Difference Among Society, Trust and Section 8 Company

In India, there are multiple legal structures for setting up a non-profit organization due to its rich tradition of philanthropy and social welfare. There are three main types of non-profit organizations: Societies, Trusts, and Section 8 Companies. Each of these has its own legal characteristics, regulatory bodies, compliance requirements, and benefits. If you're planning to promote art, education, healthcare, or any other charitable cause, you need to choose the right legal entity.

To help you make an informed decision, we will explain the definitions, legal structures, and registration processes of a Society, Trust, and Section 8 Company.

What is Society? 

The Society is a group of people who join together for a common charitable, scientific, literary or social objective. This formation (Society) regulated and governed under the Societies Registration Act, 1860. It was mainly formed for promoting non-commercial activities. Key features of a Society includes - 

1. Minimum 7 members for registration
2. Operates under State-level Registrar of Societies
3. Can hold property, enter into contracts, and sue or be sued.
4. Suitable for educational institutions, cultural associations, welfare organizations.

What is Trust? 

The Trust is a legal formation where the Settlor (author) transfers property to trustees to handle it and provide benefits to the poor people or for the public for charitable purposes. In India, the Trusts are governed by the Indian Trusts Act, 1882 and mainly principles of charity law. The key features of a Trust includes - 

1. Must have two parties - the settlor or trustees
2. Trust deed in the foundational document
3. It can be private or public trust
4. Ideal for family-run institutions, charitable hospitals or temples. 

What is Section 8 Company? 

Section 8 Company is also known as “NGO” stands for Non-Profitable Organization”. This is a special form of company governed under the Companies Act, 2013 especially established for charitable or not profit purpose. This structure promotes social welfare, art, education and research. The key features of Section 8 company includes - 

• Must obtain a license from the Central Government (MCA). 
• Functions similarly to a private limited company but cannot pay dividends.
• High level of transparency and governance.
• Ideal for organizations looking for foreign funding (FCRA) or corporate partnerships.

Difference among Society, Trust & Section 8 Company

The difference among Society, Trust and Section 8 Company is as mentioned below: 

Conclusion 

There is no one-size-fits-all approach when it comes to selecting a structure for your NGO or non-profit venture. Here’s a quick recap:

• Trust: Best for family-run institutions or religious charities with minimal compliance.
  
  
  
• Society: Ideal for community-driven social causes with local reach.
  
  
• Section 8 Company: Preferred for larger, well-governed organizations targeting global reach, FCRA funding, and CSR support.

Choose based on your vision, scale, and desired legal flexibility. And no matter which route you take, always maintain proper records, transparency, and compliance for the credibility and sustainability of your organization.

Frequently Asked Question 

1) Can Section 8 companies sell goods? 

Yes, Section 8 companies can sell goods in order to promote charitable trust among customers. 

2) What is the difference between Pvt Ltd and Section 8 company?

The common difference between Pvt Ltd and Section 8 Company is that the former is subjected to earn profits no matter what goods and business is. While the latter is subjected to charitable objectives and not lies on the purpose to earn profits.

3) What is the minimum number of members required to register a society in Delhi? 

In order to start a society in Delhi a minimum 7 members are required. 

4) How long does it take to register a society in Delhi? 

Usually it takes 20-30 working days to register a society in Delhi. 

5) What are the benefits to register a society in Delhi? 

The benefits of Society Registration in Delhi includes legal recognition, eligibility for grants, and improved credibility for fundraising activities.

6) What is the minimum capital requirement for Section 8 Company Registration?

There is no minimum capital requirement for Section 8 Company registration. You can start the company with any minimum capital as per your convenience.