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Home / How to Open a Educational Trust in India

How to Open a Educational Trust in India

If you are looking to start a School in India, the first and foremost thing is to form a TRUST, SOCIETY or a SECTION 8 Company. The most important element which one should remember is the entity thus formed has to be Not-For-Profit and Non- Proprietary in nature.

Whether you opening a CBSE School, ICSE School, State Board School, IB School or school catering to any board, any school teaching Class I and above has to have TRUST, SOCIETY or a SECTION 8 Company managing the school.

So now there are couple of question which arises which we are seeking answers for;

Question 1: Is this the only way to start a school in India? If so, why?

Question 2: What is the difference between TRUST, SOCIETY or a SECTION 8 Company?

Question 3: Which one is better between TRUST, SOCIETY or a SECTION 8 Company?

Question 4: How do you form a Society, Trust, Section – 8 company?

Question 4: What is this "Non Proprietary" character ?

Question 1: Is this the only way to start a school in India? If so, why?

Answer: YES, this is the only way. You can either start a TRUST, SOCIETY or a SECTION 8 Company but mandatory requirement is it that they should be of Non for Profit and Non Proprietary Character. This is because government is very wary of some unethical private players posturing as educators and exploiting this basic need of every child. By laying this ground rule, Government tries to discourage these forces as much as possible. By making it Not for Profit, Government tries to rein in blatant commercialisation.

Question 2: What is the difference between TRUST, SOCIETY or a SECTION 8 Company?

The above table shows the differences between the three but the aims of establishing any of these stays the same.

Question 2: Which is better between the three – Society / Trust / Section 8 Company?

Of the three Section 8 is most preferred, here are the reasons

  • It is easier to increase the number of directors, it is easier for people donating money to join or leave or transfer shares to others, and such a company is obliged to fulfil far less stringent book-keeping and auditing requirements as against a regular company. This is the biggest advantage in my opinion.
  • The formation just requires two people hence a distinct advantage for promoters who are investing theirown money without any partners.
  • Section 8 companies are much easier to run than Trusts and Societies, as board meetings require a smaller quorum and requirements for calling such meetings are less rigid.
  • Section 8 is preferred by several businessmen because they are conversant with the company structure, while benefits from several exemptions make it easy for philanthropy.
  • A Section 8 Company has more credibility as compared to any other Non-profit organization structure be it a Trust or Society. As it is a licensed by the central government. It has more stringent regulations such as no change in MOA and AOA can be done at any stage or situation in a Section 8 Company. A section 8 company due its strict compliances as regard to functioning has a more reliable image in comparison to other legal structures.
  • Those looking to start with Partners – Section 8 is highly recommended, imagine a scenario , Partner is no more in this world, You want to infuse capital through getting moe partners, Partners want to exit the arrangement. It is never easy bit possibly it is easier with Company

Question 3 a: How do you form a Society ?

Societies are membership organizations that may be registered for charitable purposes. They are usually managed by a governing council or a managing committee and are regulated by the Societies Registration Act which has been modified and adopted by various states. Unlike trusts, societies may be dissolved. The main instrument of any society is the memorandum of association and rules and regulations (no stamp paper required), wherein the aims and objects and mode of management (of the society) should be enshrined.

Memorandum of association is the charter of a society. It is a document depicting and describing the objects of the its existence and its operations. However, article of association includes rules and regulations of the society under which it works.

A Society needs a minimum of seven managing committee members; there is no upper limit to the number of managing committee members. The Board of Management is in the form of a governing body or council or a managing or executive committee. The society has a Chairman, Treasurer, Secretary and ordinary members.  There will be some permanent memebers and some temporary members.

One applied for registration, the Registrar of Society will give the society a Registration Certificate.

Here this article on wikipedia is very helpful, I am copying some important lines from the wiki page

Question 3 b: How do you form a Trust ?

Public charitable trusts may be established for a number of purposes, including poverty relief, education, medical relief, the provision of facilities for recreation, and any other objective of general public utility. Indian public trusts are generally irrevocable. No national law governs public charitable trusts in India, although many states (particularly Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public Trusts Acts.

  • TRUST DEED: Trusts are registered using a document called TRUST DEED. This document contains all the information about the Trust and is printed/written/typed on plain A4 size papers.
  • Attach a Rs. 100 Non-Judicial stamp paper (which you can get from a notary). All the Trustees and witnesses will have to give thumb impressions and signatures on these papers. All in all, you will need help of a notary to prepare the papers.
  • You may also need a No-Objection Certificate (NOC) from the owner of the property where the registered office of the trust is to be situated. If you're the owner of the property, then you don't need to worry about NOC
  • Following elements must be mentioned in the Trust Deed document:
    • Name and address of the Settler (Settler is the person who is setting up trust)
    • Name(s) and address(es) of the other trustees
    • Name of the trust
    • Minimum and maximum number of trustees your trust can have
    • Address of the registered office of the trust
    • Objectives of the trust
    • Rules and Regulations of the trust
  • For registering a trust you need minimum two trustees (i.e. one settler and another person). You can decide the maximum number of trustees and this number must be mentioned in the trust deed. All the trustees together are called Board of Trustees. This board collectively governs the trust.
  • All the trusts are allowed to work on all India level
  • Trusts are irrevocable –unless it is mentioned in the trust deed. This means that the trust cannot be wound up
  • Trustees are usually life-long members or their tenure is specified in the deed. Electoral process is not involved in the appointment of trustees.
  • Board of Trustees can also have various designations for trustees. Common designations are Chairperson and Managing Trustee.

Here this article on wikipedia is very helpful, I am copying some important lines from the wiki page

Question 3 C: How do you form a Section – 8 company ?

The formation of Section 8 Company happens through the portal of Ministry of Corporate Affairs. The steps are following

  • A form called INC-1 is filed for the naming the proposed Section-8 company. The form in online and is called as Form meant to RESERVE THE COMPANY's NAME. The promoters have to ensure that the proposed name selected does not contain any word as prohibited in Section 4(2) & (3) of the Companies Act, 2013 read with Rule 8 of the Companies (Incorporation) Rules, 2014. The name also should be unique. To search for the name, here is the service by the MCA
  • Fill INC 12 – Click here for the form. This form is for the request of the Granting of the permission.
  • Attach a draft copy of the Memorandum of Association (MOA) and Articles of Association (AOA). There is a prescribed format for Memorandum of Association of a Section 8 company in Form INC 13.
  • Also one has to attach the following to the application – Estimated statement of Income & Expenditure for the next three years, List of Directors,
  • There are other FORMS like INC – 7, INC – 8, INC – 9, INC – 12, INC – 13, INC – 14, INC – 15, INC – 16, INC – 22 and DIR – 2, DIR – 3, DIR – 12, which one has to fill giving detailed information about company's particulars.
  • One has to obtain Digital Signature Certificates (DSC) of the proposed directors.

Question 4: What is this "Non Proprietary" character ?

Answer: Not for Profit or Non Proprietary means the members of the  managing committee of the society  in No Way can withdraw PROFIT coming out of the business of the society or the trust for their personal gain. The Profit simply explained in business parlance will be BOTTOM LINE.Money should be channelized within the ambit of the not-for-profit areas of focus and its functional areas. Profit should be used only for the development and betterment of the objectives and aims of the entity.

State Address Link
Uttar Pradesh Registrar of Cooperative Societies ,
Govt. of Uttar Pradesh, 14 Vidhan Sabha Marg
3rd Floor, Vikasdeep, Lucknow, Uttar Pradesh 226001		 http://cooperative.up.nic.in
Chhattisgarh Registrar of Cooperative Societies ,
Govt. of Chhattisgarh, Block - 3, 2nd and 3rd Floor,
Indrawati Bhawan, New Raipur
Tel : 0771 2511921		 http://rfas.cg.nic.in/Contact_us.aspx
Madhya Pradesh Registrar Firms & Societies
Department of Commerce & Industries
Government of Madhya Pradesh
D-Wing, First Floor, Vindhyachal Bhawan,
Bhopal [M.P.]		 http://registrarfirms.mp.gov.in
Punjab Directorate of Industries, Ponch House, Lahore (Next to Chuburji)
Phone : 0092-42-99211520-21
Fax : 0092-42-99211522		 http://dicludhiana.gov.in/frmSocietyRegistration.aspx
Bihar Completely Online 1) https://biharregd.gov.in/Society/Home.aspx

2) https://biharregd.gov.in/Society/Online/Society_Registration.pdf
Rajasthan Registrar of Cooperative Societies ,
Govt. of Rajasthan, Nehru Sahakar Bhawan,
Bhawani Singh Road, Jaipur 302 001		 1) http://rajcooperatives.nic.in
2) http://forms.gov.in/RJ/5077.pdf
Jharkhand Ground Floor, Engineer's Hostel - I, Near Golchakkar, Dhurwa, Ranchi, Jharkhand. http://www.jharkhand.gov.in/office-of-registrar-cooperative
West Bengal Department of Cooperation,
Government of West Bengal
New Secretariat Building(4th Floor),
1,K.S.Roy Road,Kolkata-700001		 http://coopwb.in/aboutus.html
Maharashtra Commissioner for Cooperation
Registrar of Cooperative Societies
2nd Floor, New Central Building,
Ambedkar Wellesly Rd,
Pune, Maharashtra 411001
Tel.: 020 2612 2846 ‎		 https://sahakarayukta.maharashtra.gov.in/Site/Home/Index.aspx
Tamil Nadu No.100, Santhome High Road, Chennai 600 028. http://www.tnreginet.net/english/society.asp
Kerala Inspector General,
Departmernt of Registration,
Vanchiyur P.O
Thiruvananthapuram.
Kerala - 695035
regig.ker@nic.in
contact 0471-2472118, 2472110		 http://keralaregistration.gov.in/?lang=eng
Andhra Pradesh Office of the Commissioner & Inspector General of Registration and Stamps,
5-59, R.K.Spring Valley Apartments,
Edupugallu, Kankipadu Mandal,
A.P, Vijayawada - 521151		 http://www.registration.ap.gov.in
Telengana D-Block, 4th Floor, Telangana Secretariat, Hyderabad-500022.
Office : 040-29801057		 https://registration.telangana.gov.in/registrationsociety.jsp
Karnataka Registrar of Cooperative Societies in Karnataka, Address: 1, Ali Asker Rd, Bengaluru, Karnataka 560052 1) http://sahakara.kar.gov.in/ContactUs.html
2) http://www.karnataka.gov.in/karigr1/Pages/Societies-Registration-Act-and-Rules.aspx
Himachal Pradesh Block No.25, SDA Complex, Kasumpti, Shimla, Himachal Pradesh 171009 https://coophp.nic.in/
Uttarakhand Registrar of Cooperative Societies,
Govt. of Uttarakhand, Uttaranchal Secretariat,
4-B, Subhas Road, Dehradun 248001
Tel : 2713534
FAX: 2712268		 society.uk.gov.in/
Haryana Bays No. 27-30, Sector-2,
Panchkula-134109.

Phone No. : 0172-2585023, 2583438

 http://rcsharyana.gov.in/contact-us.htm
Gujarat Registrar of Cooperative Societies ,
Govt. of Gujarat, Block No 10, 1st Floor, Old Sachivalaya
Gandhinagar 382 010
Tel : 079-23253868, 079-23253862 ,
FAX: 079-23253877, 079-23253876		 https://rcs.gujarat.gov.in/introduction.htm
Manipur Government of Manipur
4th floor, Western Block
New Secretariat,
Manipur-795001		 http://manipur.gov.in/?page_id=1697
Assam Registrar of Cooperative Societies ,
Govt. of Assam, Lakhtokia, Guwahati 781 001
Tel : 0361-2545334 ,
FAX: 0361-2545994		 http://assam.gov.in/web/registrar-of-firms-and-societies
Meghalaya Registrar of Cooperative Societies

New Administrative Building
Lower Lachumiere, Shillong-793001
East Khasi Hills District, Meghalaya
Phone Number : 0364 - 2225212

 http://megcooperation.gov.in
Tripura O/O the R.C.S. Govt of Tripura. 1st Floor & 2nd Floor http://tripura.nic.in/coop/
Nagaland Registrar of Co-operative Societies
A.G. Office Road
Kohima, Nagaland-797001		 http://nagalandcooperatives.com/page.aspx?page=legal_nsca
Sikkim Government of Sikkim
Annexe 1, Top Floor, Kazi Road
Gangtok , Sikkim-737101		 https://www.sikkim.gov.in/portal/portal/StatePortal/Department/CooperationDept
Odisha Near State Bank Of India, Kharvel Nagar, Bhubaneswar, Odisha 751001 http://rcsorissa.nic.in
Goa THE REGISTRAR
THE OFFICE OF THE REGISTRAR OF
CO-OPERATIVE SOCIETIES

'SAHAKAR SANKUL'
4 & 5 FLOOR, EDC COMPLEX,
PATTO, PANAJI – GOA
Tel:No: +91 - 832- 2437165/2437175/2437134
Email : reg-orcs.goa@nic.in

 http://www.coopgoa.gov.in
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Abhiney Singh

Abhiney Singh

I run a school called Brighton International School (www.brightoninternational.in).
I am also now a partner with a School consulting company which helps budding educators or investors start school or gain access to help related to school. The help could be in the form of Turnkey School Consultation, Detailed Project report, Project Finance, Business Plan consulting, Recruitment planning, Infrastructure consultation, Affiliation Consultation, Teacher's Training, Academic and Curriculum Planning. I now have a decade of work experience. I strongly believe in improving every day and I have tremendous respect for people who pursue their dreams with undying passion and enthusiasm.
I have worked in Mumbai for about 6 years as a Marketing-Media professional which has helped me in shaping what I am today. I am Chemical Engineer with an MBA in Marketing.
You can know more about me at www.linkedin.com/in/abhineysingh

You can mail me on abhiney@brightoninternational.in or call me on +91 70002 40006. This number is also on whatsapp.

How to Open a Educational Trust in India

Source: http://brightoninternational.in/teachclub/start-a-trust-society-section-8-company-for-school/