Formation
of a Society
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A
Society can be defined as a company or association of
persons united together by mutual consent to deliberate,
determine and act jointly for some common purpose. (Gliner
vs. Stone) In 1854 in England, to acknowledge the separate
existence of a society from its members an act called
the ‘The Literary and Scientific Institution Act’ was
passed. In the same line an act was also passed in India
in 1860 i.e. ‘The Societies Registration Act’ (Act
XXI of 1860)
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In
India, an institution of non commercial nature for promotion
of charitable activities like education, art, religion, culture
etc. has to register itself :
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as
a public charitable trust, or |
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under
Societies Registration Act,1860, or |
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under
Section 25 of the Companies Act ,1956 |
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The
Societies Registration Act, 1860 is an act for the registration
of literary, scientific and charitable societies. The object
of the Act as stated in the preamble is to make provision
for improving the legal conditions of Societies established
for promotion of literature, science, fine arts, for diffusion
of useful knowledge or for charitable purposes.
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Such
an association has to be registered since it gives the society
a legal status and is also essential for:
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opening
bank accounts |
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obtaining
registration and approvals under Income tax act |
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lawful
vesting of properties of societies |
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recognition
to the society at all forums and before all authorities |
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The
Act is applicable to all societies formed either prior
to commencement of the Act or formed after commencement
of the Act so as to provide them with a legal status for
carrying out the purpose for which they have been formed.
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| Who
can form a society? |
As
per the Act, a society can be formed by “Any Seven
or more persons associated for any literary, scientific
or charitable purpose, or for any such purpose as described
in Section 20 of this Act, may, by subscribing their names
to a memorandum of association, and filing the same with
registrar of joint stock companies (or as amended by respective
state acts) form themselves into a society under this Act”.
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| Eligibility |
Besides
individuals the following persons are eligible for subscribing
to the memorandum of the society :
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Foreigners: The
Act does not bar foreigners from subscribing to
the memorandum of the society therefore, in effect
foreigners can subscribe to the memorandum of the
society.
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Partnership
firm: The position of Partnership firm
regarding its eligibility to subscribe to the
memorandum of the society is not clear from provisions
of the Partnership Act 1932, Societies Registration
Act 1860 or any other judicial decision. However
simple analogy can be drawn by keeping in view
the provisions of Sec 25(4) of Companies Act,
1956 which permits a partnership firm to become
a member of a Section 25 company and provides
that the firm may be a member of any association
or company registered under the provisions of
the Companies Act 1956. However on dissolution
of the firm, the membership of the firm to such
an association or company will lapse. Therefore
drawing a parallel from the above, we may deduce
that a partnership firm may subscribe to the
memorandum of society.
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Limited
company: Company can subscribe to the
memorandum of society
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Registered
society: A registered society can subscribe
to memorandum of association of proposed society.
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Various
state governments by their amendments have expanded the provisions
in the Act for formation of the societies. |
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| Purpose
for which a society can be formed |
Section
20 of the act specifies the following purpose for which the
society may be registered:
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Grant
of charitable assistance |
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Creation
of military orphan funds |
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Societies
established at the general presidencies of India |
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Promotion
of science, literature, fine arts, instructions or
diffusion of useful knowledge, diffusion of political
education, foundation or maintenance of libraries,
public museum and galleries of paintings, works of
art, collection of natural history, mechanical and
philosophical inventions, instruments , designs |
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| Registration
of Society |
A
registered society implies that the society has a legal
entity which binds the members to a certain extent. The
society enjoys a legal status separate from its members
and can acquire and hold property and can sue and be sued.
The
registration of the society is to be done under the act
wherever obtaining and not in the state where the benefit
is claimed (Radhaswami Satsang Sabha,Dayal Bagh Vs. Hanskumar
Kishan Chand)
Sec
3 (2) of the Act means that the society which seeks registration
should not have a name identical with that of another
society which was previously registered and whose registration
is subsisting.
All
the subscribers (minimum 7) should sign the memorandum
of association and the signatures should be attested
by an Oath Commissioner, Notary Public, Gazetted Officer,
Advocate, Chartered Accountant or magistrate 1st Class
with their rubber/official stamp and complete address.
However
persons desirous of forming a society should also become
members of the first Governing Body.
The
Rules and regulations of the Society should be signed
by atleast 3 members of the Governing Body.
The following documents are required to be filed with the registrar (or
respective registering authority of the respective state):
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Covering
letter requesting for registration
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The
memorandum of association in duplicate along with
a certified copy. The memorandum should be typed
with serially numbered pages.
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Duplicate
copy of the rules and regulations of the society
duly signed
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Where
there is a reference to any particular existing places
of worship, sufficient documentary proof establishing
legal competence and control of applicant society
over such place should be filed.
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Affidavit
on non-judicial stamp paper of appropriate value
sworn by the president or secretary of the society
stating relationship with the subscribers duly attested.
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Documentary
proof such as House Tax receipt, rent receipt in
respect of premises shown as registered office of
the society or no objection certificate from the
owner of the premises.
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The
society can be registered with a nominal fee of Rs.50/-
which is payable in cash or demand draft
After
verification of the documents and ensuring the compliance
of provisions the registrar certifies the registration
of the society.
It
should be noted that it cannot be presumed that the society
is duly registered under the Act by just obtaining the
certificate of registration from the Registrar, but it
is presumed to be registered by the copies of the Rules
and regulations and memorandum being certified under
Sec 19 the Act
However,
once the society becomes registered and obtains its legal
entity, the activities and the members become bound by
the objects of the memorandum.
An
unregistered society does not enjoy the legal status
and therefore exists in fact and not under the law.
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| Memorandum
of Association |
Memorandum
is the charter of the society. It is the document depicting
and describing the objects of its existence and its operations.
The memorandum as per the Principal Act (Section 2) and Acts passed by
various state governments should contain the :
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Name
of the Society
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The
objects of the Society |
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The
names, addresses and occupation of the members of
the governing body |
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The
place of the registered office of the Society |
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The
memorandum should be a neatly typed document on good quality
durable paper with serially numbered pages since these
documents are to be kept as permanent records. Also, there
should be a one and a half margin on left side of each
sheet of paper while typing and it should be typed on one
side only.
The
memorandum should also contain the names, addresses and
full signatures of the seven and more persons subscribing
their name to the memorandum of association. The signatures
should be duly witnessed and attested.
Along
with the memorandum of association, a certified true
copy of the Rules and Regulations of the Society signed
by atleast three of the members of the first governing
body should be filed.
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| Rules
and Regulations |
The
rules and regulations of the society are framed to guide
the members of the governing body or the persons entrusted
with management of the society to regulate the functions
of the society and for its internal management.
These
rules and regulations help in achieving the objects of
the society and are binding on its members.
A
copy of the rules and regulations certified to be correct
by not less than three members are required to be filed
with the registrar along with the other documents at
the time of the registration of the society.
The
rules and regulations also lay down the rules for the
meetings. The rules should normally contain guidelines
for meetings, quorum, proxy, minutes, and resolutions.
It
cannot be presumed that a society is duly registered
under the Act by just obtaining the certificate of registration
from the registrar, but it is presumed to be registered
by the copies of the Rules and Regulations and the Memorandum
of Association being certified under Section 19 of the
Act.
Member(s) in the memorandum shall be a person(s) who has been admitted
according to the rules and regulations of the society and should
have paid the subscription and signed the list of members. No person
shall be entitled to vote or be counted as a member in any of the
proceedings of the society whose subscription has been in arrears
for a period exceeding three months.
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rights and duties of these members are: |
Right
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Right
to receive notices |
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Right
to vote |
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Right
to receive copies of the bye laws |
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Right
to receive statement of accounts |
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Right
to attend general meetings |
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Duties
and Liabilities
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To
work towards attainment of the objectives of the
society |
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To
attend the meetings regularly and exercise their
democratic right as and when necessary. |
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A
society may act against the members for: |
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-
recovery of arrears of membership subscription
- recovery of any retained property or damages to the property caused
by the members
- for mis-utilisation / mis-appropriation of funds of the society
- forging any deed, document, money receipt etc. causing loss of
fund or loss of credibility of the society. |
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Governing
Body
Governing Body under the Act can be said to be consisting of the Governor’s
council, Committee, trustees or some other body by whatever name called
to whom or to which by the rules and regulations of the society the management
of its affairs is entrusted. Property belonging to the society registered
under the Act is deemed to be vested in the Governing Body of the society
if not vested in trustees.
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General
Body
General
Body comprises of all the members who have subscribed
to the memorandum of the society
In
certain NGO’s there is no distinction between the
General Body and the Governing Body. It is permissible
to have common members among both the General Body and
the Governing Body. However for good governance, sometimes
there are more members in the general body from which
the Governing Body is elected in the Annual General Meeting
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| Meetings |
General
Meetings: Annual General Meeting (AGM) is a meeting of
the general body i.e. of all the members who have subscribed
to the memorandum of the society normally held once in
a year to discuss and approve the important matters like
review of yearly activities, approval of audited accounts,
and appointment of auditor. The AGM is to be conducted
within six months of the end of the financial year since
the annual activities and accounts are adopted in this
meeting.
Other
general meetings can also be called during the year to
discuss certain matters of importance if required. Such
meetings are called the Extraordinary General Meeting
(EGM).
All
members of the society have a right to participate in
the meeting.
Board
Meetings / Governing Body Meetings: The meetings
of the Governing Body are held to take administrative
decisions for the organisation. These meetings are
held as per the time interval specified in the rules
and regulations of the society. They can also be held
more frequently if need arises for them. Generally
the meetings should be held at atleast in an interval
of three months if the time interval for holding the
governing body meetings is not specified in the rules
and regulations. These meetings are important for an
organisation since these meetings the matters related
to management of the organisation is taken in collective
manner.
Notice: A
notice for every meeting should be given to all the members
according to the time limit as mentioned in the bye laws
and the time limit for issue of the notice for any meeting
should be provided in the bye laws. The notice for the
meetings has to be given in writing. Generally a 21 days
notice should be given for a general meeting and 7 days
notice for a governing body meeting.
Agenda: Along
with the notice for the meeting, the ‘Agenda’ for
the meeting should be enclosed which provides the details
regarding the relevant items to be discussed during the
meeting.
Quorum: The
bye laws of the organisation should also specify the
quorum required for different meetings. ‘Quorum’ implies
the minimum number of members who must be present in
the meeting to make the proceedings of the meeting valid.
If the required quorum is not present then the meeting
is generally adjourned to the same day of the next week,
at the same time and the same place. In case the quorum
is still not present in the adjourned meeting then the
meeting can be taken as a valid meeting. However proxies
are not considered as part of the quorum.
Proxy: A
member entitled to attend and vote in a meeting can appoint
a proxy on his behalf who can attend and vote in the
meeting who is referred to as the Proxy .A proxy form
has to be filled up and submitted at least 2 days before
the date of the meeting of the society.
Minutes: It
is important to record the minutes of the meetings since
they are the formal record of the proceedings of the
meetings. The minutes can be recorded on loose sheets
chronologically prepared and bound together or a bound
register. The pages of the minutes should be serially
numbered.
The
minutes of the previous meeting are to be read and confirmed
at the beginning of a meeting. Thereafter the minutes
are signed by the chairman and subsequently they cannot
be altered or corrected.
The
members are required to sign the attendance register
during the meeting.
In
case of a combined general body and governing body meeting,
care should be taken to write separate minutes for the
General Body meeting and the Governing Body meeting.
Also care should be taken to maintain the required quorum
as required for the type of meeting being conducted
Resolutions: For
any decisions taken at the meetings by the members, to
formally apply the decisions a resolution stating the
decision taken has to be passed in writing. It is required
for the organisation to mention the decision taken during
the meeting in the shape of a resolution along with the
number of votes in favour and against the decision
While
framing the rules and regulations the number of members
required to pass a resolution is to be mentioned in the
rules and regulations.
A society after its registration may require at any time to change its
name, or to alter, abridge or amend its objects and /or the rules
and regulations at any time. A society may be required to change
or alter its objects, rules and regulations at any time for any reasons
or if the Government requires it.
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Alteration/
Amendment of Memorandum of Association
The
memorandum of a society contains the aims and objectives
of the society within which the society has to operate.
Any activity undertaken beyond the aims and objectives
specified in the memorandum shall make the activity invalid.
Section 12 of the Societies Registration Act 1860 gives
the procedure for alteration, amendment or abridgement
of the aims and objectives .The Act gives a specific
procedure which is very systematic and the steps mentioned
has to be adopted as given the Act. The Section 12 in
the Act is given as:
‘Whenever
it shall appear to the governing body of any society
registered under this Act, which has been established
for any particular purpose or purposes, that it is advisable
to alter, extend, or abridge such purpose to or for other
purposes within the meaning of this Act, or to amalgamate
such society either wholly or partially with any other
society, such governing body may submit the proposition
to the members of the society in a written or printed
report, and may convene a special meeting for the consideration
thereof according to the regulations of the society;
but no such proposition shall be carried into effect
unless such report shall have been delivered or sent
by post to every member of the society ten days previous
to the special meeting convened by the governing body
for the consideration thereof, not unless such proposition
shall have been agreed to by the votes of three-fifths
of the members delivered in person or by proxy, and confirmed
by the votes or three-fifths of the members present at
a second special meeting convened by the governing body
at an interval of one month after the former meeting.’
The
procedure given in the Act is mandatory and not optional.
In a decision of Allahabad High Court, Shridhar Mishra
vs. Jaichander Vidyalankar AIR 1959, it has been stated
that:
‘It
is impossible to accept the suggestion that a society
is not bound by the Societies Registration Act .A private
institution need not get itself registered under the
Societies Registration Act. But if an institution chooses
to get itself registered under the Act, the institution
is bound by the provisions of the Act, whether the procedure
laid down in Sec.12 of the Act is directory or mandatory
is another question. But a society registered under the
Act cannot altogether ignore Sec.12 of the Act.’
The proposal for alteration or extension of the
purposes of the society has to be passed at the special
meeting convened by a special majority of members.
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Section
12 of the Societies Registration Act 1860 has laid down
the following steps for alteration, extension or abridgement
of the aims and objectives of a society which have to be
followed:
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Submission
of the proposal by the governing body to the
members of the society
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10
days notice to members about holding of a special
meeting,
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convening
a special meeting for the consideration of
the proposal,
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Approval
of the proposal by 3/5th of members,
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Convening
second special meeting after a month, and
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Confirmation
by 3/5th of members present at the second special
meeting
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Certain
State Acts have more provisions regarding the alteration
of the objects clause. Some of these provisions are:
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Section
9 of the Karnataka Societies Registration Act states
that the changes should be filed with the Registrar
within 30 days along with a fee of Rs. 20.The order
of Registrar refusing to register amendment is
appealable in the court of law.
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Section
11 of Madhya Pradesh Act states the circumstances
in which the Registrar may order amendment of objects
clause.
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Section
9 of the West Bengal Societies registration Act
states that the resolution should be passed by
3/5th majority. The amendments should be filed
with the registrar within 30days.
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Section
9 of the Telangana Area Societies Registration
Act states that the resolution for the alteration
is required to be voted by 2/3rd majority of members
present.
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| Alteration/
Amendment of Rules and Regulations of the Society |
The
society during the course of its working may find the need
to alter its rules and regulations according to the change
in working of the management of the society or due to other
needs felt by the management and the members. The Societies
Registration Act however does not contain any provision
as to the change in the rules and regulations, but it is
always beneficial for the Society to follow Section 12
guidelines of the Societies Registration Act, 1860. Certain
State Acts have specific provisions in their respective
State Societies Registration Act for alteration of the
rules and regulations of the society. Some of the provisions
specifically given in these state acts are:
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Section
4 A of the Bihar Societies Registration Act
states that a corrected copy of the rules and
regulations certified by at least three members
of the governing body should be sent to the
inspector general of Registration
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Section
4A of the Gujarat (Amendment) Societies Registration
Act and U.P. Societies Registration (Amendment)
Act states that the corrected and certified
copy of the rules should be sent to the registrar
within 30 days of alteration.
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Section
4A of the Orissa Societies Registration(Amendment)
Act states that a certified and corrected copy
of the rules should be sent to the registrar
within 2 months of the alteration
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Section
4A(6) of Pondicherry Societies Registration(Amendment)
Act states that a certified and corrected copy
of the rules should be sent to the registrar
within 15 days of the alteration
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Section
10 of the Karnataka Societies Registration
act states that resolution is to be passed
for the amendment by 3/5th of the majority.
The corrected and certified copy of the rules
should be sent to the registrar within 30 days
of alteration with a fee of Rs.10 along with
it.
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Section
4A of the Gujarat(Amendment) Societies Registration
Act and Section 8(3) of West Bengal Societies
Registration Act states that the corrected
and certified copy of the rules should be sent
to the registrar within 30 days of alteration
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Section
4A of the Assam (Amendment) Societies Registration
Act states that a corrected copy of the rules
and regulations certified by at least three
members of the governing body should be sent
to the registrar
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Section
11 & 15 of the Madhya Pradesh Societies
Registration Act states that the alteration
should be registered with the registrar and
gives the circumstances under which amendment
can be ordered by the registrar.
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Change
of name of the Society
During
the course of its working the members of the society
might feel a need to change the name of their society,
however, the Societies Registration Act 1860 does not
specify any specific procedure for change of the name
of the society. For the change of the name, the society
has to follow the same procedure which has been laid
down in the Act under Section 12.However certain State
Governments have inserted amendments in the Societies
Registration Act giving procedure for change of name,
specifying how the society can change the name by passing
a resolution in the General meeting with consent of appropriate
majority of its members.
In
general, various state acts under section 12,12A,12B
give the following procedure for change of the name of
the society:
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Convene
a general meeting for the purpose of the change of
the name |
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A
resolution should be passed by a majority |
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The
notice in writing of the change of name, which
has to be signed by the Secretary of the society
along with seven members(as in case of the registration
of the memorandum of association), should be submitted
to the registrar.
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The
name of the society if accepted by the registrar is registered
and the change of name is effected from the date of the
registration. However the registrar may refuse to register
the change of name in case the name proposed is identical
to some other society or for reasons that the name may
be deceiving to the public or the name suggests patronage
of Government or connection with any body constituted by
the Government or any other authority. The change of name
does not affect any legal proceedings which are already
present for the society.
Various
State Governments have provisions related to change of
name inserted in the Societies registration Act like:
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Section
12 of Delhi (Amendment) Act, Goa, Diu and Daman(Amendment)Act,
Himachal Pradesh (Amendment)Act state that the
resolution should be adopted by 3/5th of the majority.
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Section
12A 12B, 12C of Bihar (Amendment) Act, Gujarat
(Amendment) Act, Maharashtra (Amendment) Act, Pondicherry
(Amendment) Act, Orissa (Amendment) Act state that
the resolution should be passed by 3/5th majority.
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Gujarat
(Amendment) Act, Maharashtra (Amendment)Act, Orissa
(Amendment) Act also specify that the resolution
after being adopted by 3/5th of majority should
be confirmed at a subsequent meeting and a certified
copy of change in name should be obtained from
the registrar on payment of fees of Re.1.
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Section
12,12A 12B,12C of Assam (Amendment)Act, Nagaland(Amendment)Act,
U.P. Amendment Act, M.P. Act, Rajasthan Act state
that the resolution should be adopted by 2/3rd
of the majority.
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TamilNadu
Act states that the resolution should be adopted
by 3/4th of the majority. |
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Every
society registered under the Act may sue and be sued in
the name of the President, Chairman or principal secretary
or trustees as determined by the rules and regulations
of the society.
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