Section 25 Company Registration - Benefits, Documents & Procedure

Section 25 Company Registration - Benefits, Documents Requirement and Procedure

Section 25 Company Registration - Benefits, Documents Requirement and Procedure


Section 25 Company or a Non-Profit organization (NPO) is a Company established for promoting commerce, art, science, religion, charity or any other useful object, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.

An NPO/NGO can be formed for promotion of any useful object like sports, education, research activities etc. The term No Profit does not mean that the Company cannot generate profit or income, but it essentially means applying the income for further promotion of the object and not for distributing it to the promoters. It means that the Company can earn profits but the promoters cannot be benefited out of those profits.


Benefits of Section 25 Company Registration

Being an NPO or Non-profit Organization does not mean that the Company cannot make a profit or income. It only signifies that the Company can earn income but the promoters are not to benefit from those profits. The profits cannot be distributed among the promoters. All incomes must be applied to promoting the object.


Some of the advantages are:

  • Many privileges and exemptions under Company Law.

  • Exemption from requirement of Minimum Paid-up capital.

  • Exemption of Stamp duty for registration.

  • Non-application of Companies Auditor’s Report Order (CARO) 2003.

  • Registered partnership firm can be a member in its own capacity.

  • Tax deductions to the donors of the Company u/s. 80G of the Income Tax Act.

Documents Required for Section 25 Company

  1. For Director Identification No (DIN) (to be taken for all directors)
    Photo Identification Proof Of Directors (PAN Card Mandatory)
    Color Passport Size Photograph – 2
    Address Proof (If address not included in Photo ID Proof)
  2. For Digital Signature (to be taken for at least one director)
    Photo Identification Proof Of Directors (PAN Card Mandatory)
    Color Passport Size Photograph – 2
    Address Proof (If address not included in Photo ID Proof

  3. For form 24A
    1. Three printed copies of the memorandum and articles of association of the applicant company, signed by all the promoters with full name, address and occupation (No stamp duty is payable on the Memorandum and Articles of Association)
    2. A declaration by an advocate or a chartered accountant that the memorandum and articles of association have been drawn up in conformity with the provisions of the Act and that all the requirements of the Act and the rules made there under have been duly complied with, in respect of registration
    3. List of the names, addresses and occupation of the promoters, members of board of directors, name of companies, associations and other institutions in which promoters of the applicant company are directors or hold positions, description of the positions held by them (three copies)
    4. A statement of assets and liabilities
    5. Source of income of the Applicant Company and estimate of annual expenditure;
    6. A statement giving a brief description of the work, if any, already done by the association and of the work proposed to be done by it after registration in pursuance of section 25;
    7. A statement on grounds on which the application is made under section 25 of the Companies Act, 1956;
    8. A declaration by each of the persons making the application that he/she is of sound mind, not an undischarged solvent, not convicted by a court for any offense and does not stand disqualified under section 203 of the Companies Act, 1956 for appointment as director.

Procedure for Registration of Section 25 Company

Given below is the brief procedure for registration of section 25 company.

1. Apply for & Get Director Identification Number

The first step is to get DIN Numbers for all the proposed directors of the company. The minimum directors required are three

2. Apply for Name Approval

After DIN Nos have been obtained, the next step is to apply for name approval of the company

3. Application for grant of license

After Name Approval is received, a application has to be made to the Registrar of Companies (ROC) in form 24A along with relevant documents for getting license for removal of work private limited or limited as the case may be and for registration of company as section 25 company

4. File Memorandum & Articles of Associate and necessary forms

After license is obtained from the Registrar of Companies, further form 18, 32 & 1 are required to be filed with the ROC and Certificate of Incorporation obtained.


For more information on this visit www.taxaj.com
Posted by Pooja
Team Taxaj

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