DIFFERENCE BETWEEN TRUSTS, SOCIETIES & SEC.8 PVT LTD COMPANY

Doing a Social work is good and important for betterment of society. Then why not doing it in a legal manner. In India Non-Profit making organizations can be registered as Trust, Society, Private Limited Non Profit Company (Section 8 Company). People usually consider them to be one and same. But No. There is huge difference between all three. All have their own Benefits, Drawbacks and legal existence. The following comparison table should help you in deciding which is better for you considering your objectives and circumstances.

BASIS OF DIFFERENCE	TRUST	SOCIETY		PVT LTD SEC-8 COMPANY
STATUTE / LEGISLATION	Indian Trust Act, 1882	Societies Registration Act, 1860	The Companies Act, 2013
MEMBERS ARE CALLED AS	Trustees	Members	Directors
MINIMUM NUMBER OF MEMBER REQUIRED	Two	Seven	Two
GEOGRAPHICAL AREA OF MEMBERS	Members can be from same state or city.	Should be from different states.	Can be from same state or city.
MINIMUM CAPITAL INVESTMENT REQUIREMENT	Can be registered with a minimum amount (say Rs 1,100/-)	Can be registered with a minimum amount (say Rs 1,100/-).	Minimum Capital Required Rs. 1,00,000/-.
MEMBERSHIP FEES FOR MEMBERS	No such option	Societies can keep a minimum fees for every Member	No such option
FAMILY MEMBERS	Can become Trustees	Registrar objects on family members becoming part of the Governing Body	Can become Director
GEOGRAPHICAL AREA OF ACTIVITY	All India	Normally, state wise registration. A separate registration for All India level is required.	Normally, state wise registration. Can work on All India Level.
MAIN DOCUMENTS	Trust Deed	1.       Memorandum of Association 2.       Rules and Regulations	1.       Memorandum of Association 2.       Articles of Association
AMENDMENTS IN MAIN DOCUMENTS	Easily done by Supplementary Trust Deed.	Relatively more difficult. Both Memorandum of Association and Rules and Regulations need to be changed	Relatively more difficult. Both Memorandum of Association and Articles of Association needs to be change.
NATURE OF CONTROL	One Man Control, i.e , Settler	Democratic system. Decisions are made by voting. Power struggle may ensue.	Decisions are made by Board of Directors
NAME OF ORGANISATION	Easily Available	A bit difficult to get the desired name	A bit difficult to get the desired name
WINDING-UP	Trust is generally irrevocable, Can not be wound-up.	Can be wound up if 3/5th of the members so desire	Voluntary Wind up or by Tribunal for some reasons. For voluntary wind-up consent of at least 3/4th of the members is required.
AFTER DISSOLUTION	If dissolved on certain conditions,  All the property is transferred to Trust having same objectives.	Upon dissolution and after settlement of all debts and liabilities, the funds and property of the society may not be distributed among the members. Rather, the remaining funds and property must be given or transferred to some other society having similar objects.	Upon dissolution and after settlement of all debts and liabilities, the funds and property of the company may not be distributed among the members of the company.  Rather, the remaining funds and property must be given or transferred to some other section 8 company having similar objects

I hope above table will help you in understanding basic differences among these three and choosing a right option as per your requirement.

## This Post is just a knowledge sharing initiative for mutual discussion and author does not intend to solicit any business or profession.