WHAT’S BETTER- TRUSTS, SOCIETIES OR SECTION 8 COMPANIES??

From the above discussion it is clear that all the organizations i.e. Trusts/ Society/ Section 8 Co. are meant to provide social benefit, relief to poor’s and providing social welfare to society at large, they cannot do any other work apart from providing social benefits and what is prescribed in the main documents, the surplus from their business cannot be applied in any other object, i.e. Non-Profit Organization.

There is no evident particular situation under which one can choose what to form, like in case of providing social benefit to one individual/family (in case of private trust) or to society at large (in case of public trust) wherein it can be properly managed, the trustee to hold office for his or her lifetime without the need for an election. Privacy in activity as well as flexibility in the division of benefits.

Now, in case if person wants more organized, structural way managed through elected bodies to provide social benefits to public at large then formation of societies is the ideal choice.
If one desires to provide social welfare as a legal structure of a company, to gain reliability and credibility as it is an approved establishment by the central government, with no requirement of higher, more benefits of government subsidies, foreign contribution, more transparency.

If one is of the view to do any micro finance business but not as a part of NBFC, then solely section 8 company is the best as Section 8 companies are authorized to undertake micro finance activities wherein small-scale loans of somewhat Rs. 50,000 for rural areas and Rs.
1,25,000 for urban areas are allowed by section 8 companies, it is the simplest way to register a microfinance company, as per RBI circular RBI/2015-16/15 DNBR (PD) CC.No.052/03.10.119/2015-16 Dated July 01 2015, exempted section 8 companies to obtain Certificate of Registration from RBI to carry on any non-banking financial business, but within the limits prescribed by RBI.

Hence, it is evident from the above discussion that there is no specific criteria thactt one must follow to decide which Not- for- profit organization is better, every organization is best at their parts, and if one desires to engage itself in micro finance activities then section 8
company is the best as this facility is not granted in trusts/ societies


MahataAgarwal
MahataAgarwal
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