COSIA - A Section 25 Company

COSIA is a non-profit company registered under section 25 of the Companies Act, 1956.

What is a Section 25 Company?

A company incorporated under Section 25 of the Companies Act 1956 is:

1. a voluntary association of people for promoting commerce, arts, science, religion, charity, etc.

2. wherein no profits or other income is distributed to its members by way of dividend, etc.

3. such a company is not required to suffix the term “limited” or “Private limited” to its name.

Click here to read Section 25 of Companies Act 1956

Why a Section 25 Company?

Under Indian law, 3 legal forms exist for Non-Profit organizations:

1. Trusts

2. Societies

3. Section 25 Companies

Due to a better laws, Section 25 companies have the most reliable and strongest organisational structure:

1. Indian Trusts have no central law.

2. Indian Societies have different legal and institutional frameworks from state to state.

3. Indian Companies (incl. Sec 25 companies), have one uniform law across the country - Companies Act 1956.

It is this robust Act that regulates the formation, management and accountability of a Section 25 company, thus making it more closely regulated and monitored than trusts and societies, and recognised all over the world.

A comparison

Non-profit activities Charitable, Literary, Scientific, etc Charitable, Socially beneficial
Indian Companies Act 1956 Societies Registration Act 1860 Bombay Public Trusts Act 1950
Complex legal procedure Simple procedure Normally only Settlor can modify
Complex procedure, 3-6 mths. Simple and easy Simple and easy
Formalities of Company law have to be observed. Few restrictions imposed under the Act Very few restrictions imposed under the Act
To be held as per provisions of law which are quite extensive. Annual meeting as per law and Rules of the society No provisions laid down
Various offences and lapses attract severe penalties. Few offences and penalties have been prescribed Very negligible
Full legal status Legal status with certain limitations Legal status with limitations
Exhaustive but mature Very limited Nominal
Not possible without consent Possible without consent Not applicable
Very difficult Possible Possible