How is the non-government organization is different from profit not distributing company has been differentiate below :
| S.N. | Title | Non-Government Organization (NGO) | Not-for-Profit Company (NFP Company) |
1. | Relevant Laws | An NGO is registered under the Association Registration Act, 2034. | A NFP Company is registered under the Companies Act, 2063. |
| 2. | Incorporation | Submitting an application to the Chief District Officer (CDO). | Submitting an application to the CRO along with the required documents. |
| 3. | Registering Entity | Office of Chief District Officer (CDO) | Office of Company Registrar (OCR) |
| 4. | Activities | No clarity on whether the NGO can be engaged in income generating activities. | Allows NFP to be engaged in income generating activities but cannot distribute the profits to members. It’s more like the charity company registered in UK and USA. |
| 5. | Distribution of Profit | Prohibited. | Prohibited. |
| 6. | Minimum Members | At least 9 members | At least 5 members. |
| 7. | Foreign Members | Foreign nationals are prohibited from getting Membership of NGOs. (In Practice) However, they can remain as Advisors. | Foreign Nationals are allowed to get memberships of NFP Companies. |
8. | Board of Director | At least 9, including General Member. (Known as executive committee) | The number of Directors is prescribed in the AOA. |
| 9. | Documents required to be submitted at the time of application | Constitution of the association Name Objectives Name, address and occupation of stakeholders Source of income Address of the offices Police verification of members Recommendation from ward office of the members Citizenship Copy of the member | MOA of proposed Not-For- Profit-Company. AOA of the proposed Not-For- Profit-Company. a certified copy of the citizenship certificate of the promoter, where the promoter is an individual a certificate of registration of incorporation where a corporate body is a promoter decision of the Board of directors, regulating the incorporation of the company Copy of the citizenship certificate of the witness (one witness is required per promoter) |
10. | Approval Requirements | The NGO must be registered in CDO in accordance with the ARA before commencement of its activities | Company should obtain required approval from the concerned authority prior to commencement of its business. |
| 11. | Name of company | Cannot change Name | NFP companies should not add ‘company’, ‘private limited’ or ‘limited’ at the end of its name |
12. | Affiliation | Affiliation with the Social Welfare council is not mandatory. If the entity receives donations, the entity must register with the Social Welfare Council. The affiliation has to be renewed every three years. It is governed by NGO Affiliation Guideline 2014 and guidelines by the Social Welfare Council issued from time to time. | No affiliation is required, but may choose to be affiliated with the Social Welfare Council. If the entity receives donations, the entity must register with the Social Welfare Council. It is governed by NGO Affiliation Guideline 2014 and guidelines by the Social Welfare Council issued from time to time. |
13. | Renewal | The certificate of incorporation has to be renewed annually | Renewal of Certificate of incorporation is not required. But certain documents should be submitted to OCR every year as annual compliance. |
14. | Election of Board of Directors | Regular periodic election of the directors to be conducted. | Directors to be elected by the members through an election procedure. |
15. | Sale and Transfer of Shares | Not Applicable | Not Applicable |
16. | Tax Exemption | Entitled for tax exemption (The Certificate must be renewed annually) | Entitled for tax exemption (The Certificate must be renewed annually) |
17. | Annual General Meeting | Annually, as prescribed in its Constitution | Annually, as prescribed in its AOA |
18. | Submission of Annual Audit Report | The NGO is required to submit the audited annual financial report to the local officer | The Company is required to submit a copy of the audited annual financial statement to OCR. |
| 19. | Remuneration of directors, allowances, and prize | The administrative expenses of the NGO cannot be more than 20% of the total project cost. | The establishment and operational expenses, meeting allowances, remuneration and facilities of officials of the Company must not be more than 25% of Gross Expenses of the Company. However, entity registered with Social Welfare Council is required to meet the requirement of 20% of the total project cost. |
20. | Winding up | The NGO can be dissolved under the grounds mentioned in the Constitution of the NGO. | The Company may go for Voluntary Dissolution by adopting Special Resolution in the AGM of the Company. |
| 21. | Property after Cancellation of Registration | The property of the NGO after adjusting all liabilities is transferred to the Government. | The property of the Company after adjusting all liabilities is managed either as provided under the AOA (transfer to similar not for profit entity or NGO) or is transferred to the Government. |
