MSSR Bill to get more teeth, regulate over 1.5 m societies

The Financial Express, July 05, 2013

The government is set to expand the scope of the draft legislation for regulating various societies to include trusts, Section 25 companies, not-for-profit organisations and NGOs among others. Being prepared to replace the archaic Society Registration Act of 1860, the draft Multi-state Societies Registration Bill, 2012, (MSSR Bill) will get more teeth, said senior officials.

The MSSR Bill is proposed to regulate over 1.5 million societies registered in multiple states, which include religious bodies like Baba Ramdev’s Patanjali Yogpeeth, sporting bodies like Board of Control for Cricket in India (BCCI) and Indian Olympic Association (IOA), NGOs and schools.

The proposed Bill, being prepared by the ministry of corporate affairs (MCA), empowers the Centre to take over, suspend, penalise, confiscate, cancel, impose fines and investigate societies or its properties.

All societies will have to be mandatorily registered in accordance with the provisions of the proposed law.

Moreover, as the Bill proposes to treat all multi-state societies as corporate bodies, all such societies will have to file annual reports, balance sheet and details of office bearers with MCA-21 of the MCA.

The proposed Bill will also strengthen the inflow of funds to such societies, including those received from overseas.

The need for separate regulations for societies was felt last year after a government-appointed expert group failed to locate 25 lakh out of the 32 lakh societies registered under the Society Registration Act of 1860.

The proposed Bill makes it clear that all the accounts of a multi-state society shall be audited if the gross receipts or expenditure in a financial year exceeds R5 lakh.

However, Voluntary Action Network India (VANI), the apex body of voluntary organisations, has suggested a single regulatory authority for all societies, trusts and NGOs for transparent regulation.

?A common law and framework for the entire country is needed, which is not provided in this Bill.
The proposed MSSR Bill, 2012, is about societies having multi-state operation,? said VANI chief executive Harsh Jaitli.

Experts said there is no common law and framework that regulates a not-for-profit organisation which too can be registered as a society, trust or a Section 25 company under the Companies Act, 1956.

?In all the three forms there is no legal bar in having branches for activities outside the state. However, any charitable organisation whether registered or unregistered can work anywhere in the country without much check, which too should get covered by this Bill,? said a lawyer working with an NGO.

According to the lawyer, the Bill is silent on various Waqf boards and religious endowments, which implies that it will not be a central body for the entire range of charitable or religious organisations.

However, the proposed Bill outlines a number of measures to regulate the multi-state societies. As per the proposal, the government will allot unique identification number to the board members and the governing body of such societies.

Section 42 of the Bill provides that the government may constitute a new board or take over the society in case the entity is found to be violating provisions of the Bill.

The draft Bill states: ?No cancellation shall be done by the central government without affording the multi-state society an opportunity of being heard?.

According to a study commissioned by the MCA, a number of countries, including Singapore, Australia and South Africa, are already in the process of implementing a centralised law and centralised reporting requirements related to regulation of societies and firms.

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