Not For Profit Association Registration In Sri Lanka

When considering registering an entity with no profit intention, there are different corporate structures to choose from, such as Associations, Not-for-Profit Organizations, and Non-Governmental Organizations (NGOs). All these structures share a common goal: they operate without profit intention and provide a separate legal personality. This article will help you understand the differences and guide you through the process of NGO registration in Sri Lanka.

Introduction

When someone wants to register an entity with no profit intention, different corporate structures can be chosen, such as Associations, Not-for-Profit Organizations, and Non-Governmental Organizations (NGOs). All these structures share a common goal: they operate without profit intention and provide a separate legal personality. This means that the management team and the association are distinct entities.

Difference Between Association and NGO

An Association is a Company Limited by Guarantee (CLG). Associations registered under the Companies Act No. 07 of 2007 can apply to be recognized as NGOs if they meet the requirements of the Voluntary Social Services Organizations (Registration & Supervision) Act. NGOs, on the other hand, are specifically focused on social services and must comply with additional regulations.

Law Applicable for Association and NGO

• Associations: Governed by Part III of the Companies Act No. 07 of 2007.
• NGOs: Governed by the Voluntary Social Services Organizations (Registration & Supervision) Act.

Name of the Association

Section 34 of the Companies Act explains the requirements for the name of the association. Applicants can apply to use the name without the word “Limited” at the end. If the registrar is satisfied with the objectives of the association, a license will be issued to use the name without “Limited.”

Directors and Members

• Associations: Must meet the minimum number of directors required by the Companies Act No. 07 of 2007, which is 2 directors (compared to 1 director for a private company).
• NGOs: Must have a minimum of 5 directors as per the Voluntary Social Service Organizations (Registration and Supervision) Act No. 31 of 1980. This requirement must be fulfilled before proceeding with the NGO application.

Legal Requirements

Both Associations and NGOs must comply with the relevant legal requirements, including maintaining accurate financial records and submitting annual reports.

Not-for-Profit and Association

Associations and NGOs operate without profit intention. Any income generated must be used solely for the furtherance of their objectives.

Benefits of Registering an NGO

Registering your NGO provides several benefits, including:

• Legal Recognition: Easier operation and access to resources.
• Credibility: Adds legitimacy to your organization.
• Tax Exemption: Potential eligibility for tax exemptions and financial benefits.
• Ability to Receive Funding: Eligible to apply for funding from various sources.
• Better Access to Resources: Improved capacity to deliver services.
• Increased Accountability: Maintains accurate financial records and reports.
• Ability to Open Bank Accounts: Separates personal and organizational finances.

Registering your NGO boosts sustainability, credibility, and impact while demonstrating your commitment to responsible, transparent operations, fostering trust and support from stakeholders.

Conclusion

Registering an NGO in Sri Lanka involves understanding the differences between Associations and NGOs, complying with legal requirements, and recognizing the benefits of registration. If you are considering registering your NGO, ASAC is here to help. We are registered practicing company secretaries in Sri Lanka and are capable of fulfilling the CLG registration requirements.

Feel free to reach out to us for assistance with your NGO registration process. Let’s work together to make a positive impact on society!