This amendment has been brought to further tighten the rules and reporting Forms. The changes are applicable from the date of publication in the Gazette. Considering large number of amendments which impact several aspect of FCRA legislation, it is decided to cover various amendments through a series of posts. So please bear with us. In this post we cover impact of amendments on For-Proft entities.
Key Functionaries defined
- A Key functionary has now been formally defined. It includes Board members, Trustees, Office bearers of governing body (covering Trust, Society, Trade Union, etc). However Chief Functionary is still not defined, although it is the person who signs all documents to be submitted to the FCRA Dept online. Whoever signs application for registration / prior permission automatically becomes Chief Functionary. Subsequent changes, if any are informed to the FCRA Dept formally through Form FC-6E.
- Any other officer or person, by whatever name called, who has control over or responsibility for the management or affairs of such person. Thus, a CEO who is not a director or office bearer of an NPO would now be covered. Earlier say husband of a managing trustee, would largely run the organisation, without formally having a post. Now theoretically such a person would be covered by the definition of ‘Key Functionary’.
- Important pointto note, while For-Profits were covered earlier too, but now definition specifically states that partners in a partnership, Karta of HUF, director in a company will be covered.
The above raises a very interesting point, are For-Profit entities covered under FCRA. Theoretically once the definition of ‘Person’ was introduced through FCRA 2010 Act, For-Profit entities got covered, however how many have heard a For-Profit entity getting FCRA registration. There have been several instances, where FCRA Dept has refused to give FCRA registration on the ground that the applicant is likely to make ‘personal gains’. In fact clause (vi) of S.12(4), says exactly the same and is one of the ground for refusal to granting registration certificate.
I believe emphasis on partners, directors ismainly to discourage NPOs to start incorporating For-Profit entities, to avoid FCRA registration process.
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