Trust Registration

A public charitable trust is usually floated when there is property involved, especially in terms of land and building. It is very easy to form a Trust. There is no formal procedure to form a Trust and moreover, it is also not necessary to register the Trust Deed. It is very easy to manage the Trust. Except to the extent provided in the Trust Deed, the Trustee is free to manage the Trust according to his will and prudent business decisions. Moreover, the beneficiaries, do not have any role to play in the management of the Trust. In case of trusts where income applied for charitable or religious purposes, it is exempt from income tax u/s 10 or 11 of the Income Tax Act. Trust as form of business for carrying charitable activities is hugely popular.

AS PER SECTION 3 OF INDIAN TRUST ACT 1882
“A Trust is an obligation annexed to the ownership of the property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner”

 

HOW TO CREATE A TRUST

Trusts are created when the settler of the property transfers property or provides benefits for the welfare of beneficiaries or for the usage of public purposes.


FOUR ESSENTIAL CONDITIONS ARE NECESSARY TO BRING INTO BEING A VALID TRUST-

The person who creates a trust (settler) should make an unequivocal declaration binding on him.

He must transfer an identifiable property under irrevocable arrangement and totally divest himself of the ownership and the beneficial enjoyment of the income from the property .

The objects of the trust must be defined and specified.

The beneficiaries are specified

 

WHO CAN CREATE A TRUST

As per Section 7 of the Indian Trusts Act, a trust may be created by every person competent to contract and by or on behalf a minor, with the permission of a principal court of original jurisdiction.

 

 FOLLOWING ARE ELIGIBLE TO CREATE A TRUST-

Trust by an Hindu Undivided Family;

Trust by a Minor;

Trust by a Woman;

Association of Persons;

Company(eg: Debenture-Redemption Fund Trust for redemption of its debentures);

 

LEGISLATION :

Different states in India have different Trusts Acts in force, which govern the trusts in the state;

In the absence of a Trusts Act in any particular state or territory the general principles of the Indian Trusts Act 1882 are applied.

MAIN INSTRUMENT :

The main instrument of any public charitable trust is the trust deed, wherein the aims and objects and mode of management (of the trust) should be enshrined.

In every trust deed, the minimum and maximum number of trustees has to be specified.

The trust deed should clearly spell out the aims and objects of the trust, how the trust should be managed, how other trustees may be appointed or removed, etc.

The trust deed should be signed by both the settlor/s and trustee/s in the presence of two witnesses.

The trust deed should be executed on non-judicial stamp paper, the value of which would depend on the valuation of the trust property.

TRUSTEES :

A trust needs a minimum of two trustees; there is no upper limit to the number of trustees.

The Board of Management comprises the trustees. 

APPLICATION FOR REGISTRATION:

The application for registration should be made to the official having jurisdiction over the region in which the trust is sought to be registered.

After providing details (in the form) regarding designation by which the public trust shall be known, names of trustees, mode of succession, etc., the applicant has to affix a court fee stamp of Rs.2/- to the form and pay a very nominal registration fee which may range from Rs.3/- to Rs.25/-, depending on the value of the trust property.

The application form should be signed by the applicant before the regional officer or superintendent of the regional office of the charity commissioner or a notary. The application form should be submitted, together with a copy of the trust deed.

Two other documents which should be submitted at the time of making an application for registration are affidavit and consent letter.

 

Comparison among Trust, Society and Non profit Company

 

Trust

Society

Section-25 Comapny

Statute/Legislation

Relevant State Trust Act or Bombay Public Trusts Act, 1950

Societies Registration Act, 1860

Indian Companies Act, 1956

Jurisdiction

Deputy Registrar/Charity commissioner

Registrar of societies (charity commissioner in Maharashtra).

Registrar of companies

Registration

As trust

As Society
In Maharashtra, both as a society and as a trust

As a company u/s 25 of the Indian Companies Act.

Registration Document

Trust deed

Memorandum of association and rules and regulations

Memorandum and articles of association. and regulations

Stamp Duty

Trust deed to be executed on non-judicial stamp paper, vary from state to state

No stamp paper required for memorandum of association and rules and regulations.

No stamp paper required for memorandum and articles of association.

Members Required

Minimum – two trustees. No upper limit.

Minimum – seven managing committee members. No upper limit.

Minimum three trustees. No upper limit.

Board of Management

Trustees / Board of Trustees

Governing body or council/managing or executive committee

Board of directors/ Managing committee

Mode of Succession on Board of Management

Appointment or Election

Appointment or Election by members of the general body

Election by members of the general body

 

 

 

     
   
     
   
     
   
     
 
     
   
     
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