Society & Trust

Trusts

A public charitable trust is usually floated when there is a property involved, especially in terms of land and building. A trust may be public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public. There is no central law governing public charitable trusts, although most states have "Public Trusts Acts." Typically, a public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption. In general, trusts may register for one or more of the following purposes :-

  • Relief of Poverty or Distress;
  • Education
  • Medical Relief
  • Provision for facilities for recreation or other leisure -time occupation (including assistance for such provision), if the facilities are provided in the interest of social welfare and public benefit; and
  • The advancement of any other object of general public utility, excluding purposes which relate exclusively to religious teaching or worship.

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

Society

According to Sec 20 of the Act, the types of societies that may be registered under the Act include, but are not limited to, the following:-

# Charitable societies;
# Military Orphan Funds
# Societies established for the promotion of science, literature, or the fine arts;
# For education;
# Public art museums and galleries, and certain other types of museums, foundation or maintenance of libraries or reading rooms for general use among the members or open to the public and other works of art, collection of natural history, mechanical and philosophical inventions, instruments or designs.

Legislation

Societies are registered under the Societies Registration Act, 1860, which is a federal act. However, every state has its own legislation of Societies Act, which lays down the procedures for registration, management and dissolution of the Society.

Main Instrument

The main instrument of any society is the memorandum of association and rules and regulations (no stamp paper required), wherein the aims and objects and mode of management (of the society) should be enshrined.

Memorandum of association is the charter of a society. It is a document depicting and describing the objects of its existence and its operations. However, article of association includes rules and regulations of the society under which it works.

Trustees

A Society needs a minimum of seven managing committee members; there is no upper limit to the number of managing committee members. The Board of Management is in the form of a governing body or council or a managing or executive committee

Application for Registration

Registration can be done either at the state level (i.e., in the office of the Registrar of Societies) or at the district level (in the office of the District Magistrate or the local office of the Registrar of Societies).

  • The procedure varies from state to state. However generally the application should be submitted together with: (a) memorandum of association and rules and regulations; (b) consent letters of all the members of the managing committee; (c) authority letter duly signed by all the members of the managing committee; (d) an affidavit sworn by the president or secretary of the society on non-judicial stamp paper of Rs.20-/, together with a court fee stamp; and (e) a declaration by the members of the managing committee that the funds of the society will be used only for the purpose of furthering the aims and objects of the society.
  • All the aforesaid documents which are required for the application for registration should be submitted in duplicate, together with the required registration fee. Unlike the trust deed, the memorandum of association and rules and regulations need not be executed on stamp paper.

Dissolution

Unlike trusts, societies may be dissolved. Dissolution must be approved by at least three-fifths of the society's members. Upon dissolution, and after settlement of all debts and liabilities, the funds and property of the society may not be distributed among the members of the society. Rather, the remaining funds and property must be given or transferred to some other society, preferably one with similar objects as the dissolved entity.

COMPARISON BETWEEN A TRUST, A SOCIETY AND A SECTION 25 COMPANY

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