Legal Aspects of Corporate Business: Trusts and Societies Overview

1. Legal aspects of Corporate Business Submitted To Dr. Daksha Pratapsinh Presented By Bhalala Niddhi N. (Roll no. = 05) M.Com. sem.- 2 Department of commerce Saurashtra University

2. Trust And society

3. Overview • Introduction • TRUSTS: - What is Trust? • - Definition of Trust • - Types of Trust • - The Indian Trust Act,1882 • Creation of Trusts • Duties and Liabilities of Trusts • Rights and powers of Trusts • Disabilities of Trustees • Rights and Liabilities of the beneficiary • SOCIETY: - What is Society ? • Document required to registered society • Eligible person to form society • Registration process • Formation of society = under Gujarat Society Act • Difference between Trust and society

4. Introduction In India non profit organizations can be registered as: Trusts Societies Section 25 Companies

5. trusts What is a trust ? • A trust is a right in property held by one person for the benefit of another. • A trust may be created to benefit a family member, a charity , or even a pet. • A charitable trust is an irreversible trust established for charitable purposes. • Trust deed is a document used to set up a trust.

6. Definition of Trust • Section 3 of Indian Trust Act 1882, • A “ Trust” is an obligation annexed to the ownership of property , and arising out of 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- • The person who resposes or declared the confidence is called the “author of the trust” • The person who accepts the confidence is called the “trustee” • The person for whose benefit the confidence is accepted is called the “beneficiary” • The subject matter of the trust is called “trust – property” or “trust-money” • The “beneficial interest” or “interest” of the beneficiary is his right against the trustee as owner of the trust property • The instrument, if any, by which the trust is declared is called the “instrument of trust” • The word “confidence Resposed” is key word for the formation of Trust ,since the trustee is bound to held the property for the beneficiary and the can’t use the property for his own benefit.

7. Types of Trusts • Public Trusts • Private Trusts • Express Trusts • Bare Trusts • Fixed Trusts • Discretionary Trusts • Resulting Trusts • Constructive Trusts • Hybrid Trusts • lmplied Trusts

8. The Indian Trust Act,1882 • Creation of Trust • Duties and liabilities of Trustees • Rights and powers of Trustees • Disabilities of trustees • Rights and Liabilities of the Beneficiary

9. Creation of Trusts • Sec. 4 Lawful purpose • Sec. 5 Trusts of immoveable or moveable Property • Sec. 6 Creation of Trusts • Sec. 7 Who may create Trusts • Sec. 8 Subject of Trusts • Sec. 9 Who may be beneficiary • Sec. 10 Who may be Trustee

10. Duties and Liabilities of Trusts • Sec. 11 Trustee to execute trust • Sec. 12 Trustee to inform himself of state of trusts – property • Sec.13 Trusts to protect title to trusts – property • Sec. 14 Trusts not to set up title adverse to beneficiary • Sec. 15 Care required from trustee • Sec.16 Conversion of perishable property • Sec.17 Trusts to be impartial • Sec. 18 Trusts to prevent waste • Sec.19 Accounts and information • Sec.20 Investment of trust - money • Sec. (20)A Power to purchase redeemable stock at a premium • Sec.21 Mortgage of land pledged to government under Act 26 of 1871 • Sec.22 Sale by trustee directed to sell within specified time

11. Sec.23 Liability for breach of trusts • Sec.24 No set – off allowed to trustee • Sec.25 No- liability for the acts or defaults of co- trustee • Sec.26 Non – liability for predecessor’s default • Sec.27 Several liability of co- trustee • Sec.28 Non – liability of trustee without notice of transfer by beneficiary • Sec. 29 liability of trustee where beneficiary’s interest is forfeited to the government • Sec.30 Indemnity of trustees

12. Rights and Powers of Trusts • Sec.31 Right to title – deed • Sec.32 Right to reimbursement of expenses • Sec.33 Right to indemnity from gainer by breach of trusts • Sec.34 Right to apply to court for opinion in management of trusts • Sec.35 Right to settlement of account • Sec.36 General authority of trustee • Sec.37 Power to sell in lots, and either by public auction or private contract • Sec.38 power to sell under special conditions. Power to buy in and re sell • Sec.39 power to convey • Sec.40 Power to vary investment • Sec. 41 power to give receipts

13. Disabilities of Trustees • Sec.46 Trustee cannot renounce after acceptance • Sec. 47 Trustee cannot delegate • Sec.48 Co – trustees cannot act singly • Sec. 49 Control of discretionary power • Sec.50 Trustee may not charge for services • Sec.51 Trustee may not trust- property for his own profit • Sec.52 Trustee for sale or his agent may not buy • Sec.53 Trustee may not buy beneficiary’s interest without permission • Sec.54 Co-trustees may not lend to one of themselves

14. Rights and liabilities of the Beneficiary • Sec.55 Right to rents and profits • Sec.56 Right to specific execution • Sec.57 Right to inspect and take copies of instrument of trust account, etc • Sec.58 Right to transfer beneficial interest • Sec.59 Right to sue for execution of trust • Sec.60 Right to proper trustees • Sec.61 Right to compel to any act of duty • Sec.62 Wrongful purchase by trustee • Sec.63 Following trust property- into the hands of third persons; • into that which it has been converted • Sec.64 Saving of rights of certain transferees • Sec.65 Acquisition by trustee of trust- property wrongfully converted

15. societies What is society? • It is an association person to carry out literary , scientific or charitable purpose. • It is an organization in which main objective is not to profit. • Societies registered for charitable purposes like Education, culture , etc.

16. Document required to registered society • Request letter • Two sets of MOA & AOA • Affidavit • Copy of residence • Address proof

17. Eligible person to form Society Foreigners Society Registered Society Partnership form Limited company

18. Registration Process • Deciding upon the name of society • Drafting of Memorandum of Association and Rules & regulations • Affidavit by the president on secretary of the society on regarding the relationship between subscriber to the Memorandum • No objection certification from owner if the premises is on rent • Affidavit by the president or secretary of the society on regarding the relationship between subscriber to the Memorandum

19. Formation of Society –under Gujarat Society Act • The amendments made are the same as those of Maharashtra except that in sec.1B(1) for the words “ Throughout the state of Maharashtra”. • Insert the following section ,namely 1A Interpretation in this Act, Unless there is anything repugnant to the society or context, the expression ‘registrar’ . • So renumbered after the words “The name of society” insert the following namely “The place of situation of the registered office of the society” • “ A society may by a special resolution passed by a majority of not less than 3/5 of the total membership of the society, after its MOA.

20. There shall be sent to registrar a statement showing changes during the year to which the list relates in the personnel, of governors, councils, Directors, committee or other governing body to whom the management of the affairs of the society is entrusted and Certified to be copy by not less than three of the member of the governing body. • A copy of every alteration made in rules of the society certified to be a correct copy shall be sent to the registrar within 30 days of the making of such alteration.

21. Difference Between Trust and Society

23. Conclusion So, The NGO Registered under the societies Registration Act,1860 are ‘non profit organizations’ and as such they are prohibited from distributing any monetary residual to their own members. Once the Trust has been created for charitable purpose the law shall fulfill such intension of charity.

24. Thank you