Legal aspects of Corporate Business Submitted To Dr
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
TRUST AND SOCIETY
Overview § Introduction § TRUSTS: - What is Trust? Definition of Trust Types of Trust The Indian Trust Act, 1882 v Creation of Trusts v Duties and Liabilities of Trusts v Rights and powers of Trusts v Disabilities of Trustees v 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
Introduction In India non profit organizations can be registered as: Trusts Societies Section 25 Companies
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.
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.
Types of Trusts § Public Trusts § Private Trusts q q q q Express Trusts Bare Trusts Fixed Trusts Discretionary Trusts Resulting Trusts Constructive Trusts Hybrid Trusts lmplied Trusts
The Indian Trust Act, 1882 q q q Creation of Trust Duties and liabilities of Trustees Rights and powers of Trustees Disabilities of trustees Rights and Liabilities of the Beneficiary
q Creation of Trusts Ø Ø Ø Ø 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
q Duties and Liabilities of Trusts Ø Ø Ø 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
Ø Sec. 23 Liability for breach of trusts Ø Sec. 24 No set – off allowed to trustee Ø Sec. 25 No- liability for the acts or defaults of co- trustee Ø Sec. 26 Non – liability for predecessor’s default Ø Sec. 27 Several liability of co- trustee Ø Sec. 28 Non – liability of trustee without notice of transfer by beneficiary Ø Sec. 29 liability of trustee where beneficiary’s interest is forfeited to the government Ø Sec. 30 Indemnity of trustees
q Rights and Powers of Trusts Ø Ø Ø 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
q Disabilities of Trustees Ø Ø Ø Ø 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 Ø Sec. 54 Co-trustees may not lend to one of themselves
q Rights and liabilities of the Beneficiary Ø Sec. 55 Right to rents and profits Ø Sec. 56 Right to specific execution Ø Sec. 57 Right to inspect and take copies of instrument of trust account, etc Ø Sec. 58 Right to transfer beneficial interest Ø Sec. 59 Right to sue for execution of trust Ø Sec. 60 Right to proper trustees Ø Sec. 61 Right to compel to any act of duty Ø Sec. 62 Wrongful purchase by trustee Ø Sec. 63 Following trust property- into the hands of third persons; into that which it has been converted Ø Sec. 64 Saving of rights of certain transferees Ø Sec. 65 Acquisition by trustee of trust- property wrongfully converted
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.
Document required to registered society § § § Request letter Two sets of MOA & AOA Affidavit Copy of residence Address proof
Eligible person to form Society Foreigners Registered Society Limited company Partnership form
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
Formation of Society – under Gujarat Society Act The amendments made are the same as those of Maharashtra except that in sec. 1 B(1) for the words “ Throughout the state of Maharashtra”. § Insert the following section , namely 1 A 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.
§ 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.
Difference Between Trust and Society Basis of Difference Trust Society Statue Private trusts are governed by Indian trust Act, 1882 Society Registration Act, 1860 Minimum number of Two members seven Geographical area of activities All India A separate registration for all India level is required Nature of control One man control i. e. settler Democratic system. Decisions are made by voting. Amendments Can easily be done via a supplementary trust deed Relatively more difficult. Name Easily available A bit difficult to get the desired name
Basis of Difference Trust Society Bank A/C operation Controlled by one person, settler Two person, either president or secretary and treasurer Family members Can become trustees Registrar objects on family members becoming part of the governing body Governed by Board of Trustees Governing body Main documents 1. Trust deed 1. MOA 2. Rules and regulation Objective Can be general Have to be specific
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.
Thank you
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