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Tuesday, December 11, 2012

TRUST or SOCIETY Q & A.



1) Are foreigners allowed as members of the trust ?
Ans. -There is no apparent bar on the foreigners becoming a trustee of trust.

2) Will there be subsequent problems if foreigners are the trustees?
Ans. -It is difficult to get FCRA registration if foreigners are there as trustees. Normally, FCRA registration is not granted to such organisations. The FCRA is silent in this regard but FCRA authorities confirmed that FCRA registration is not given if foreigners are its subscribers/members/ trustees. We did come across instances of organisations being given FCRA registration inspite of having foreigners as board members/trustees. But these are exceptions and we have to assume that FCRA registration will not be given, unless the foreigners involved are too distinguished and intervention of higher authorities is availed.
The difficulties involved in getting FCRA permission for Ngo's having foreigners as trustees is a deterrent for foreign Ngo's contemplating the option of floating an Indian Ngo. Therefore, foreign Ngo's should explore other legal and legitimate way of controlling an Indian Ngo.

3) Can foreigners be inducted as ex-officio or nominated trustees?
Ans. -There should not be any problem in having foreigners as ex-officio or nominated trustees. The trust deed can be suitably drafted so as to have Ex-Officio directors or nominated trustees.

4) After registration, how long a trust can exist ?
Ans. -The registration as a trust provides perpetual existence. A trust will cease to exist if the subject mater of the trust is totally liquidated. A trust cannot be revoked once it is legitimately created.

5) Can a Public Charitable Trust Indian have activities outside India?
Ans. -The various acts under which an Ngo can be registered do not prohibit activities outside India. The FEMA and FCRA are silent in this regard and under the liberalized regime of RBI, current account transactions are allowable without any prior permission. Therefore, there should not be any problem in transfer of foreign exchange,subject to the guidelines of FEMA. The most important legislation in this context is the Income Tax Act, which under section 11(1)(c) prohibits the activities of Indian Ngo outside India without specific permission of the CBDT. An Indian Ngo spending money on activities outside India will be subject to income tax on that portion of its income

6) What are the annual returns that a Trust is required to file with the Registrar ?
Ans. -A trust is not regulated by any authority therefore, no annual returns are required to be filed with the registering authority. However, trust has to file annual returns as required under FCR Act, 1976 and Income Tax Act, 1961.

7) Who can form a trust?
Ans. -Every person competent to make a contract and competent to deal with property can create a Trust. Besides individuals, a body of individuals or an artificial person such as an association of persons, an institution, a limited company, a Hindu Undivided Family through its Karta can also form a Trust. For all practical purposes, two or more individuals are required to form a charitable trust.

8) How to form a `Trust'? 
Ans. -a) A trust can be formed as per Section 4 of Indian Trust Act 1982 for a lawful purpose;
b) A trust should have a document written and signed by trustees or a sole trustee;
c) A trust can be formed through a will also;
There is no definite form to create a trust. Objectives of the trustee should be clear and unambiguous;

9) What are the purposes for which a trust can be formed? 
Ans. -Trust cannot be formed for the following purposes under Sec.4 of the Act:
a) Unlawful purposes;
b) Against provisions of Indian Trusts Act 1932 rules made there under;
c) If there are provisions for cheating etc. in the trust;
d) If the trust is intended to cause loss or damage to one's property

10) Who can form a trust?
Ans. -The following can form a trust under Sec.7 of the Indian Trusts Act 1882:
a) A person capable of making contract can form a trust;
b) Trust can be formed on behalf of minor with permission of Civil Court.

11) What is the stamp duty to be paid for a trust deed?
Ans. -1. Rs.500/- if only money is contributed by the author of trust or if immovable property is conveyed where in the author remains as the sole trustee.
2. Same duty as conveyance if the immovable property is conveyed and the author is not a trustee or a sole trustee.

12) What is the fee for registration of trust deed?
Ans. -As per Article III of table of fees under Registration Rules 1965, fee shall be paid at 1 percent on the total of value shown by the trustee or value of movable or immovable property shown in the trust deed.

13) Can a trust be cancelled? 
Ans. -A trust can be cancelled on the following grounds as per Sec. 78 of The Indian Trust Act 1882:
a) Trust can be cancelled at the will of the trustees;
b) Trust can be cancelled if there is provision for cancellation in the deed.
c) If author of a trust creates trust for the purpose of repayment of his debt and if this is nor informed to the creditor author can cancel the trust.

14) Can the defects in the trust be cured by amendment?
Ans. -Yes, amendment can be made a rectification or supplementary deed.

15) What is meant by a Society or an Association? Why should it be registered?
Ans. - A Society / Association is an organized group of people with the sole aim and objectives of non-profitable service. Registration of such an association will have legal recognition. It will be possible to run society legally with discipline. Society can sue and be sued.

16) Who will register a Society/Association and where it can be registered?
Ans. - Registrar of Societies i.e., District Registrar of a District is appointed under Societies Registration Act 1850 is the authority to register the societies. Society can be registered in the office of the Registrar in which District the society is intended to be established.

17) What is the minimum number of people to form a society or an Association?
Ans. - A minimum 7 persons who have attained the age of 18 years can form a society or an Association.

18) For what purpose a society/association be formed? 
Ans. - Association could be formed for the following purposes:
1. Religious;
2. Educational, art and religious;
3. Sports;
4. Knowledge of commerce and industry;
5. Political education training;
6. Maintaining Library;
7. Collection/preservation of historical monuments, technical and philosophical research.

19) What are the differences between `Trust' and `Society' registered under Societies Registration Act 1850?
Ans. -
SocietyTrust
District Registrar and Registrar of Societies is competent authority to register.Trust deed can be registered in Office of the Sub Registrar.
Aims and objectives are for the development/welfare of the whole society without restrictionThere are two kinds of Trusts. Public and Private. The latter is a private trust for the beneficiaries.
Minimum of 7 persons are required to form Society.Any body can form Trust without restriction as to the number of persons.
Executive committee runs it.Managing trustee runs it.
Executive committee manages, subject to approval of general body.Management is under the control of management of Trustees and Managing Trustees.
Accounts shall be filed to the Registrar of Societies.Does not apply.
There is provision to admit members.Does not apply.
In order to cancel an association action can be taken only after enquiry under Sec.27Author of Trust can cancel Trust if he so wishes. If the provision is made in the deed.
Profit cannot be distributed among the members. It can be used only for development of society.Trustees cannot share. Beneficiaries may be allowed to use the profit.

20) What are the documents to be filed for registration of a society? 
Ans. - (a) Application
(b) Proceedings of the first meeting
(c) Memorandum of Association
(d) List of members of Executive Committee with name, address, occupation, age and signature.
(e) Bye-laws of the Association.

21) What should not be there in the name of the society?
Ans. - The name shall not be
1. Similar to one already existing
2. Name prohibited or registered by State or Central Government
3. Indian Institute or University

22) What is the fee for registration of Society?
Ans. - 1. In MRDA 1000-00
2. Other places 500-00
3. Women's Association/SC/ST Associations shall pay half of the fee mentioned at 1&2 above.

23) What are the follow up actions after registration of society?
Ans. - 1. First General Body meeting should be held within 18 months;
2. Society should get accounts audited by the Chartered Accountant and get it approved by the General Body every year and file it with the registrar within 14 days from the General Body meeting;
3. Society shall elect Executive Committee members as per its bye law.

24) What is the fee to be paid for filing of accounts for approval?
Ans. - 1. For every One lakh rupees of the amount of income and expenditure or part thereof Rs.100/-
2. Half of the fees mentioned above is payable for Associations belonging to SC/St and women.

25) Is there provision to condone delay to file accounts on payment penalty? If so what is Quantum of penalty?
Ans. - 1. If delay does not exceed one year, Rs.50
2. Where the delay exceeds one year, for each year of delay or part thereof; Rs.100/-

26) Can memorandum, byelaws of society be amended? If so, what is the procedure?
Ans. - Memorandum can be amended by approval in a special General Body Meeting called for the purpose after giving due notice and by approval another special General Body Meeting called after 30 days again. Byelaws can be amended by approval of majority of members in Special General Body Meeting. Such amended byelaws shall be filed with the Registrar within one month.

27) Can Registrar refuse to accept amendments if he feels they are against provisions of the Karnataka Societies Registration Act?
Ans. - Yes. However, there is a provision to appeal to the Karnataka Appellate Tribunal.

28) Can a registered Society be cancelled or amalgamated with another Society?
Ans. - 1. Amalgamation (Sec.21):
Proposal for amalgamation should be approved in specially called General Body meeting called after giving minimum of 21 days notice twice in a span of 30 days at a time.
2. Cancellation/Dissolution (Sec.22):
Society can be cancelled or dissolved by approval of majority of members present in a specially called General Body Meeting. If there are any disputes within the members or with executive body, transactions etc., it can be resolved by approaching Civil Court.

29) Can anybody other than member of Society inspect records of the Society and get copy of it ?
Ans. - Yes, since records of the Society are deemed to be public records. Under section 24 any person can get copy and produce as evidence.

30) Can Registrar enquire into the affairs of a Society? If so on what account and occasion?
Ans. - Under section 25 of the Act, Registrar may make suo moto enquiry or on application by 2/3 of the executive committee members or 1/3 of total members.
Such inquiries are held with reference to constitution, working or financial condition of the Society.
The Registrar himself or any person appointed by him may hold inquiry.

31) Can Registrar take action to recover the loss/misappropriation made by the members? Is there appeal against such action?
Ans. - Registrar can pass order to recover such loss or damage caused by members after giving opportunity to explain.

32) Can registered societies be cancelled? Who can cancel? Is there provision for appeal?
Ans. - Yes. If a society is engaged in illegal activity, Registrar may enquire under Section 25 and cancel under Sec.27 after giving notice about such cancellation. Dissolution held as per Sec.22. Appeal may be preferred within 60 days from the date of order.

33) Can an administrator be appointed to manage affairs of an Association? What is the procedure?
Ans. - If a society is unable to function and executive committee is unable to hold general body meeting or if there are serious allegations against the governing body, administrator can be appointed by the Government on recommendation by the Registrar.

34) Can a member be held as guilty and be fined for illegal activity?
Ans. - A member can be fined under Sec.28 for an illegal act.

35) Do ordinary members have right to urge for holding Special General Body for a specific purpose?
Ans. - Yes. Special general body may be convened not later than 40 days after receipt of requisition by 1/3 of the members for specific purpose.


















Source : http://www.ashokaconsultant.com/TrustRegistration.php

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