Incorporation under Public Charitable Trust

To form a public charitable trust it is very important that the objects of the Trust must be of charitable nature & of general public utility. The Charitable Endowment Act, 1890 defines ‘charitable purpose’ as a purpose for the relief of the poor, education, medical relief and advancement of any other object of general public utility but does not include a purpose which relates exclusively to religious teachings or worship.

No clear statutes are available for the formation of a Charitable Trust. The only Central Legislation available is the Charitable and Religious Trust Act, 1920. This Act is very limited in its application, and does not provide any effective control over Public Charitable Trusts.

The basic Elements for the formation of trust are:

  • Trustees
  • Settlor
  • Trust Deed
  • Trust Property
  • Purpose of the Trust

Eligibility criteria for formation of trust

As a general rule, any person, who has power of disposition over a property, has capacity to create a trust of such property. According to section 7 of the Transfer of Property Act, 1882, a person who is competent to contract and entitled to transfer the property or authorized to dispose of transferable property not his own, either wholly or in part and either absolutely or conditionally, has ‘power of disposition of property’.

Thus, two basic things are required for being capable of forming a trust – power of disposition over property and competence to contract.

Procedure of registration of trust:

To form a valid Public Charitable Trust it is always desirable to prepare a Trust Deed. Such Trust Deed should clearly specify and satisfy the certainties of a Trust.

Step 1: Name clause

This is the basic step in registering your trust. While choosing name take care that the proposed name should not suggest any kind of patronage by the government of India or any state government. It should not under the restricted list of names as per the provisions of Emblems and Names Act 1950. However there is no restriction in using names that are already registered as a trust in the Registrar office. In case the Registrar refuse to register your trust under a given name in spite of it not violating any of the other rules.

Step 2: Determination of the settler/Author/Trustees: Determine the settler/Author and trustees of the intended trust. In case of the number of the settler/Authors there is no clearly defined rules. It is subject to the decision of the sub-registrar at the registrar office. However in most cases traditionally there is one settler or author. Minimum 2 trustees are necessary and there is no limit on the maximum number.

Step 3: Preparation of trust deed

A trust deed, generally, incorporates the following:

  • The name(s) of the author(s)/ settlor(s) of the trust.
  • The name(s) of the trustee(s).
  • The name(s) if any, of the beneficiary/ies or whether it shall be the public at large;
  • The name by which the trust shall be known;
  • The place where its principal and/or other offices shall be situate;
  • The property that shall devolve upon the trustee(s) under the trust for the benefit of the beneficiary/ies;
  • An intention to divest the trust property upon the trustee(s);
  • The objects of the trust;
  • The procedure for appointment, removal or replacement of a trustee, their rights, duties and powers, etc.;
  • The rights and duties of the beneficiary/ies;
  • The mode and method of determination of the trust.

Step 4: Registration of Trust Deed

Registration is to be made as per the provisions of the Registration Act, 1908. It may be noted that the trust deed and not the trust is registered. The deed has to be registered with the Sub-Registrar of the registration department of the respective State Governments. For Public Charitable Trusts in the State of Maharashtra and Gujarat, registration is to be made under The Bombay Public Trust Act, 1950.

2.3. Documents Required for Registration

  • The details of trustees like Name, Occupation, Address, Age, Father’s Name, Designation, Mobile Number, Email Address and Two Photograph are required.
  • Address Proof of Trustee & Settler required: – Voter I.D / Driving license / Passport.
  • Electricity Bill or House Tax Receipt or Water Bill Receipt or Ownership Proof of Property required.
  • In the case of Rented, Rent Deed duly notarized with rent receipt and NOC form Land Lord on Rs 10/- Stamp Paper. Name of Landlord, Father’s name, Residence Address.
  • Physical Presence of Settler/all required at the time of Registration along with Original ID.
  • Physical Presence of Two witnesses with original ID Proof at the time of Registration.

Cost of Registration

The Trust can be registered with any settlement amount (technically known as the Trust Property) starting from Rs. 1,000/-. The registration fee depends upon the value of property of the Trust.

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