Trust & Society

What is Trust & Society Registration?

A registered trust or society that works for the development, welfare, and progress of the public is called as a Non-Government Organization (NGO). The objective of NGOs can be cultural, religious, educational, social, or economic. The sources of revenue for NGOs are donations, gifts, grants, membership fees, and interests on investments. The profit obtained from the activities of the NGOs are utilized for non-profit activities.

Trusts are created for various purposes that include education, medical relief, relief of poverty, provision of facilities for recreation, or any other activities of public utility. The activities of the trusts are regulated by the Indian Trusts Act or Bombay Public Trust Act, 1950. The jurisdiction of the trusts is under the Sub Registrar or charity commissioner. For registration as a trust, there is a minimum requirement of two trustees. There is no limit for the maximum number of trustees. The trusts are managed by the trustees or the board of trustees. The registration under Trust Act has national validity and it can operate throughout India.

A trust cannot receive payments. But, it can receive payments if the trust is providing a professional service.

Societies are also meant for charitable purposes. Societies are similar to trusts but are different in certain aspects. The activities of the societies are regulated under the Societies Registration Act, 1860. The societies are under the jurisdiction of the Registrar of societies. Minimum seven members are required for registering as a society. There is no upper limit for the maximum number of members. The societies are managed by the governing body or council or managing or executive committee. Members of the same family cannot become members of society. A society can be operated throughout the country if it is registered as a National level society. If the society is registered in one state only, then its operation is possible in only one state.

Types of Societies

Different societies could be registered under the Societies Act. These include:

- Charitable societies
- Military orphan funds or societies
- Societies for the promotion of literature, science, or fine arts
- Societies for the diffusion of useful knowledge
- Societies for the foundation and maintenance of libraries
- Societies to open public and private museums and galleries of painting or other artworks, collections of natural history, instruments, mechanical and philosophical inventions, or designs.

Types of Trusts

Private Trusts

The private trusts are created as per the direction of an individual so that one or more persons can hold the individual’s property according to certain duties. The persons also have to protect the property for the benefit of others.

Revocable Trusts

Revocable trusts are created in the course of lifetime of the person. The trust maker can alter, change, modify, and revoke the trust entirely. Revocable trusts are also called living trusts. The person has the right to remove his property from the trust during the lifetime.

Irrevocable Trusts

In an irrevocable trust, the person cannot alter, change, modify, or revoke the trust once created. The person does not have the right to remove property from the trust once it is transferred.

Asset Protection Trusts

Asset protection trust is to protect a person’s properties and assets from future claims of creditors. Theses trusts protect the assets of the trust maker from creditor attacks.

Charitable Trusts

Charitable trusts are created for performing charity activities that benefit the public.

Constructive Trusts

Constructive trusts are established by courts. The court can take decisions in the absence of a formal declaration of the trusts.

Special Needs Trust

Special need trust is created for a person who receives government benefits. The purpose is not to disqualify the beneficiary from such government benefits.

Spendthrift Trust

A spendthrift trust is created for a beneficiary. The beneficiary cannot sell or pledge away interests in the trust

Public Trusts

Public trusts are created for the benefit of the public. The purpose can be educational, charitable, religious, or scientific

Forms required for trust & society registration?

Form 10A: This form is required for a trust for applying and obtaining a 12A registration

What are the documents required for Trust & Society registration?

Documents required for trust registration:

Identity proof of a minimum of two members. This can be voter Id, driving license, Aadhar card, or passport.
Trust deed.
Two passport size photographs.
Copy of ID proof of the settlor.
Copy of ID proof of two witnesses along with their photographs.
Registered address proof. It can be an electricity or water bill.
A non-objection letter signed by the land.

Documents required for society registration:

PAN card of all members of the proposed society.
The residence proof of all members of society. This can be a bank statement, Aadhar card, utility bill, driving license, or passport.
Memorandum of Association containing the objectives of the society, the details of society members, and the address of the registered office of the society.
Rules and regulations of the society.
Covering letter mentioning the aim of society.
Copy of address proof of the registered office of the society.
List of all members of the governing body along with signatures.
Declaration by the president of the society that he is willing to hold the position.

What is the procedure for Trust & Society registration?

Procedure for trust registration:

Choose an appropriate name for the trust. The name cannot be the restricted names under the Emblems and Names Act, 1950.
Decide the authors or settlers and trustees.
Formulate the trust deed.
Formulate the Memorandum of Association.
Gather the required documents.
Prepare the trust deed.
Submit the trust deed with the registrar.
Obtain the registration certificate

Procedure for society registration:

Choose an appropriate name for the society.
Formulate the memorandum of association.
Gather the required documents.
Submit the documents and registration.
Obtain the registration certificate

What if you violate the law?

Penalties under Trust Act:

The punishment for the criminal breach of trust under section 406 is imprisonment for up to 3 years or fine or both.
The punishment for breaching trust in transactions like the transportation of goods is imprisonment for up to 7 years with a fine.
The punishment for breaching the trust by office clerks and employees is imprisonment for up to 7 years with a fine.

Penalties under Societies Act:

A society that fails to produce the list of a managing body or any other information that is needed to be produced under section 22, or willfully makes a false entry will be liable to a punishment with a fine which may extend to Rs.5000.
A society that willfully fails or neglects to maintain balance and audit accounts as per section 12C will be liable to a punishment with a fine which may extend to Rs.5000.
A society willfully fails to appear before the registrar or other authorized person or violates any other provisions under sub-section (3) of section 23 will be liable to a punishment with a fine which may extend to Rs.5000.

Conclusion

A trust or society in India is a Non-Governmental Organization and has to be registered under the respective acts. It is required for them to strictly follow the rules and regulations under the acts. Failing to comply with these may lead to punishable offenses under the act.