What Qualifies A Trust As A Charitable Trust ?
A charitable trust is a trust established for the purpose of social welfare and related activities. Just like a general trust, it has the authority to hold properties, bank accounts, assets and can raise mortgages. The operations of a charitable trust should be in accordance with the trust deed. For the Society Registration of your trust under the section of a charitable trust, it should be for the purpose of charity or for any kind of religious or educational purposes in which case there is no necessity of the actions taken by the trust to be charitable or not.
A charitable trust can be formed for an object or purpose that promotes education, religion or is involved in activities that alleviate poverty or provide any other benefits to the society for which it was formed in the first place. It can also be for any recreational activities that are of public interest and benefit as well. Charitable trusts are not for commercial purposes and any profit earned through it should go to public welfare and not to its trustees or members.
Steps To Form A Charitable Trust
All Charitable Trusts within India needs to be registered with the commissioner responsible for the office of charity and who has administration over the trust. The steps involved in the Society Registration of a charitable trust are as follows :-
Naming Your Trust
The first step is to name your trust. While naming your trust, make sure that it does not suggest any kind of backing or sponsorship from the central or state governments. Also it should not be a name from the list of restricted names stated under the Emblems and Names Act of 1950. There is no issue in using the name of a previously registered trust. If the office Registrar objects to register the name under an already existing trust name, then you can raise a complaint with the top authorities if needed.
Determination of Trustees and Authors
There is no limitation for the number of authors and trustees within a trust. The Sub Registrar can make a final decision on this. But generally there should be a minimum of one Author or Settler and two trustees even though there is no restriction on the maximum number. The authors or settlers are not considered as trustees. Neither there is any minimum educational qualification for being a trustee. But the minimum age for a male to qualify as one is 19 years and for a female it is 18 years. In most cases an average of the two age limits, which is 19.5 is treated as the minimum age to become a trustee.
However, a trustee must not be a foreigner, an NRI with more than 6 months of residence abroad or an OCI card holder.
Preparation of Trust Deed
A trust deed which is a contract for the association and the rules and regulations of the trust should be made as it serves as a legal evidence. The trust deed should contain clauses for name, trustee and authors, beneficiaries, registered office, object, general body members, etc. The trust memorandum must contain details enlisting name, occupation, addresses, signatures, etc of all its members. It should also include a rules and regulation section which has clauses for membership, subscription, committee, meeting, auditor, legal proceedings, properties under the trust,etc.
Registration Process Of A Charitable Trust
The other procedures involved in the Society Registration of a trust includes :-
Keeping The Documents Ready
It is very important to keep all the documents ready for submission at the time of registration. A trust deed which is made on stamp paper of a percentage value of the property of the trust, should be present which should contain details of the trust like its name, trustee and settler names and addresses, maximum and minimum number of trustees, trust objectives, registered office address, designations of members within the trust, trustee tenures, trustee rights and duties, execution date of the deed, etc.
Submission Of Trust Deed
The trust deed with its attested copies should be submitted at the registrar office. Settler should sign each copy of the deed. The author and two other witnesses should be present during registration. Identity proofs and their self attested copies of the people present should be brought along with it.
After the registration, the registrar will return the original of the registered Trust deed while retaining the photocopy of the same.
You will receive the registration certificate after a period of 7 days of submitting and completing all the registration procedures. In India, some states require all the trustees to be physically present in the registrar office while the identity proofs and copies of the trustees are only required in other states.
In certain cases, the office registrar will verify the address of your trust by sending an official letter to the trust address.