Thursday, the 15th day of June, 2017 Public Trusts Presentation by CS Girish Paralikar Thursday, the 15th day of June, 2017

GOD CREATED MOTHERS BECAUSE HE CANNOT BE EVERYWHERE. GOD IN PEOPLE CREATE TRUSTS BECAUSE THEY CAN NOT REACH EVERYWHERE.

(a) Selfless acts are those acts which have no benefit to the actor. if it were truly selfless, there would be no benefit to you. (b) All acts benefit the actor in some way (even those that return no tangible benefit create the pleasure of doing something that has no tangible benefit to yourself). but I think has a different possible impetus also, that being that you experience a pleasant sensation from helping others (c) Therefore, there are no selfless acts. Your conclusion (c) follows inescapably from (a) and (b).

What is a Trust A trust is a fiduciary relationship in which one party, known as a Testator / Settlor / Author, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. A "trust" is an obligation annexed to the ownership 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.

There are basically two types of Trusts – Private Trust and Public Trusts. Private Trusts are those which are meant for the benefit of identified, limited persons / entities. Public Trusts are those which are meant for the benefit of General Public at Large without the identification of its Beneficiaries.

Maharashtra Public Trusts Act, 1950 An Act to regulate and to make better provision for the administration of public religious and charitable trusts in the State of Maharashtra. “public trust” means an express or constructive trust for either a public religious or charitable purpose or both and includes a temple, a math, a wakf, church, synagogue, agiary or other place of public religious worship a dharmada or any other religious or charitable endowment and a society formed either for a religious or charitable purpose or for both and registered under the Societies Registration Act, 1860;

How is it created A Trust is created by way of an “instrument of trust” which means the instrument by which the trust is created by the author of the trust and includes any scheme framed by a competent authority or any memorandum of association and rules and regulations of a Society registered under the Societies Registration Act, 1860, in its application to the State of Maharashtra. This is typically called as Trust Deed.

How is it created Person(s) who intend to create any Public Trust / Society shall make application in prescribed Form to the Charity Commissioner of the relevant District and upon compliance with the formalities, get Certificate of Registration of Trust. The basic criteria is the beneficiaries from the Trust that is being created. The intent to create a Public Trust must be clear, property identified, purpose or objectives must be predefined along with provisions for day to day management of a Trust.

Particulars required to be furnished The designation by which the public trust is or shall be known (hereinafter referred to as the name of the public trust), (i)the names and addresses of the trustees and the manager, (ii)the mode of succession to the office of the trustee, (iii)the list of the moveable and immovable trust property and such descriptions and particulars as may be sufficient for the identification thereof, (iv)the approximate value of moveable and immovable property,

Particulars required to be furnished (v)the gross average annual income of the trust property estimated on the income of three years immediately preceding the date on which the application is made or of the period which has elapsed since the creation of the trust, whichever period is shorter, (vi)the amount of the average annual expenditure in connection with such public trust estimated on the expenditure incurred within the period to which the particulars under clause (v) relate, (vii)the address to which any communication to the trustee or manager in connection with the public trust may be sent, (viii)such other particulars which may be prescribed.

Compliance post incorporation: Post formation, the Public Trust shall carry on usual compliance like: Opening of its Bank Account Obtaining PAN / TAN and other Tax Registrations, if required. Obtain Shop Act license if it is carrying out any activity for Profits (not distributing but only generating) Registration under the provisions of the Income Tax Act, FCRA, Labour Laws etc.

Compliance under the Maharashtra Public Trusts Act Maintain Registers including, Register of Trustees and Managers, Movable and Immovable Properties, Members (if Society ) Conduct Meeting of the Trustees as per the directions written in the Trust Deed and issue Notice, Agenda for the same and maintain proceedings of the Meetings. File on Annual Basis its Budget for its next year performance latest by 28th February in each year.

Compliance under the Maharashtra Public Trusts Act – Accounts Every trustee of a public trust has to keep regular accounts of all the receipts, movable and immovable properties and of all encumbrances created and all payments and alienations made. The accounts are to be kept in a manner which will facilitate preparation of the final accounts in the prescribed form of Schedule VIII (Balance sheet) and IX (Income and expenditure A/c) and preparation of statement of income chargeable to contribution in Schedule IXC.

Utilising Assets The Trust shall not keep any of its assets idle. Those shall be utilised for meeting its Objects and if in case there are surplus funds not required in the immediate future, those need to be invested in the securities that are permissible under the provisions of the Act and also in line with the provisions of the Income Tax Act.

Compliance under the Maharashtra Public Trusts Act File on Annual Basis its Audited Financial Statements with Auditors Report (Yes / No report) duly signed by the Trustees Whenever any change takes place in its: Trustees Immovable Properties and Movable Properties (other than of trivial nature) Then file a Report with the Office of charity Commissioner called as Change Report depicting out the change that has taken place. Obtain prior permission from the Office of the Charity Commissioner for taking any Loan or for sale of any of its Immovable Property or for creation of any interest in the said Property.

Compliance under the Maharashtra Public Trusts Act Obtain prior permission from the Office of the Charity Commissioner for taking any Loan or for alienation of any of its Immovable Property or for creation of any interest in the said Property or for its lease (exceeding 10 years if it is an Agricultural Lad and exceeding 3 years otherwise).

Change Reports: It is mandatory to inform any change which occurs in the trust in respect of the trustees, moveable or immovable properties etc. within a period of 90 days from the change as provided under section 22 of the B.P.T. Act, 1950. The change so informed is necessary to be recorded on satisfaction of its legality and validity to the authority. It is the duty of trustee to inform the change and also substantiate the same with record about its legality and validity.

Change Reports: At times, Change Reports becomes a serious issue if any change takes place that hurts any of the Trustees or it takes place against the Interests of the Trusts. These then become contested Change Reports where the validity and legality of the reported change is then challenged (analogous with the Oppression and Mismanagement matters). At times, the Charity Commissioner also looks in to the change, especially, in the immovable properties, very seriously because he is an ipso-facto Trustee of the Trust from the date it is formed.

General Information Total Public Trusts registered in Maharashtra are estimated to be about 7,50,000. Out of them, in Pune, it is estimated that there are about 60,000 Public Trusts that are operating. On an All India Basis, it is estimated that there are about 17,50,000 Public Trusts operating.

General Information Of these, only about 10% file their Accounts with the Office of the Charity Commissioner. It is basically on account of lack of information and proper guidance to the Trustees. At times, this default becomes a Criminal Offence and the Trustees may be subjected to imprisonment as provided by the provisions of the Law.

General Information The Hon’ble Supreme Court of India has taken a very serious view on the same and has directed the Union Government to make a Uniform Law which shall be applicable to all Public Trusts in India. Also, the ICAI had represented to the Union Government urging for this in a couple of years ago.

Scope for Company Secretaries Tremendous. With the steps taken by the Maharashtra Government for online filing of various returns and computerisation of records with the Office of Charity Commissioner, it shall become very easy for the Government to monitor the Trusts and this gives rise to opportunities for the Professionals. If the Supreme Court directives sees the light of the day, which is most likely to happen, then the scope goes on Pan-India basis.

Scope for Company Secretaries - MPT Personally, I see immense work even for today. Making applications for Registration of Trusts and Societies. Drafting of Trust Deeds and other required documents. Maintenance of Records for the Trusts and conducting their Meetings on a regular basis is one such area. Changes in constitution / Trust Deeds and preparation of Change Reports and its supporting documents

Scope for Company Secretaries - MPT Drafting of applications U/s. 36 A of the MPT Act for obtaining Loan / sale of Property etc. Acting as Scrutiniser for Auction of Property and submitting Report on the Auction Process to the Charity Commissioner.

Scope for Company Secretaries- Commercial Activities Project Reports for various projects undertaken by the Trust to be submitted to the Charity Commissioner. Internal Operating Manual for the Trusts Loan Applications with the Banks and making CMA Data for the same. Obtaining Funding through CSR Activities of the Companies required to spend on the same.

Scope for Company Secretaries - FCRA Registration of the Trusts under FCRA One Time Permission under FCRA Filing of Annual Returns under FCRA Applications for compounding of offences

Scope for Company Secretaries – Income Tax Act Making and processing Applications for registration U/s. 12 A and 80 G. Applications U/s. 197 A for Lower / NIL deduction of TDS Guidance on Investments of the surplus monies of the Trusts.

Scope for Company Secretaries – General Obtaining Registrations under various Laws, Rules and Regulations – such as Shop Act, Labour Laws etc.

देणाऱ्याने देत जावे घेणाऱ्याने घेत जावे घेता घेता एक दिवस देणाऱ्याचे हातच घ्यावेत - विंदा करंदीकर

Thanks a lot for patient hearing Thanks a lot for patient hearing!!! CS Girish Paralikar E-mail : csgpar@gmail.com Hello: 94 20 17 48 53