DIFFERENCE BETWEEN TRUST AND SOCIETY AND NONPROFIT COMPANY

DIFFERENCE BETWEEN TRUST AND SOCIETY AND NONPROFIT COMPANY

Features	Trust	Societies	U/s 25 Company / Nonprofit Company
Set up and running Cost	Nominal	Nominal	Comparatively More
Charter	Trust Deed	By laws and Rules & Regulation	Memorandum of Association and Article of Association
Basic Document	Trust Deed - which contains objects of the trust (bye-law)	Memorandum of Association Articles of Association with rules & regulations.	Memorandum of Association Articles of Association
Formation procedure	Very Easy	Simple	Little Hard
Jurisdiction	Deputy Registrar / Charity Commissioner	Registrar of Societies - For Maharastra Charity Commissioner	Registrar of Companies
Legislation / Statute	Relevant state Trust Act - Bombay Public Trust Act 1950, Indian trust Act,1882	Societies Registration Act 1860	Indian Companies Act 1956
Objects	Social benefits & Charitable, Religious, Wellfare of the member, Families, Debenture redemption trust, Employee Welfare trust. Ex. PF Trust, Superannuation Trust etc	Literary, Charitable, Scientific and resource oriented, Health and any social purpose.	Non profit Activities
Re-ammendment or Modification of Objects	Alteration can be undertaken only by the Founder or settler. If the founder deceased alteration of objects is impossible	Easy Legal Procedures	Complicated Legal Procedures Legislation / Statute
Required Members	Minimum = 2 Maximum = No limit	Minimum = 7 Maximum = No limit	Minimum = 7 Maximum = No limit
Nature of control	One man control, i.e. Settler	Democracy system	Board of Directors & Management committee
Registration	As Trust with the Registrar.	As Society with Society Registrar - Both as a society and a trust in some states like Maharastra.	As per Companies Act under Section 25
Stamp Duty	4% of Trust property Value will be executed in non judicial stamp paper with the registrar	No stamp paper required for Memorandum of association, and rules and regulations.	No Stamp paper required for Memorandum of association and articles of association.
Name	Very easy to choose	Very easy to choose	Prior approval required from Registrar of Companies
Bank a/c operation	One person,  Settler	Two persons, either President or Secretary and Treasurer	As Authorised by Board of Director
Family Member	Can become trustee	Objection in becoming members of the Governing Body	Can Be Directors
Management Board	Trustees	Governing Body	Board of Directors & Management committee
Succession in Management	By Election	By Election	By Appointment
Meetings	No provisions	Annual Meeting As per Law. Governing Body meeting as per the rules of Society.	Quite Extensive as per the provision of Company Law
Legal Status	Limited Legal Status	Limited Legal Status.	Full Legal Status
Example	Mother Teresa Charitable trust, Amar Jyoti Charitable Trust	Trade Associations	ITC Ltd, NTPC LTD, TCS LTD
Statutory Regulations	Nominal	Limited.	Maturable - Exhaustive
Membership Transfer	Nominal	Impossible.	Impossible Free or Control as per desire.
Member Admission	Not applicable	Governing Body Control .	General Body or Board Control through issue of Capital.
Dissolution or Take over by State	Possible	Possible	Very risky and difficult.
Payment to Members	As notified in Trust deed	Not restricted	As approved by Company & State.
Penalties	Lesser penalties	Lesser penalties	Higher Penalties
Eligible for Income Tax Exemption after Registration u/s 12A & 80G Eligible for receiving Foreign Contribution after Registration under FCRA
Eligible for receiving Govt. grants and benefits
Profits shall not be distributed to the Trustee/ Members/ Directors