Charitable, religious, hospitality and rehabilitation institutions can be formed by executing a Trust Deed. Trust deed is executed between settlor and the trustees. A settlor is a person who creates the trust for some charitable or religious or hospitality or rehabilitation purposes; whereas trustees are people who manage the trust. The settlor generally appoints trustees who can effectively run and work according to objects of the trust. Under trust deed, the settlor transfers the identifiable property to trustees and makes it obligatory for trustees to work and manage trust as per terms and conditions specified in the trust deed.
Prime object for which the trust is created is specified in this clause. This is very important clause as all activities are undertaken for fulfillment of these objectives only. Trust can accept donations, grants, subscriptions, aids or contributions from any person, government or any other charitable institutions, in cash or in kind including immovable property without any charge on it. But it shall not accept any such funds received with condition which is inconsistent with objectives of the trust.
It is the responsibility of the trustees to manage funds of the trust in an efficient manner. The funds which are not required in near future for meeting current needs should be invested in securities, banks and other investments to get good returns in the same manner as a prudent man would do the same. The trustees are required to maintain proper books of accounts of all the assets, liabilities, income and expenditure of the trust and also get the accounts audited by a chartered accountant.
In the event of winding up of the company, the assets of the trust shall not be transferred to the trustees. They shall be transferred to some other similar trust or organization whose objects are similar to those of this trust with the permission of the charity commissioner/Court/any other law as may be applicable for the time being.