Non-Corporate Entities

Trust is defined in section 3 of the Indian Trust Act, 1882 as “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. In other words, it is simply a transfer of property by one person (the settlor/author of the trust) to another (the “trustee”)

who manages that property for the benefit of someone else (the “beneficiary”). The settlor must legally transfer ownership of the assets to the trustee of the trust.

Thus, the settlor, trustee, beneficiary, the trust property, beneficial interest and instrument of trust are the constituents of The Green Future Trust defined as follows:

“author of the trust”: the person who reposes or declares the confidence is called the “author of the trust”:

“trustee”: the person who accepts the confidence is called the “trustee”:

“beneficiary”: the person for whose benefit the confidence is accepted is called the “beneficiary”:

“trust-property”: the subject-matter of the trust is called “trust-property” or “trust-money”:

“beneficial interest”: the “beneficial interest” or “interest” of the beneficiary is his right against the trustee as owner of the trust-property; and “instrument of trust”:- the instrument, if any, by which the trust is declared is called the “instrument of trust”:

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 3(b) (Syllabus 2022).

The following are legal and procedural steps involved in registering a Multi-State Cooperative Society under the Multi-State Cooperative Societies Act, 2002.

Registration Procedure:

1.For the purposes of registration of a multi-state cooperative society under this Act, an application shall be made to the Central Registrar in such form and with such particulars as may be prescribed.

2.The application shall be signed a. in the case of a multi-state cooperative society of which all the members are individuals

-by at least fifty persons from each of the state concerned; b. in the case of a multi-state cooperative society of which the members are cooperative societies – by duly authorised representatives on behalf of at least five such societies as are not registered in the same state; and c. in the case of a multi-state cooperative society of which another multi-state cooperative society and other cooperative societies are members, by duly authorized representatives of each of such societies: Provided that not less than two of the cooperative societies referred to in this clause, shall be such as are not registered in the same state; d. in the case of a multi-state cooperative society of which the members are cooperative societies or multi-state cooperative societies and individuals, by at least i. fifty persons, being individuals, from each of the two states or more; and ii. one cooperative society each from two states or more or one multi-state cooperative society.

3.The application shall be accompanied by four copies of the proposed bye-laws of the multi-state cooperative society and the persons by whom or on whose behalf such application is made shall furnish such information in regard to the society as the Central Registrar may require.

4.If the Central Registrar is satisfied a. that the application complies with the provisions of this Act and the rules; b. that the proposed multi-state cooperative society satisfies the basic criterion that its

objects are to serve the interests of members in more than one state; c. that its bye-laws provide for social and economic betterment of its members through self-help and mutual aid in accordance with the cooperative principles; d. that the proposed bye-laws are not contrary to the provision of this Act and the rules, he may register the multi-state cooperative society and its bye-laws.

5.The application for registration shall be disposed of by the Central Registrar within a period of four months from the date of receipt thereof by him.

6.Where the Central Registrar refuses to register a multistate cooperative society, he shall communicate, within a period of four months from the date of receipt of the application for registration, the order of refusal together with the reasons thereof to the applicant or applicants, as the case may be. Provided that no order or refusal shall be made unless the applicants have been given a reasonable opportunity of being heard.

The application for registration of the Multi- State Cooperative Society shall be disposed of by the Central Registrar within a period of four months from the date of receipt thereof by him and if the application for registration is not disposed of within a period of four months specified above or the Central Registrar fails to communicate the order of refusal within that period, the application shall be deemed to have been accepted for registration and the Central Registrar shall issue the registration certificate in accordance with the provisions of the MSCS Act, 2002 and the rules made thereunder.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 2(a) (Syllabus 2022).

Formation of Multi State Co-Operative Society An application for registration of a multi-state cooperative society in specified Form should be filed with the Central Registrar of Cooperative Societies, New Delhi along with the following enclosures:

1.A certificate from the bank stating credit balance in the bank account in favour of multi-state cooperative society.

2.A scheme explaining how the proposed multi-state co-operative society has reasonable prospects of becoming a viable unit.

3.Four copies of bye-laws in original.

4.Proposed area of operation for registration shall initially be permitted for two contagious states only.

5.List of at least 50 members from each state. The list has to be submitted in the format annexed with the Multi State Cooperative Societies Act, 2002 (MSCS Act,

2002) along with the copies of ID proofs of the members duly attested by Chief Promoter.

6.Certified copies of the resolutions passed by the proposed society along with the certified copy of the resolution of the promoters which shall specify the name and address of one of the applicant(s) to whom the Central Registrar may address correspondence under the rules before registration and dispatch or hand over registration documents.

7.Contact number and e-mail address of the Chief Promoter or Society on cover page.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 3(d) (Syllabus 2022).

Advantages of Multi-State Cooperative Society (MSCS):

1.MSCS provides loans at reasonable rates of interest to the poor. This benefits them, as they do not have to go to financiers who lend at high interest rates.

2.MSCS can function pan India as they can start branches in different districts and states.

3.As regulatory requirements of filing, etc. is minimal, MSCS have low compliance costs.

4.A Multi State Co-operative Credit Society belongs to its members, who are at the same time the owners and the customers of their Society. This creates a sense of belonging and ownership among the members.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 4A(iv) (Syllabus 2022).

Risks Involved in Forming a Multidisciplinary Firm (MDF):

1.Lack of understanding and multiplicity of directions to the staff could be disastrous.

2.More cost on infrastructure and technology.

3.Dominance of senior partners over the younger partners.

4.Defining exit route is difficult.

5.Lack of transparency may lead to disputes.

6.If crack develops in mutual faith & trust, very difficult to cure.

7.Communication gap between partners.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 4(d) (Syllabus 2022).

Sl. Partnership Agreement Trust Deed No.

1.Partners, as mentioned in the deed runs the Trustees are generally appointed or elected.

Partnership Firm. The procedure to admit a

The Procedure to elect/ appoint the trustees

partner in the firm is mentioned in the Deed.

is set out in Deed.

2.A partnership Deed can be between two or Three parties must be involved with any more persons. The Maximum no. of partners deed of trust.

in a partnership firm can be 50 partners.

3.The Deed may mention a fixed term of A Trust deed can provide for trust to be partnership or for a specific undertaking or wound up within certain number of years.

may mention the condition of dissolution by notice of intention to dissolve, if mutually agreed by the partners.

4.The Deed states the rights and duties of The Trust Deed states the rights and duties of the Partners. Partners owe a fiduciary duty the Trustees as well as Beneficiaries. Trustees to each other, based on loyalty, trust and have fiduciary duties to beneficiaries.

confidence.

5.Expectations of Partners are more limited to Expectations of trustees can be high-the financial success of business ventures. difficult to satisfy beneficiaries with so many More easily measured. choices on where to spend income.

Answer to No. 4A(v)

The Joint Hindu Family Business is a distinct form of organization peculiar to India. Joint Hindu Family Business is created by the operation of law. It does not have any separate and distinct legal entity from that of its members.

The laws that govern Hindu Undivided Family (HUFs) are not codified and are read along with the Hindu Succession Act, 1956 and the Income tax Act, 1961.

The business of Joint Hindu Family is controlled under the Hindu Law instead of Partnership Act,

2008. The membership in this form of business organization can be acquired only by birth or by marriage to a male person who is already a member of Joint Hindu Family.

“When two or more families agree to live and work together, throw their resources and labour with joint stock and share profits and the losses together, then this family is known as composite family.”

There are two schools of Hindu Law-one is Dayabhaga which is prevalent in Bengal and Assam and the other is Mitakshara prevalent in the rest of the-country. According to Mitakshara law, there is a son’s right by birth in the property of joint family. It means, when a son is born in family, he acquires an interest in the property jointly held by the family.

The business of the Joint Hindu Family is controlled and managed by one person who is called ‘Karta’ or ‘Manager’. The Karta or manager works in consultation with other members of the family but ultimately, he has a final say. The liability of Karta is unlimited while the liability of other members is limited to their shares in the business.

PART-II

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 4A(iv) (Syllabus 2022).

Partnership Agreement Trust Deed 1.Partners, as mentioned in the agreement runs 1. Trustees are generally appointed or elected.

the partnership firm. The procedure to admit a Procedure to elect/appoint the trustees is set partner in the firm mentioned in the deed. out in the Trust Deed 2.A partnership deed can be between two or 2. Three parties must be involved with any deed more persons. Maximum number of partners in of trust:

a partnership firm can be 50 partners.

Trustor: This party is the borrower.

Atrustor is sometimes called an obligor.

Trustee: As a third party to a deed of trust, the trustee holds the property's legal title.

Beneficiary: This party is the lender.

3.The deed may mention a fixed term of 4. Trust deed can provide for trust to be wound partnership or for a specific undertaking, or may up within certain number of years.

mention the condition of dissolution by notice of intention to dissolve, if mutually agreed by the partners.

5.The deed states the rights and duties of the 5. The Trust Deed states the rights and duties Partners. Partners owe a fiduciary duty to each of the Trustees as well as Beneficiaries. Trustees other, based loyalty, trust and confidence have fiduciary duties to beneficiaries

6.Expectations of partner are more limited to 6. Expectations of trustees can be high difficult financial success of business ventures. More to satisfy beneficiaries with so many choices on easily measured. where to spend income.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 4(e) (Syllabus 2022).

(a)Identification of the beneficiaries of the Trust is a simple way to differentiate between a public and a private trust. If the beneficiaries make up a large or substantial body of public, then the trust in question is public. A public trust exists “for the purpose of its objects, the members of an uncertain and fluctuating body,” and is managed by a board of trustee. If, however, the beneficiaries are a narrow and specific group such as the employees of a company, then the trust is private.

(b)In a Public Trust, the interest is vested in an uncertain and fluctuating body. They are the general public or class thereof. In a Private Trust, beneficiaries are definite and ascertained individuals. (Supreme Court in Deoki Nandan v. Murlidhar 1957 AIR 133 1956 SCR 756)

(c)Their domains are different; public trusts have larger and wider domain whereas private trusts have limited and narrow domain.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 4A(ii) (Syllabus 2022).

The residents of the housing complex can form a ‘Resident Welfare Association’ (RWA) or ‘Apartment Owners Association’ (AOA), which are types of legal entities that are best suited for their needs.

These entities are designed to ensure proper maintenance and administration of the society.

The basic requirements for the formation of an RWA or AOA are as follows:

1.Membership: All the residents of the society can become members of the association.

2.Management Committee: A management committee needs to be formed which includes positions like President, Secretary, and Treasurer.

3.Registration: The association needs to be registered under the Societies Registration Act, 1860 or under the Delhi state’s Apartment Ownership Act or Housing Cooperative Society.

4.Bye-Laws: The association should have its own bye-laws which govern the functioning of the association. These bye-laws should be in compliance with the Societies Registration Act, 1860 or the Delhi State’s Apartment Ownership Act.

5.Meetings: Regular meetings of the members and the management committee should be held as per the bye-laws of the association.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 3(b) (Syllabus 2022).

Tax exemption under Section 12 of the Income Tax Act, 1961 Under Section 12 of the Income Tax Act, 1961, various incomes these are excluded from the computation of taxable income of a trust or a society are as follows:

1)Income which is derived from the property that is held under the authority of trust with the purposes which are wholly charitable or religious in nature.

2)Income which is kept aside to the extent that does not exceed 25% of the total income received in lieu of the property.

3)In cases of charitable trusts, specifically those formed before 1st of April 1961, income which is acquired from the property which is held partially for religious or charitable purposes within India.

4)In furtherance of the above case, the income which is set apart to a certain extent and which does not exceed twenty five percent of the total income.

5)In cases of income that is obtained from a trust created before 1st April 1952 for charitable purposes and spent outside India.

6)Income made by way of voluntary contributions towards the corpus of the trust.

7)Charitable trusts created for the benefit of any of the socially and economically backward castes such as Scheduled Castes, Scheduled Tribes or women or children.

Trusts are allowed to set apart or accumulate some of the funds received from voluntary contributions for certain specific purposes. The resultant benefit obtained by the trust is that amount so deducted is not considered as forming part of income of the previous year and therefore not taxed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 4(c) (Syllabus 2022).

As per Section 30 of the Partnership Act, 1932, a minor cannot become a full-fledged partner in a partnership firm. However, a minor can be admitted only for the benefits of the partnership, with the consent of all existing partners.

In this case, B can introduce his minor son into the partnership for benefits, but only with A’s consent.

The minor will be entitled to a share in the firm’s profits but will not be personally liable for any losses incurred by the firm.

Thus, B can introduce his minor son into the partnership for the benefits, but only if A agrees, and subject to the conditions outlined in the Partnership Act, 1932.

After attaining majority: [Section 30(5)] Once the minor attains majority:

At any time within six months of his attaining majority, or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, such person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position as regards the firm: Provided that, if he fails to give such notice, he shall become a partner in the firm on the expiry of the said six months.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 2(a) (Syllabus 2022).

In order to incorporate a society for the welfare of farmers in Gujarat, the following documents must be submitted to the Registrar of Societies under the Societies Registration Act, 1860:

1.A letter requesting registration, signed by founding members. This letter will state the purpose of formation of the society and a requisition indicating that the society is registered under the Act. The signature of all members is mandatory.

2.A certified copy of the MoA, signed by the founding members, with a duplicate.

3.A certified copy of the rules and regulations, signed by the founding members, along with a duplicate copy.

4.A table with the names and address and occupation of all members of the society with their signatures.

5.Minutes of the meeting (general body meeting conducted to set the rules and regulations).

6.Declaration by the president of the society.

7.A sworn affidavit from the President or Secretary, declaring the relationship between the subscribers.

8.Address proof of registered office and no-objection certificate from the landlord.

The documents are to be filed with the Registrar along with the fees, and a suitable name (which should be unique and not suggest a relationship with the government or violate the provisions of the Emblem and Names Act, 1950). If the Registrar is satisfied with the application, the society will be registered.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 3(a) (Syllabus 2022).

A society is an association of persons who voluntarily unite to deliberate, determine and act jointly for a common purpose. Societies are generally formed for the promotion of charitable objectives such as education, art, religion, culture, music, spots and similar activities.

According to Section 20 of the Societies Registration Act, 1860, societies can be formed for the following purposes:

i.Charitable societies; ii. The military orphan funds or societies established at the several presidencies of India; iii. Societies established for the promotion of science, literature, or the fine arts for instruction, the diffusion of useful knowledge; iv. The diffusion of political education; v. The foundation or maintenance of libraries or reading-rooms for general use among the members or open to the public; vi. Public museums and galleries of paintings and other works of art, collections of natural history, mechanical and philosophical inventions, instruments, or designs.

Besides these purposes, the respective State Governments may provide for any other objects by their legislations.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 2(c) (Syllabus 2022).

If the society is not registered under the Societies Registration Act, 1860, the following major implications arise:

1.No Separate Legal Identity – The society cannot own property, enter contracts, or sue/be sued in its own name.

2.Inability to Open a Bank Account – The society cannot open a bank account in its name, leading to financial transparency issues.

3.Challenges in Property Ownership – Property must be held in individual names, increasing the risk of disputes.

4.No Perpetual Succession – The society lacks statutory recognition, making governance unstable when members change.

5.Ineligibility for Government Grants & Benefits – The society cannot receive government aid, tax exemptions, or financial support.

6.Personal Liability for Members – Members may be personally liable for any legal or financial obligations of the society.

While registration involves recurring compliance and expenses, it provides legal protection, operational clarity, and collective rights. If the society remains unregistered, members may face significant legal and operational challenges in managing the property and resolving disputes.

Therefore, registration is generally advisable for long-term stability and legal protection.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 2(e) (Syllabus 2022).