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REGISTERED TRUST AND ITS UTILITY UNDER THE CORPORATEWORLD:

STUDY OF INDIAN TRUST LAW WITH COMPARISON TOINTERNATIONAL REGIME

PRESENTED BY:KURAT SHAH

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ACKNOWLEDGMENT.

AN INTRODUCTION.

T HE I ND I A N T R U S T L A W .

T HE I NT E R NA T I ONA L T R U S T L A W R E G I ME .

C A S E L AW S U N DE R I N DI A N & I N T E R NA T I O N A L L A W .

C ONC L U S I ON & S U G G E S T I ONS .

B I B L I OG R A PHY .

INDEX

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T R U S T

ME A NI NG HI S T OR Y OF T R U S T

K E Y E L E ME NT S C R E A T I ON

T Y PE S OF T R U S T

CHAPTER1AN INTRODUCTION

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"Trust may be defined as confidencein the rel iabi l i ty of a person orsystem, regarding a given set of outcomes or events, where that

confidence expresses a fai th in the

probity of love of another, or in thecorrectness of abstract principles

(technical knowledge)."

What exactly is trust according to GiddensHe defined it as follows:

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A trust is a disposition of property toa person or persons jointly in whom

the legal t i t le then vests in theconfidence that the benefi ts wi l l beapplied to the advantage of one ormore other persons or some other

object permitted by law.

A SIMPLE DEFINITION FROM

A LEGAL VIEWPOINT

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T h e tr u s t , w a s th e p r od u c t of a p ec u li a r h i s tor y a n d

d i v is i o n o f l a b o r b e t we e n m e di e v al e ng l i s h c o ur t s .

A p a r a l le l s ys tem of c ou r ts , k n ow n a s c h a n c er y o r e q ui t y c o ur t s , t h e n e m e rg e d a n d d e mo n s t ra t e d a

w i l l i n g n es s to en f or c e i n ten ti on i n w a ys p r ev i ou s ly u n r e c o g n i z e d .

A b e l a t e d c om p a n i o n a c t, t h e s t a t u t e o f w i l l s i n 1 5 4 0 ,s p ec i f i c a l l y a u th or i z ed w i l ls of la n d f or th e f i r s t t i m e.

"Anti trust l aw" em er g ed i n th e 19 th c en tu r y w h en

i n d us t r ie s c r e a t ed m o n op o l is t i c t r u s ts .

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KEY ELEMENTS

Is a person whocreates TrustSETTLOR

Are the beneficialowners of the trustproperty.

BENEFICIARIES

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The trust is governed by the termsof the trust document.

It is usually written andoccasionally set out in deed form.

It is also governed by local law

TRUSTDOCUMENT

The settlor is also called the trustor,grantor, donor or creator.

. In some other jurisdictions,

the settlor may also be known as thefounder

IN THEUNITED

STATES ANDINDIA

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CREATION

A written TrustDocument

Will Of adecedent.

An OralDeclaration

A TestamentaryTrust

Court order

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C O N S T R U C T I V E T R U S T :

N o t c re a t e d b y a n a gr e e m e n t be t w e e n a s e t t l o r a n d t h e t r u s t e e . A c o n s t r u c t i v e t r u s t i s i m p o s e d b y t h e l a w a s a n "E Q U I T A B L E

R E M E D Y .

D Y N A S T Y T R U S T

A l s o k no w n a s a g e n er a t i o n- s k i pp i n g t r u s t. A t y p e o f tr u s t i nw h i c h a s s e t s a r e p a s s e d d o w n t o t h e g r a n t o r ' s g r a n d c h i l d r e n ,n o t t h e g r a n t o r ' s c h i l d r e n .

E X P R E S S T R U S T :

A s e t t l o r d e l i b e r a t e l y d e c i d e s t o c r e a t e a t r u s t , o v e r t h e i ra s s e t s , e i t h e r n o w , o r u p o n h i s o r h e r l a t e r d e a t h .

H Y B R I D T R U S T :

T h e t r u s t e e m u s t p a y a c e r t a i n a m o u n t o f t h e t r u s t p r o p e r t y t oe a c h b e n e f i c i a r y f i x e d b y t h e s e t t l o r .

TYPES OF TRUST

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INCENTIVE TRUST:A trust that uses distributions from income or principal as an

incentive to encourage or discourage certain behaviors on the part ofthe beneficiary.

OFFSHORE TRUST:Strictly speaking, an offshore trust is a trust which is resident in any

jurisdiction other than that in which the settlor is resident.

PRIVATE AND PUBLIC TRUSTS:A private trust has one or more particular individuals as itsbeneficiary. By contrast, a public trust (also called a charitable trust)has some charitable end as its beneficiary

SPENDTHRIFT TRUST :Is a trust put into place for the benefit of a person who is unable tocontrol their spending. It gives the trustee the power to decide howthe trust funds may be spent for the benefit of the beneficiary.

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T Y P E S O F O R G A N I Z A T I O N S

T A X L A W S

A P P L I C A B L E L A W S

R E L E V A N T L E G A L F O R M S

S P E C I F I C Q U E S T I O N S R E G A R D I N G L O C A LL A W

CHAPTER 2

THE INDIAN TRUST LAW

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T R U S T ST h e p u b l i c c h a r i t a b l e t r u s t i s a p o s s i b l e f o r m o f n o t - f o r - p r o f i t

e n t i t y i n i n d i a .T y p i c a l l y , p u b l i c c h a r i t a b l e t r u s t s c a n b e e s t a b l i s h e d f o r an u m b e r o f p u r p o s e s , i n c l u d i n g t h e r e l i e f o f p o v e r t y , e d u c a t i o n ,m e d i c a l r e l i e f , a n d a n y o t h e r o b j e c t o f g e n e r a l p u b l i c u t i l i t y .

I n d i a n p u b l i c t r u s t s a r e g e n e r a l l y i r r e v o c a b l e .

N o n a t i o n a l l a w g o v e r n s p u b l i c c h a r i t a b l e t r u s t s i n i n d i a ,a l t h o u g h m a n y s t a t e s ( p a r t i c u l a r l y m a h a r a s h t r a , g u j a r a t ,r a j a s t ha n , a nd m a d h y a p r a de s h ) h a v e p ub l i c t r u s t s a c t s .

TYPES OF ORGANISATION

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S o c ie t i e s a r e m e m b er s h i p o r g a ni z a t i o ns t h a t m a y b e r e gi s t e r edf o r c h a r i t a b l e p u r p o s e s .

S o c i e t i e s a r e g o v e r n e d b y t h e s o c i e t i e s r e g i s t r a t i o n a c t 1 8 6 0 .

S E C . 25 C OMPA NI E S

C o m p a n y i s a c o m p a n y w i t h l i m i t e d l i a b i l i t y t h a t m a y b ef o r m e d f o r "p r o m o t i n g c o m m e r c e , a r t , s c i e n c e , r e l i g i o n , c h a r i t y o r a n y o t h e r u s e f u l o b j e c t ," p r o v i d e d t h a t n o p r o f i t s , i f a n y , o ro t h e r i n c o m e d e r i v e d t h r o u g h p r o m o t i n g t h e c o m p a n y ' s o b j e c t sm a y b e d i s t r i b u t e d i n a n y f o r m t o i t s m e m b e r s .

SOCIETIES

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C O N S T I T U T I O N O F I N D I A

A R T I C L E S 1 9 ( 1 ) ( C ) A N D 3 0 ;

I N C O M E T A X A C T , 1 9 6 1 ;

P U B L I C T R U S T S A C T S O F V A R I O U S S T A T E S ;

S O C I E T I E S R E G I S T R A T I O N A C T , 1 8 6 0 ;

I N D I A N C O M P A N I E S A C T , 1 9 5 6 , S E C T I O N 2 5 ;

F O R E I G N C O N T R I B U T I O N ( R E G U L A T I O N ) A C T , 1 9 7 6 ;

APPLICABLE LAWS

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U NI T E D S T A T E S OF A ME R I C A .

U NI T E D K I NG D OMU A E .

CHAPTER 3

THE INTERNATIONAL TRUST LAW

REGIME

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U N I T E D S T A T E S T R U S T L A W i s t h e b o d y o f l a w r e g u l a t i n g t h el e g a l i ns t r u me n t f o r h o l di n g w ea l t h k n o wn a s a t r u s t.

I N A U G U S T 2 0 0 4 , T H E N A T I O N A L C O N F E R E N C E O FC O M M I S S I O N E R S O N U N I F O R M S T A T E L a w s c r e a t e d t h e f i r s ta t t e m p t t o c o d i f y g e n e r a l l y a c c e p t e d c o m m o n l a w p r i n c i p l e s i na n g l o - a m e r i c a n l a w r e ga r d i n g t r us t s i n t o a u n i f o r m s t a t u t o r y c o d e f o r t he f i ft y st a t e s , c a l l ed T H E U NI FO R M T R US T

C OD E ( UT C) .T h e U T C a t t e mp t s t o s t a n d a rd i z e t h e g e ne r a l c o m p o si t i o n o f

b o t h t r u s t f o r m s a n d t h e i r r e q u i r e m e n t s , b u t d o e s n o t g e n e r a l l y a t t e m pt t o a dd r es s t h e p r o ce d u ra l q u e st i o n s a s to o ve r a l ls u b j e c t - m a t t e r j u r i s d i c t i o n a n d o t h e r a s p e c t s o f p r o c e e d i n g si n v o l v i n g t r u s t s .

U.S.A

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E ng l i s h t r u s t s l a w i s t h e o ri g i na l a n df o un da t io na l l aw o f t ru st s i n t h e w or ld , a nd a un iq ue

c on tr ib ut io n o f e ng li sh l aw t o th e l eg al s ys te m.T h e l a w o f t r u s t s d e v e l o p e d i n t h e m i d d l e a g e s f r o m t h e t i m e o f t h e c r us a d e s u n d e r t h e j u r i s d i c t i o n o f t h e k i n g o f E n g l a nd .

N E W U K T R U S T L A W b r i n g s g r e a t e r f l e xi b i l i t y , b y A ma n d aB a n ks , T a x - N ew s . c om , L o n do n U K L A W F I R M,

B o o d l e H a t f i e l dh a s o b s e r v e d t h a t n e w t r u s t l e g i s l a t i o n , d u e t o e n t e r i n t o f o r c e

o n a p ri l 6 , w i l l a l l o w t ho s e l o o k in g t o e s t a bl i s h n ew t r u s t sg r e a t e r f l e x i b i l i t y .

U.K

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For yea r s w ea lth y f a m i l i es i n th e U A E h a v e us ed f a m i ly t r u s t s t o h o l d of f -shore a s s e t s .

I n a m a j or a n n o u n ce m en t ma d e i n j u ne 2 0 08, D U B A I

I NT E R NA T I ONA L FI NA NC I A L C E NT R E ( D I FC ) n o wp r o p o s e s r e g u l a t i on s e s t a b l i s h i n g a c l e a r l e g a l f r a m e wo r k a n d p r o c e s s t o f a c i l i t a t e t h e e s t a b l i s h m e n t o f s inglefamily tr u s ts i n th e U A E , w h i c h w ou ld be s u i ta ble to h ol don-shore U A E a s s ets ( both w i th i n a n d ou ts i d e th e D I FC ) .

T h e D I FC T R U S T L A W S ets ou t th e d u ti es a n d p ow er s of at r u s t e e a n d d e f i n e s t h e r e l a t i o n s h i ps b e t w e e n t r u s t e e s a n d

ben ef i c i a r i e s a n d th ei r r es p ec t i v e i n ter es ts i n th e tr u s ta s s e t s .

U.A.E

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CASE LAWS DEALING WITH TRUSTSUNDER

INDIAN AND INTERNATIONAL LAW.

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R AD HA NT A D EB V .C OM MI SS IO NE R O F H IN DU R EL IG IO USE N D O WM E N T OR I S S A A I R 1 9 81 S C 7 9 8 (1 9 8 1 ) 2 S CC 2 2 6 :

C l a s s i f i c a t i o n o f t r u s t s p r i v a t e a nd p u b li c t r u s t s w a s g i v e n i nt h i s c a s e .

D A L G O B I N D A S E T H I V . K A N I K A M A Z U M D A R A I R 1 9 8 7 O R I 6 0

A B D U L R A H M A N V . S M T . A N G E R B A L A A I R 1 9 7 4 C A L 1 6

A B D U L S A M A D K H A N V . B I B I J A N A I R 1 9 2 5 M A D 1 1 4 9

A B R A H A M S W I L L T R U S T S 1 9 6 7 ) 2 A L L E R 1 1 7 5

INDIAN CASE LAWS

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INTERNATIONAL CASE LAWSA NEW ZEALAND CASE STUDY

SCOTLAND CASE STUDY

AUSTRALIAN CASE STUDYWASHINGTON CASE STUDY

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SUGGESTIONS AND CONCLUSION

T r u s t c a n be u s ed f or v a r i ou s p u r p os es , th e m os ti m p o r ta n t b e i n g i n h e r i t a n c e p l a n n i n g . O n d e a t h o f t h es e t t l o r , a s s e t s t r a n s f e r r ed i n t o a t r u s t c a n b e u t i l i z e d

f or th e ben ef i c i a r i e s w i th ou t h a v i n g to w a i t f or th ep r oba te to be c om p leted .

T h es e tr u s ts c a n a ls o be u s ed f or m a n a g i n gi n v es tm en t s . A s of f s h or e v eh i c les a r e ta x -n eu tr a l , th e

w ea lth a n d th e i n c om e th a t th es e i n v es tm en ts g en er a tew i l l n ot be ta x ed .

C o n f i d e n t i a l i ty i s a n o t h e r a t t r a c t i o n o f o f f s h o r etr u s ts . A s leg a l ow n er s of th es e tr u s ts a r e th e tr u s tees ,t h e s e tt l o r d o e s n ot h a v e t o d i s c l o s e a s s e t s t r a n s f e r r ed

i n t o t h e s e t r u s t s t o t a x a u t h o r i t ie s . O n l y t a x a b l eben ef i ts r ec ei v ed f r om th e tr u s t n eed s to be d i s c los ed .

CHAPTER 5

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L I S T O F B O O K S

L I S T O F A R T I C L E S

L I S T O F C O N V E N T I O N S / A C T S

L I S T O F W E B S I T E S

L I S T O F C A S E S

A B B R E V I A T I O N S

BIBLIOGRAPHY

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