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CS Professional · CSR and Social Governance · Financial and Non-financial Reporting of Different Non-Corporate Entities

Lakshmi Charitable Trust was created by a registered trust deed in which Mr. Rao transferred property to three trustees to hold for the benefit of orphaned children. Which feature correctly identifies the trust as a non-corporate entity?

A trust is a non-corporate entity because trustees hold the trust property for the beneficiaries under an obligation, and the trust itself is not a separate legal person. It has no shares or dividends, and it is not a body corporate with its own legal personality.

  1. ATrustees hold the property for beneficiaries under an obligation, and the trust itself is not a separate legal personCorrect
  2. BThe trust issues shares to its founder
  3. CThe trust has members who vote on dividends
  4. DThe trust is a body corporate with perpetual succession under its deed

Explanation

In a trust, property is vested in trustees who hold it for the beneficiaries under an obligation. The trust is not a separate legal person. Shares, dividends and corporate succession are features of companies, not trusts.

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