19 July 2024
Yes, charitable trusts can be merged under certain conditions, and there are specific procedures that need to be followed to effectuate the merger. Here’s a general overview of the procedure:
### Procedure for Merger of Charitable Trusts
1. **Board Resolutions:** - The boards of trustees of both the trusts (the transferring trust and the receiving trust) should pass resolutions approving the merger. These resolutions should outline the terms and conditions of the merger, including the effective date.
2. **Drafting a Merger Proposal:** - Prepare a merger proposal document that details the rationale for the merger, the terms and conditions, and how the assets, liabilities, and activities of the transferring trust will be transferred to the receiving trust.
3. **Consent of Charity Commissioner:** - Obtain consent from the Charity Commissioner under whose jurisdiction both trusts are registered. This typically involves submitting: - Certified copies of the board resolutions of both trusts approving the merger. - The merger proposal document. - Any other documents as required by the Charity Commissioner.
4. **Publication and Objections:** - Publish a notice regarding the proposed merger in the Official Gazette and a local newspaper as required by local regulations. - Allow a specified period (usually 30 days) for objections to be raised against the merger.
5. **Approval by Charity Commissioner:** - After the notice period has elapsed and there are no objections or after addressing any objections raised, obtain final approval from the Charity Commissioner for the merger.
6. **Execution of Merger Agreement:** - Execute a merger agreement between the transferring trust and the receiving trust, detailing the transfer of assets, liabilities, and other relevant terms.
7. **Amendment of Trust Deeds:** - Amend the Trust Deeds of both trusts to reflect the merger and any changes in the objects or activities of the receiving trust resulting from the merger.
8. **Transfer of Assets and Liabilities:** - Transfer the assets, liabilities, and activities of the transferring trust to the receiving trust as per the terms agreed upon in the merger agreement.
9. **Post-Merger Compliance:** - Comply with any additional requirements or filings post-merger, such as updating registration details with the Charity Commissioner and filing necessary documents with the income tax authorities.
### Considerations
- **Legal Advice:** It is advisable to seek legal advice from a lawyer specializing in trust and charity law to ensure compliance with all legal requirements and to properly execute the merger.
- **Tax Implications:** Consider the tax implications of the merger, including potential exemptions or approvals under tax laws, and consult with a tax advisor if necessary.
By following these procedures diligently and obtaining the necessary approvals from the Charity Commissioner and other regulatory bodies, charitable trusts can merge effectively, consolidating their resources and efforts towards common charitable objectives.
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