Chartiable Institution Specified Modes of Investment

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies the investment rules for charitable trusts, particularly when receiving corpus contributions for future specified purposes. It highlights that investments must adhere to the specified modes outlined in Section 11(5) of the relevant act. Investing in corporate fixed deposits like Bajaj Finance or equity shares of listed companies is generally not permitted under these rules, and auditors are responsible for reporting non-compliance.

CA Rishabh Kankaria

CA Rishabh Kankaria (Querist)

27 May 2021 If a charitable trust receives a corpus contribution for a specified purpose in the future. Let's assume to purchase a property after 5 years. Can that corpus be invested in:
1) Corporate Fixed Deposit of Bajaj Finance Ltd.
2) Equity Shares of ANY listed company.
or does one need to invest this money specifically in Specified modes of investment under section 11(5) too?
Kindly quote the act or rules before answering. The question is very relevant since today we know a lot of trusts investing in Corporate FDs of Bajaj Finance or Equity Shares of Listed Co.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 May 2021 No charitable trust can invest in Bajaj finance and in equity shares.
If you know such investments made the concerned auditors are responsible in reporting.
Specified modes of investment under section 11(5) only allowed.

CA Rishabh Kankaria

CA Rishabh Kankaria (Querist)

27 May 2021 Seetharaman Sir,
Why will the Auditor falsely report the same but?
Because Section 11(5) does not allow trusts to invest in Bajaj Finance FD or Equity Shares of a Private Company.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 May 2021 Auditors report only non compliance.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now