Query abt sec.42 of companies act

Dear Jimi

A trustee is an individual or a company that takes care / manages / invests the assets of the Trust for the benefit of the beneficiary.

Regards

Dear Jimmy,

As per Section 42(2)(b) of the Companies Act 1956, a subsidiary may hold shares in the holding company :

1. as the legal representative of a deceased member of the holding company or ;

2. as a trustee (unless the holding company or any subsidiary therof is beneficially interested under the trust concerned) and enjoy all rights of members in these two cases.

As the Companies Act 1956 does not define “Trustee”, we shall see the meaning of it from the Indian Trust Act 1882 :

As per Section 3 of The Indian Trust Act 1882, “a ‘trust’ is 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.

And the person who accepts the confidence is called the" trustee".

A corporation can act as a trustee.

A corporation is capable of accepting the ownership of property with an obligation annexed to the ownership for the benefit of another which may be a class of ‘persons’, there can be no objection to a corporation acting as a trustee. This is a well-established proposition from the time of the decision of the Judicial Committee of the House of Lords in Salomon v. Salomon and Company Ltd which has been followed in India by the Supreme Court.

Regards,

Veeral Gandhi