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Issue of shares in favour of a Trust

Preeti Jain (Company Secretary) (139 Points)

07 December 2010

Dear All,

Can anyone explain me whether a company can issue shares to a trust in the name of trust?

Thanks in advance........................

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Individuals or corporations that are investing in their capacity as trustees of a trust must register their investment in their own individual or corporate name. They may include as part of the registered name reference to the capacity in which they are acting such as "as trustees of the ABC Trust". However the persons in whose name the shares are registered will be the only persons recognised as the registered owners.

Preeti Jain (Company Secretary) (139 Points)
Replied 07 December 2010

Thanks Jyotsna

Please also tell me who will be the beneficial owner, beneficiaries of trust or the trustee who is registered as shareholder.

Syam kamal (Company Secretary) (156 Points)
Replied 07 December 2010

Originally posted by : Preeti Jain
	Dear All, Can anyone explain me whether a company can issue shares to a trust in the name of trust? Thanks in advance........................

Shares can be issued to a trust in the name of trust and in that case the concerned trust and not the trustees or beneficiaries is considered as the shareholder.

In our company we have a trust viz ESOP Trust for our Employee Stock Options Plan and when the vesting of ESOP happens, we allots the share to our ESOP Trust after receiving the money who will in turn transfer the shares to our employees when they exercise their options and pays necessary amount to the ESOP Trust.

Preeti Jain (Company Secretary) (139 Points)
Replied 07 December 2010

Thanks Syam for your kind reply............

Ajay Mishra (Company Secretary) (74332 Points)
Replied 07 December 2010

Dear Friend

Society/Trust as a member

Department Clarification- A society registered under the Society Registration Act, 1860 should not be deemed to be a ‘body corporate’ within the meaning of the section 2(7) of the Companies Act, although such a society can be treated as a ‘person’ having separate legal entity apart from the members constituting it and thereby capable of being a member of a company under section 41(2) of the Companies Act, 1956. [Circular Letter, dated-24-11-1962]

Shares belonging to society held in the name of trustee simpliciter

Department Clarification-In 1957 the Department of Company Affairs was advised that the shares in the company, being the property of a charitable trust, can be held in the name of the trustee. (Extracts from Department’sFile No. 1(43)-PT/67)

Regards

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