Can trust be a shareholder in the company?

[Nehal Rawat]

Dear Members,

Can a trust be a shareholder of the company??

An early reply would be highly appreciated.

[venkata ramana]

No.

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[Bharadwaj prakash]

If it is a registered one, I think it can.

Others views solicited.

Kind regards,

CS Bharadwaj Prakash 

[venkata ramana]

N O.

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[venkata ramana]

Check provision on ' beneficial interest holders' under company law to understand reasoning behind the prohibition.

On Monday, May 5, 2014, Bharadwaj prakash <bspra...@gmail.com> wrote:

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[Ziaul Khan]

no

[Bidu Bhusan Dash]

Please refer section 153 of the companies act,1956

Regards,

CS Bidu Bhusan Dash

M-9971324050

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[Chandru]

Hi..
Since trust has no separate legal entity as per co law provisions, it can not hold shares in it's own name. However, trust can b a beneficiary of shares which are held by the trustee in their individual capacity. As mentioned, sec 153 of old act can b referred.

Can somebody tel wher is corresponding provision under new act??

Sent from my Xperia™ smartphone

[CS Riyanka Jain]

In new CA, 2013, no specific corresponding section is mentioned. But, in my views, taking into consideration the same intent/reason as per section 153 of CA, 1956, trust shouldnt hold shares in its own name and as far as i remember, there was a relevant case law also mentioned in the book-Ramaiya covering the subject line.

We need to analyse the definition of Member (Section 2(55) of CA, 2013), Section 88, Section 89 and Companies (Management & Administration) Rules, 2013 in this context also, where is a mention of beneficial ownership.

Preparing a short note on subject, will share it soon!

Regards,

[Chandru]

Good initiative Riyanka.

Sent from my Xperia™ smartphone

[naseej naseej]

Company cannot issue shares in the name of Trust. As per companies act 1956, Company cannot enter the name of the trust into register of members. Company can issue shares in the name of Trustee. And Trustee should declare his beneficial interest to the Company in Form 1, and company should file Form II with ROC. There r Two types of Trust-public and private. In case of PVT Trust, each beneficial owner should file declaration and  in case of Public trust, only Declaration filed by Trustee.
Refer,
Companies (Declaration of Beneficial Interest in Shares) Rules, 1975
Section 187C

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[Nehal Rawat]

Dear Members,

kindly go through this link ;

http://www.bseindia.com/corporates/shpPromoters_60.aspx?scripcd=500570&qtrid=81&CompName=TATA%20MOTORS%20LTD%20&QtrName=March%202014

Here, many trust has held shares in their own name.If a trust can hold shares in a company , then what are the additional requirements needs to be fulfilled.

Kindly guide as I have not reached to a conclusion yet.

[sachin kumar]

Nice

[CS Chandru]

Hi,

 

As per Sec 153 of Act 1956, Trust name shall not be entered in the register of members. However a Trust can be a Benificial owner of shares registered in the name of Trustees. If the shares are in electonic form in Depository system, the Depositories are the regd members and the shareholders will treated as beneficial owners of shares of their shares.

 

Therefore, in the BSE link shared above, Trusts are beneficial owners of shares

 

Others views are welcomed..

Thanks & Regards

CS Chandrashekhar

+91 9743148312

 

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[CS Chandru]

In furtherance to my earlier reply, pls find below provisions of Sec 9 of the Depositories Act -

 

9. Securities in depositories to be in fungible form
(1) All securities held by a depository shall be dematerialised and shall be in a fungible form.
3 [(2) Nothing contained in sections 153, 153A, 153B, 187B, 187C and 372 of the Companies Act, 1956 (1 of 1956) shall apply to a depository in respect of securities held by it on behalf of the beneficial owners.]

[Nehal Rawat]

Dear Mr. Chandru,

Thank you for your valuable reply.

The shares are in physical form. Moreover, the company is a private company and trust is the private trust and its trustees are the directors of the company.