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Hartmut Paul Balke   08 December 2022

Trust or company

The public charitable trust OIF in Mumbai created in 2011 a private limited company with same name, same trustees/directors, same address, same "business". Company makes losses. Why are they doing this?


 3 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     08 December 2022

Supreme Court has opined that upto 6 to 15% of profit would not jeopardise the charitable character of an Institution. The seventh category Trusts / NGO i.e. for advancement of any other object of general public utility, can have incidental business activity upto 20% of gross receipt.

Hartmut Paul Balke   08 December 2022

The question is not regarding the profit. Why is a trust creating a private company (section 25 company) with exact the same name, address, office, trustees/directors and even their targets? What is it that makes sense? To your information, there is a huge worldwide network of many companies with always the same people (as on this trust/company) on board and no employees.

Adv. Shrey Shah (Advocate)     08 December 2022

If you search charity commissioner website, you will find ample examples of big companies (cannot be named for obvious reasons) getting undue benefit from govt on account of being registered as trust. Did you know, that majority of the so called big hospitals are operated by charitable trusts and need to reserve 50% of their beds for the poor and indigent along with multiple other issues. Sadly, none of the hospitals are following it. 

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