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Differences between a society and a trust in Pakistan

Differences between a society and a trust in Pakistan

A society and a trust are two legal entities in Pakistan that have different purposes and functions. Both are non-profit organizations, but they are governed by different laws and regulations. In this article, we will discuss the differences between a society and a trust in Pakistan.

 

Society in Pakistan

A society is a non-profit organization that is formed by a group of individuals who share a common purpose. The purpose of a society can be charitable, religious, educational, or any other social cause. In Pakistan, societies are governed by the Societies Registration Act, 1860. This act provides guidelines for the registration of societies and the procedures for their functioning.

To register a society in Pakistan, a minimum of seven members is required. The members of the society must elect a governing body to manage the affairs of the society. The governing body of a society is usually comprised of a President, Vice-President, Secretary, Treasurer, and other members as required by the society’s constitution. The constitution of a society is a legal document that outlines the purpose, objectives, and rules of the society.

Once a society is registered, it is considered a separate legal entity. This means that the society can enter into contracts, own property, and sue or be sued in its own name. The members of the society, however, do not have personal liability for the debts or obligations of the society. The liability of the members is limited to the amount of their membership fee.

Examples of societies in Pakistan include the Pakistan Red Crescent Society, the Pakistan Cancer Society, and the Pakistan Society for the Prevention of Cruelty to Animals.

 

Trust in Pakistan

A trust is a legal arrangement in which property or assets are transferred to a trustee to hold for the benefit of a beneficiary. The trustee is responsible for managing the assets in accordance with the terms of the trust deed. In Pakistan, trusts are governed by the Trusts Act, 1882. This act provides guidelines for the creation, management, and dissolution of trusts.

To create a trust in Pakistan, a settlor must transfer property or assets to a trustee. The settlor must also provide instructions on how the assets should be managed and distributed to the beneficiaries. The trustee must act in the best interests of the beneficiaries and manage the assets in accordance with the terms of the trust deed.

Once a trust is created, it is considered a separate legal entity. This means that the trust can enter into contracts, own property, and sue or be sued in its own name. The liability of the trustees is limited to the assets of the trust, and the beneficiaries do not have any personal liability for the debts or obligations of the trust.

Examples of trusts in Pakistan include the Edhi Foundation, the Al-Khidmat Foundation, and the Shaukat Khanum Memorial Trust.

 

Differences between a society and a trust in Pakistan

Formation process:

The process of forming a society and a trust in Pakistan is different. A society is formed by a group of individuals who share a common purpose, while a trust is created by a settlor who transfers property or assets to a trustee.

Membership:

A society requires a minimum of seven members to be registered, while a trust does not have any membership requirements.

Governing body:

A society has a governing body that is elected by its members to manage its affairs, while a trust has a trustee who is responsible for managing the assets of the trust.

Purpose:

A society is formed for a social cause such as charitable, religious, or educational, while a trust can be created for any lawful purpose.

Liability:

The liability of the members of a society is limited to the amount of their membership fee, while the liability of the trustees of a trust is limited to the assets of the trust.

Management:

A society Management: A society is managed by its governing body, which is elected by the members of the society. The governing body is responsible for making decisions and managing the affairs of the society. In contrast, a trust is managed by the trustee, who is responsible for managing the assets of the trust in accordance with the instructions provided in the trust deed.

Property ownership:

A society can own property in its own name, but the property is held for the benefit of the society and its members. On the other hand, a trust can also own property, but the property is held for the benefit of the beneficiaries of the trust.

Dissolution:

The process of dissolving a society and a trust is different. In the case of a society, the governing body must pass a resolution to dissolve the society, and the assets of the society are distributed to its members or for a charitable purpose. In contrast, the process of dissolving a trust is outlined in the trust deed, and the assets of the trust are distributed to the beneficiaries in accordance with the instructions provided in the trust deed.

Taxation:

Societies and trusts are both considered non-profit organizations and are exempt from income tax in Pakistan. However, societies are subject to certain taxes, such as property tax and stamp duty, while trusts are not subject to these taxes.

 

Conclusion

In conclusion, societies and trusts are both non-profit organizations in Pakistan that are governed by different laws and regulations. Societies are formed by a group of individuals who share a common purpose, while trusts are created by a settlor who transfers property or assets to a trustee. Societies have a governing body that manages their affairs, while trusts are managed by a trustee who manages the assets of the trust. The purpose of a society is usually for a social cause, while a trust can be created for any lawful purpose. The liability of the members of a society is limited to their membership fee, while the liability of the trustees of a trust is limited to the assets of the trust. Finally, the process of dissolving a society and a trust is different, and they are subject to different taxes in Pakistan.