Under the laws of Kenya, it is possible for religious congregations to be registered under The Trustees (Perpetual Succession) Act (Chapter 164 of the Laws of Kenya) in order to become an body corporate, with the capacity to own property in its own name. This Act in section 4(1) thereof provides that, “Trustees who have been appointed by anybody or association of persons established for any religious, educational, literary, scientific, social, athletic or charitable purpose, or who have constituted themselves for any such purpose, may apply to the Minister …..for a certificate of incorporation of the trustees as a corporate body.”
EFFECT OF INCORPORATION
As stated above, once the trustees have been incorporated they become a body corporate with a perpetual succession and all other legal indicia appertaining to a body corporate. Section 3(3) of the Trustees (Perpetual Succession) Act states that, once incorporated “the trustees shall thereupon become a body corporate by the name described in the certificate, and shall have perpetual succession and a common seal, and power to sue and be sued in their corporate name and, subject to the conditions and directions contained in the certificate, to hold and acquire, and by instruments under the common seal to convey, transfer, assign, charge and demise any movable or immovable property or any interest therein now or hereafter belonging to, or held for the benefit of, the trust concerned in the same manner and subject to such restrictions and provisions as trustees might so do without incorporation”.
INCORPORATION PROCEDURAL REQUIREMENTS
For the trustees to get incorporated, they should prepare a Trust Deed. The Trust Deed inter alia defines:
• the objects of the Trust;
• the Name of the Trust;
• the powers of the trustees;
• the powers to change and appoint additional trustees;
• resignation and removal of trustees; and
• meeting of trustees.
Execution and stamping of the Trust Deed
Once the trust deed has been approved by the trustees, the deed should be signed as appropriate and thereafter stamped with nominal duty of KShs.200.
Stages of Incorporation
The incorporation of a charitable trust involves two stages:
(a) Registration under the Registry of Documents Act
After stamping being stamped with duty, the trust deed should be presented for registration at the Registry of Documents at Ardhi House. The Registry of Documents is established under the Registry of Documents Act (Chapter 285 of the laws of Kenya). The registration under this Act takes about 1 or 2 weeks.
It should be noted that registration under the Registration of Documents Act does not make a trust into a body corporate. However, once the trust is registered under this Act, the trustees can commence implementing the objects of the trust as a simple trust.
(b) Incorporation under the Trustees (Perpetual Succession) Act
After registration under the Registry of Documents, a certified copy of the trust deed and a petition for incorporation prepared in the prescribed form should be lodged with the Minister for Lands for incorporation of the trust. The petition must state, among other things, that the trustees are desirous of being incorporated under the Act and give a pictorial representation of the common seal of the trust, which must be rounded in shape and with the name of the trust inscribed thereto. The Minister for Lands normally takes about 2 to 3 months after presentation of the petition to issue the Trustees with a Certificate of Incorporation.
TRUSTEES
Please note that the first trustees of an incorporated trust are nominated in the trust deed, and their names will be noted in the certificate of incorporation of the trust. Thereafter, these trustees may retire and new ones appointed as per the provisions of the trust deed. Moreover, additional trustees may be appointed as per the provision of the trust deed. Every change of trustees must be reported to the Registrar of Documents in the prescribed form and noted in the original certificate of incorporation of the Trust.
Nationality of Trustees
The trustees of an incorporate trust may be individuals, both local and foreigners, or a body corporate in the nature of a trust corporation, or a mixture of both. However, the Trustee Act provides that a foreign trustee who remains out of Kenya for a period exceeding 12 months may be removed from office by the remaining trustees.
The trustees are duty bound to comply with the provisions of the trust deed establishing the trust as well as the applicable legal provisions. Trustees must also act in the best interest of the trust and avoid conflict of interest situations. The trustees are however permitted to delegate some of their functions to a committee of trustees or employees of the trust.
When incorporated the trustees are require to exercise their powers and make decisions through resolutions of the board of trustees at duly constituted meetings of trustees. Meetings may also be held through an electronic medium which allows participants to communicate with each other e.g. teleconference or video conference, if this is provided for in the trust deed. Most trust deeds also provide that a resolution assented to in writing by all the trustees shall be deemed to have been duly made notwithstanding the absence of a meeting to resolve the matter.
Normally, the trust deed will also contain a provision empowering the trustees to enact regulations to govern the conduct of their meetings including order of business, voting rights, procedure of recording minutes.
ADVANTAGES OF INCORPORATION AS A CHARITABLE TRUST
(a) The trust becomes a body corporate with:-
• perpetual succession and common seal, whose existence is not affected by the death or other incapacities of its trustees;
• legal capacity to own property in its own name;
• ability sue and be sued in its own name; and
• ability to hire employees in its own name.
(b) The trust is eligible to apply for and obtain:-
• tax exemption from the Kenya Revenue Authority pursuant to paragraph 10 of the First Schedule to the Income Tax Act;
• exemption of land rates payable on its immovable properties; and
• exemption on stamp duty when buying land and property pursuant to section 52(2) (b) of the Stamp Duty Act.
CHANGE OF NAME AND DISSOLUTION
An incorporate trust may by means of a resolution change its name by mean of a special resolution which must be registered at the Lands Office and noted in its original certificate of incorporation. An incorporated trust also may by means of a special resolution resolve to dissolve, in which case its assets could be transferred to another charitable entity with similar objects.
If your Church resolves to incorporate under the Trustees (Perpetual Succession) Act, we should be happy to prepare the relevant trust deed and other documentation on your behalf. Meanwhile, please do not hesitate to contact the writer via mainacy@gmail.com if you require any further information or clarification.
No comments:
Post a Comment