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Trustees Incorporation of Non-Profit Organization
Dr. Punitha SilivarajooBahagian Hal Ehwal Undang-Undang
Jabatan Perdana Menteri
LANDASCAPE OF NPO’S IN MALAYSIA
Company Limited By Guarantee – Companies Act 2016 [Act 777]
Charitable Corporation Formation
Company Limited By Guarantee – CompaniesAct 2016 [Act 777]
Charitable Corporation Formation
Societies, organizations, associations –Societies Act 1966 [Act 335]
Constitutional basis registered society
Incorporation of Trustees – Trustees (Incorporation)Act 1952 [Act 258]
Establishment of Trustees Incorporation by founder(associations of person / body corporate)
Trust Company and Labuan Foundation –Labuan Trusts Act 1996 [Act 554] and Labuan Foundation Act 2010 [Act 706]
NPO - UNDERLYING CONCEPT
Company Limited By Guarantee – Companies Act 2016 [Act 777]
Charitable Corporation FormationLegal persons or arrangements or organization
Primarily engages in raising or disbursing funds
Includes charitable, religious, cultural, educational, social or fraternal objectives, or for the carrying out of other type of “good works”
CHARATIBLE
RELIGIOUS
EDUCATION
SOCIAL LITERARY
SCEINTIFIC
ARTS & CULTURE
CATEGORIES OF NPO’S
INCORPORATED
YEARTOTAL
INCORPORATED REVOKE/DISSOLVED ACTIVE
Sebelum 2010 152 20 132
2011 32 2 30
2012 39 - 39
2013 57 - 57
2014 45 - 45
2015 43 - 43
2016 21 - 21
2017 44 1 43
2018 21 - 21
Jumlah 454 23 431
The trust assets constitute a separate fund and are not a part of the trustee's own estate.
A trust is that it permits the separation of legal ownership and beneficial interest: the trustees become the owners of the trust property as far as third parties are concerned, and the beneficiaries are entitled to expect that the trustees will manage the trust property for their benefit.
The trustee has the power and the duty, in respect of which he is accountable, to manage, employ or dispose of the assets in accordance with the terms of the trust and the special duties imposed on him by law.
Legal title to the trust assets stands in the name of the trustee, or in the name of another person on behalf of the trustee.
TRUSTEES INCORPORATION IN MALAYSIA
• Trustees Incorporation in Malaysia is governed by the Trustees Incorporation Act 1952 [Act 258] overseen by the Legal Affairs Division of the Prime Minister’s Department
• The “act” stipulates among others, powers of the Minister, liabilities of trustees, revocation of the certificate of incorporation, dissolution, consequences of revocation and other requirements
• Inadequacy of the current act calls for immediate amendments / repeal of the act which is in the pipeline
WHO IS WHO IN A TRUST- FOUNDERS
FOUNDERS
Founders =Individuals/ group of individuals / organisations
Founders can also be Trustees
Founders are people who contribute funds/ideas/initiatives
WHO IS WHO IN A TRUST - TRUSTEES
Trustees
- Conform to the Trust Deed and objectives stated therein- Number of trustees – between 3-15- Malaysian OR Permanent Resident
-
- Trusteeship is non transferable to third party- Changes in Trustees need to be lodged to the Minister- Trustees be appointed by the Board of Trustees
-Independent and non independent trustees-Tenure : 3-5 years- Trust fund may be used for administrative expenses- Meetings to be held for a minimum of 2 time
in a year
GENERAL DUTIES OF A TRUST(INCORPORATED UNDER ACT 258)
Perform duties in
an honest manner
NPOs well managed
Ensure objectives
are achieved
Regular reporting &
power of supervision
• General rule a trustee sufficiently discharges his
duty if he takes in managing trust affairs all those
precautions which an ordinary prudent man of
business would take in managing similar affairs of his
own.’
Speight v Gaunt (1883) 9 App Cas 1, 19, HL, per
Lord Blackburn; Learoyd v Whiteley (1887) 12 App
Cas
GENERAL DUTIES OF A TRUST(INCORPORATED UNDER ACT 258)
Ensure all transactions are well recorded within reasonable time
frame
Promote transparency and ease the referencing process by having
all information, i.e donors, beneficiaries
Record keeping includes supporting doc. deem appropriately
& in an accordance with relevant laws.
(*)In accordance to S15 of the Trustees Incorporation Act 1952 which may call forNon compliance under S17(d)
ISSUES & EFFORTS TO MITIGATE
• Many do not meet the objectives – Change their objectives descreetly
• Funding issues become dormant over time
• Inadequate commitment from Trustees
• Personal interest vs the interest of the trust
• Internal conflicts among Trustees that may affect the effectiveness of carrying out the objectives of the Trust
Micro Perspective
• To focus on “Charitable Trust”
• To amend the current Trustees Incorporation Act 1952 [Act 258] – to be “fit for purpose”
• To increase supervision and monitoring
• To increase enforcement powers
• To include sufficient regulations into the Act
Macro Perspective
• NPO’S as a third sector
• Charitable NPOs’ primary objectives:
• (i) Philanthropic : Establish caring society
• (ii) Social well-being: Elevate standard of living & education level
• (i) + (ii) = public benefit
WAY FORWARD – TRUSTEES INCORPORATION
THANK [email protected]
Tel : 03-88851095