Trust Registration in Bangladesh | A Comprehensive Guideline

A trust is a legal mechanism that places an obligation on an individual, known as the trustee, to hold property for the benefit of another. The individual who establishes a trust is referred to as the ‘settlor’ in the context of an inter vivos trust and the ‘testator’ when the trust is created through a testamentary declaration, i.e., in a will. The individual who bears the responsibility of holding the property and executing the trust’s purpose is called the ‘trustee’, while the individual for whose benefit the trust is established is known as the ‘beneficiary’.

A trust can be established to pursue a charitable objective, such as advancing women’s health education or alleviating access to justice.

In Bangladesh, the Trusts Act, 1882 governs the formation of trusts. The Act outlines the qualifications for the settlor, trustee, and beneficiary. According to Section 6 of the Act, a trust is established when the author of the trust expresses, with reasonable certainty through words or actions:

(a) an intention to create a trust,

(b) the purpose of the trust,

(c) the beneficiary, and

(d) the trust property.

Formation and Registration of a Trust: Establishing a trust does not necessitate obtaining permission from any governmental or regulatory authority. The primary requirement is the registration of the trust deed with the appropriate sub-registrar’s office.

The process of registering a trust is contingent on the type of property involved. According to Section 5 of the Trust Act of 1882, the registration of a trust involving movable property is not mandatory. However, registration is required for a trust involving immovable property. Therefore, to register a trust deed, the following steps must be followed:

Step 1: Determine the Appropriate Authority for Trust Deed Registration

A trust deed, similar to a land document, must be registered at the local Sub-Registrar’s office. For immovable property, the trust deed must be registered at the Sub-Registrar’s office in the jurisdiction where the immovable property is located, as per Section 28 of the Registration Act, 1908. Conversely, a trust deed for movable property may be registered either where the trust’s activities will take place or where the trust’s registered office is situated.

Step 2: Determine the Fees for Registration

The fees for registering a trust deed are outlined in the Gazette under No.- S. R. O. No. 254-Law/2014, issued in accordance with Section 78 of the Registration Act, 1908 by the Law and Justice Division of the Ministry of Law, Justice, and Parliamentary Affairs. According to Article A (1) of the Gazette, if the value of the trust does not exceed BDT 5,000, a 2% ad valorem fee is applied, with a minimum charge of BDT 100. For trusts valued over BDT 5,000, a fee of 2% of the trust’s value is charged as the registration fee. Schedule I of the Stamp Act of 1899 specifies the stamp duty applicable to trust deeds. According to serial no. 64 of Schedule I, the stamp duty for a trust deed is 2% of the consideration.

Step 3: Sign the Trust Deed

The trust deed must be signed by the author/creator and the trustee in the presence of the registering officer. Additionally, the authors of the trust must sign and affix their fingerprints to the register book before the registering officer. Two witnesses must also sign the last page of the trust deed in front of the registering officer.

Step 4: Submit an Application for a Certified Copy

To obtain a certified copy of the registered trust deed, the author/creator of the trust must complete and sign a prescribed form, which is then submitted to the Sub-Registrar’s office.

After completing all the necessary steps and submitting the document to the registration officer, Section 52(1)(b) of the Registration Act, 1908 requires the registering officer to issue a receipt to the person presenting the document. All the relevenat officials should be present before the sub-registry office on the day of declaring the trust.

Step 5: Operating as a Trust in Bangladesh

Upon the submission of the compiled trust documents, the official at the registering office will issue a receipt and a duplicate of the trust deed. This receipt must be presented to the appropriate Sub-Registrar’s office to obtain the original registered trust deed.

With these documents, the trust officials will be authorized to open a bank account in the name of the trust at any designated bank in Bangladesh and conduct the regular activities of the trust.

Generally, the registration process takes approximately 7-10 working days once everything is prepared for filing with the Land Registry Office. However, this period may vary depending on specific circumstances.

Step 6: Registering under The Societies Registration Act, 1860:

A trust which has a charitable object may be registered under the Societies Registration Act, 1860. An application can be made to the Registrar of Joint Stock Companies and Firms (RJSC) with the draft Articles and Memorandum of Association to obtain registration as a Society. A minimum of 7 (seven) person is required as members or trustees for registration under the Societies Registration Act, 1860. If a trust is registered under the Societies Registration Act, 1860 it creates a legal entity.
To apply with the NGO Affairs Bureau (NGOAB) or Micro Credit Regulatory Authority, the Trust must be charitable and must be registered with RJSC Bangladesh under The Societies Registration Act, 1860.

This process involves the following:

Step 01: Issuance of name clearance from RJSC.

Step 02: Application to RJSC along with the deed of trust and Clearance letter for registration, with all the other required documents.

Step 03: Payment of government fees

Step 04: Security Check by the Law enforcement agency, i.e. Special Branch of Police and National Security Intelligence etc.

Step 05: Inspection, Monitoring and Review of the NGO by the concerned authorities. (if required)

Step 06: If satisfied then issuance of registration by the authority.

This process may take 3-4 months depending on the complexity of the matter.

(i) Nature of Beneficiaries: The trust may be structured to benefit specific, named individuals (fixed beneficiaries) or may be discretionary, whereby the trustee is vested with the authority to select the beneficiaries at their discretion.

(ii) Role and Responsibilities of the Trustee: The trustee holds the legal title to the trust property and is obligated to manage it with the same level of diligence and prudence as an ordinarily prudent individual would manage their own property. The trustee bears personal liability for any breach of trust and is mandated to keep transparent and accurate accounts of the trust property.

(iii) Trustee Remuneration: A trustee is entitled to remuneration only if such compensation is explicitly stipulated in the trust deed.

(iv) Nature of Trust Property: The assets constituting the trust property can be either immovable (real estate) or movable (personal property).

(v) Foreign Donations: To receive or utilize foreign donations, the trust must secure approval from the NGO Affairs Bureau (NGOAB) under Foreign Donations (Voluntary Activities) Regulations Act, 2016 (FDRA), a process known as Foreign Donation Registration (FD Registration).

(vi) Accountability and Transparency: Trustees are required to maintain clear and detailed accounts of the trust property. Beneficiaries have the right to request and obtain access to these accounts.

(vii) Liability for Breach of Trust: Where the trustee commits a breach of trust, he is liable to make good the loss which the trust-property or the beneficiary has thereby sustained, unless the beneficiary has by fraud induced the trustee to commit the breach, or the beneficiary, being competent to contract, has himself, without coercion or undue influence having been brought to bear on him, concurred in the breach, or subsequently acquiesced therein, with full knowledge of the facts of the case and of his right as against the trustee. Where a trustee commits a breach of trust, a civil suit can be instituted against him claiming damages subject to the provisions of the Limitation Act, 1908.

How LegalSeba Can Help with Trust Registration in Bangladesh

At LegalSeba, we provide a robust suite of services to facilitate your Trust Registration process in Bangladesh. Our offerings include:
Expert Consultation: We assess your business requirements and guide you through the eligibility criteria set by the several regulated bodies associated with the trust registration process.
Document Preparation: Our team assists in collecting and preparing all necessary documentation to ensure compliance with the concerned regulations.
Application Management: We handle the entire application process, from submission to approval, ensuring all steps are meticulously followed.
Continuous Follow-up: We maintain regular communication with the regulatory bodies to track your application status and address any queries or additional requirements promptly.
Inspection Preparation: We help you prepare for any regulatory inspections to ensure your infrastructure and operations meet all regulatory standards.
Lobbying with Authorities: We facilitate effective communication with government authorities to smoothen the registration process.

By choosing LegalSeba, you can navigate the complex regulatory environment with confidence, allowing you to focus on expanding your trust operations.

Conclusion

Securing a trust registration and operation in Bangladesh involves multiple steps and stringent regulatory compliance. LegalSeba is committed to guiding you through each phase, ensuring a seamless and successful application process..

Contact Us

For personalized assistance and more information on trust registration,  book a consultation with our experts by visiting LegalSeba.com/book-now or contact us at:

Phone/WhatsApp: +8801753718223
Email: support@legalseba.com