Charitable Trust is defined as one in which property held by a trustee must be used for charitable purposes. Before a court can enforce a charitable trust, it must examine the charity and evaluate its social benefits. The court cannot rely on the view of the settlor, the one who establishes the trust, that the trust is charitable.

Advantages of a Charitable Trust

• They are entitled to exemption from Income Tax depending on the nature of business.
• There are no restrictions on membership.
• They are not subject to onerous accounting procedures.

Limitations

• The beneficiaries have a right to take possession of the trust property.
• Each beneficiary has an immediate and absolute right to both capital and income.
• It involves lengthy set-up procedures.
• Trustees are personally liable to third parties for contractual relationships and acts of employees conducted in the course of their employment and within the scope of their authority.
• Third parties do not have a direct right to payment out of the trust assets.

There are certain requirements needed when registering a charitable trust or a foundation and are as follows;

1. Name of the Trust or Foundation
2. Main Objective of the Trust. The charitable trust must fall in at least one of the following categories:
   • Relief of poverty e.g. homes & orphanages, hospitals
   • Advancement of education
   • Advancement of religion
   • Advancement of Health or saving of lives
   • Advancement of environmental protection or improvement
3. Name of the Settlor/ Donor– Full name, copy of ID card/passport; If it’s a company, a copy of the certificate of registration
4. Proposed physical address of the trust foundation
5. Domicile and residence of the trust or foundation
6. A Trust Deed
7. The Trustees: the trustees should show competence in running the trust. For example, if it’s a Medical Trust, then some should have a background in medicine. The following information from the trustees is required;
8. Names and addresses in full.
9. Passport photos of the trustees
10. Copies of Pin certificates of Trustees
11. Copies of national ID or Passport.
12. Curriculum vitae of the trustees
13. Statement of their accounts
14. Minutes appointing the trustees
15. Petition to the minister
16. Seal of the trust
17. Statement of donor funding where applicable.
18. Financial statement of the trust or foundation

PROCEDURE FOR REGISTRATION OF A CHARITABLE TRUST IN KENYA.

Preparation of trust deed

A trust deed must be prepared. It contains the name of the trust, the objectives of the trust, the names in full and addresses of the trustees including powers of the trustees to change and appoint other trustees.

Payment of Stamp duty

The trust document duly signed by trustees is submitted for stamp duty.

Registration

The registration may involve two stages namely;

• Registration under the Registry of Documents Act.

This process may take 1-3 weeks. Registration under the RDA does not make a trust into a body corporate; however the trust can commence implementing the objects of the trust as a simple trust.

• Incorporation under the Perpetual Successions Act.

After registration, a certified copy of trust deed and a petition for incorporation is lodged with the ministry of lands for incorporation of the trust. The Trust may be incorporated under the TPSA, making it a body corporate. In the petition, it must be stated that the trustees require incorporation of a trust and provide a representation of the common seal of the trust. The process takes an average of 3-6 months for the issuance of a certificate of Incorporation.

HOW WE CAN HELP

As Imperial Registrars we shall be pleased to assist you or your company in the registration and undertaking relevant compliance measures with respect to the charitable trust in Kenya. Kindly get in touch with us via (info@imperialregistrars.co.ke) for further assistance.