Drafting: Understanding the Formation and Structure of Trusts in Memorandum of Understanding (MOU)

 

Introduction

Memorandum of Understanding (MOU) serves as a foundational document for establishing trusts, societies, and associations. In this article, we will explore the process of structuring and forming a trust using a hypothetical example. Specifically, we will delve into the registration process of forming a society or public trust based on the provisions outlined in the MOU of the "Prem Niwas Tenants Association."

Name and Address of the Association

The association is named "Prem Niwas Tenants Association." Its principal office is located at C/o Room No 4, Prem Niwas Chawl, D’monte Lane, Orlem, Malad West, Mumbai – 400064. The MOU also allows for the possibility of changing the office location by mutual agreement among all members or the Managing Committee, if one is selected by the members.

Objects of the Association

The MOU outlines the objectives and aims of the association, which include:

a. Running, operating, maintaining, handling, and managing the day-to-day affairs of the association and/or the Residence Place of Members (RPoM) for the welfare and betterment of its members.

b. Collecting and depositing funds or contributions made by members or any person approved through a resolution by all members. The collection methods include demand drafts, pay orders, cheques, or cash (not exceeding Rs. 50,000/- or any maximum allowable limit under the law). The funds are to be deposited in designated banks for the purpose of day-to-day maintenance or any other purpose agreed upon by the members, which may include the development or redevelopment of RPoM.

c. Utilizing, managing, and investing the funds available in the designated bank accounts for day-to-day maintenance, generating income for the association, or any other purpose unanimously agreed upon by the members. This may also involve further development or redevelopment of RPoM.

d. Providing assistance to individuals affected by natural calamities, such as earthquakes, floods, or droughts, by arranging shelter based on member recommendations. The assistance provided should not exceed 5% of the funds collected in that month, unless all members unanimously agree otherwise. However, the assistance provided should not exceed the income generated from the collected or earned funds in that month.

e. Striving for the welfare and upliftment of association members or their dependents (e.g., old parents, spouse, or children) by improving their social, educational, and cultural status.

f. Organizing social gatherings, functions, and celebrations of national holidays to promote friendship and brotherhood among the members. Examples of such holidays include Independence Day (15th August) and Republic Day (26th January).

g. Conducting cultural and other programs in the vicinity of the association and its surrounding areas for the benefit of association members.

Management of the Association

The management of the association's affairs is entrusted to a Managing Committee. The specific members of the committee will be determined according to the rules and regulations of the association. The current members of the committee are not specified in the MOU and will likely be appointed or elected based on internal procedures.

Conclusion

The MOU plays a crucial role in establishing the structure and objectives of an association, such as a trust or society. In the case of the "Prem Niwas Tenants Association," the MOU defines the association's name, address, objectives, and the management structure. These provisions serve as a framework for the formation and functioning of the association, guiding its activities and ensuring a clear path toward achieving its stated goals.