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Trustees Incorporation of Non-Profit Organization Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang Jabatan Perdana Menteri

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Page 2: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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]

Page 4: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

CHARATIBLE

RELIGIOUS

EDUCATION

SOCIAL LITERARY

SCEINTIFIC

ARTS & CULTURE

CATEGORIES OF NPO’S

INCORPORATED

Page 5: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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

Page 6: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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.

Page 7: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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

Page 8: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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

Page 9: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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

Page 10: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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

Page 11: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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)

Page 12: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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

Page 13: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

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

Page 14: Dr. Punitha Silivarajoo Bahagian Hal Ehwal Undang-Undang ... · Jabatan Perdana Menteri . Image result for non profit organizations. LANDASCAPE OF NPO’S IN MALAYSIA. Company Limited

THANK [email protected]

Tel : 03-88851095