Introduction:
Trustee services play a crucial role in financial transactions and fiduciary relationships in India. They involve legal arrangements where securities are held or administered on behalf of third parties, such as in collective investment schemes and securitization. This article explores the meaning of trustee services, compliance requirements, the scope of work, and the benefits of appointing a corporate trustee in India.
Meaning of Trustee Services
Trustee Services are the services by way of business a legal arrangement which provides the legal title to securities is held or securities are administered for third parties’ benefits in financial transactions including Collective Investment Schemes (CIS), securitization or any other fiduciary relationship in securities markets.
In India, Trustees services are governed by SEBI under The SEBI (Debenture Trustees) Regulations, 1993 and further provide for eligibility criteria for registration, monitoring and review, registration, Code of Conduct, procedure of action in case of defaults, avoidance of conflict of interest.
What are the compliances for trustee services in India?
- General Compliances: –
1. Auditor engagement, audit support and coordination till attestation.
2. Quarterly reporting to SEBI.
3. Quarterly Compliance report (QCR) to Trustee.
4. Annual Compliance Test Report to Trustee.
5. RBI Invi Filing for Foreign contribution.
6. Annual Foreign Liability & Asset Filing with RBI.
7. Monthly statutory payments of TDS (including deduction u/s 194LBB on income distribution to unit holders), GST and filing returns.
8. GST and filing returns.
9. PPM Audit on Annual Basis.
- Following are the broad scope of work for trusteeship service:
1. Managing and administering assets under the trust
2. Keeping books and accounts.
3. Administering investments.
4. Acting in the best interests of the beneficiaries.
5. Implementing the directions of the settlor.
6. Distributing assets to the beneficiaries in the manner provided by the settlor.
Where are all the Trustee services required in India?
TRUSTEE SERVICES
- CORPORATE TRUSTS
1. Security Trustee-Term Loan & Credit Facilities.
2. Debenture/Bond Trustee-Debentures / bonds and deposits.
3. Securitization and structured finance.
4. Escrow & securities monitoring.
5. Trust and retention account agent, and facility agent.
6. Structured Finance.
7. Administration of Trust & Legal Structure.
8. ESOP / EWT Trustee.
- TRUSTEE FOR FUNDS
1. Structuring from legal & taxation perspective.
2. Business trusts: Alternate Investment Funds.
3. Transfer of assets and listing assistance.
4. Regulatory compliance & reporting.
5. Setting up of operational framework & common platform for participants.
6. Convening meetings of unit holders and maintenance of records.
7. Annual administration during the life of the trust.
- REITS & INVITS
1. Structuring from legal and taxation perspective.
2. Assisting in Transferring assets and listing.
3. Adhering to regulatory compliances & reporting.
4. Offering legal due diligence on assets and monitoring the flow of funds.
5. Convening meetings of unit holders and maintenance of records.
- CORPORATE SERVICES
1. Setting up of legal structures in line with business objective.
2. Consulting / identifying a suitable or other platform for setting up an entity in India.
3. Facilitating identification & appointment of designated partner/ directors.
4. Facilitating annual regulatory compliance including tax filings.
5. Assisting with payroll activities & book-keeping of documents.
6. Providing corporate secretarial & other support services.
SEBI registered for AIF trustee services, if yes what are the costs/process/timeline for SEBI registration.
Not required for AIF trustee and other sending separate list for debenture trustee can take from there.
Do we need a separate entity in India to provide these services?
Not mandatorily as per law but it is preferable to have as separate entity otherwise, we must check the object clause of Intertrust corporate services. No minimum paid up capital requirement as per law.
Whether there is conflict of interest with our other existing services like directorships?
No, there is no conflict of interest with our other existing services. As Intertrust provide following services all over the world:
1. Accounting services.
2. Global entity management services.
3. Global HR services.
4. Global payroll services.
5. Capital markets and fund services.
6. Family wealth service.
Benefits of appointing a Corporate Trustee:
1. Independent
2. Professional approach
3. Continuity
4. Better control over assets
5. Operational efficiency
6. Easy accessibility.
Conclusion: Trustee services are vital for maintaining legal arrangements and administering securities on behalf of third parties in India. This article has covered the meaning of trustee services, compliance requirements, the scope of work, and the advantages of appointing a corporate trustee. Whether you are involved in corporate trusts, funds, REITs and INVITs, or require corporate services, understanding the role and benefits of trustee services is crucial for efficient and compliant operations.
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