Am not sure this comes in Buisness Law, but here goes the question - Have started a pre-school and day care in Bangalore, Karnataka. The motivation was not for buisness, but what in my opinion is for social cause. I can explain the social cause later. Right now it is loss making and even otherwise I do not expect to make much profit. I had a very high paying job, and this is literally peanuts for me. Now I am taking utmost precautions for safety etc. But I have been told that in case of an unforseen circumstances and there is an accident, aggreived party can sue in court and attach my proprety etc. That would be most unfortunate in many ways, least of all this being done for charity and I loose so much. Also, in future I am not sure whether I want to grow the buisness route or donation route. So with this in mind, am not sure how I should register it - as a charitable trust or as a buisness or propreitership. Would definitely appreciate advice
Hello,
If you do not want thet in case of any unforeseen circumstances your property is attached in case of loss, you can opt the model of charitable trust, where you can act as a trustee. You have to take some precautions in drafting the deed during registration process.
Regards
Hi,
As far as I get, you wish not to make any profits out of business but you have a motive of Charity behind starting this venture. I'll advise you to incorporate a public charitable or a society/NGO to run your business. You will not face any personal liability incase you face mishaps in your business.
1) you should register the pre school as charitable trust
2) pre-primary schools across the state to register with the education department.
Pre-primary schools that fail to comply are liable to be declared "illegal".
As per Section 11 of RTE act, the appropriate government may make necessary arrangement for providing free pre-school education.” In pursuance to this, the Government of India has signed a convention for implementing Early Childhood care and Education Scheme for free playschool education.
Preschools can be set up as profit or nonprofit enterprises.
In the case of the playschool being a nonprofit enterprise, a Company or a Trust can be registered under Section 8 of the Companies Act 2013, which pertains to a established company ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objects of the company, and no dividend is paid to its members.
In the case of the playschool being a Profit making enterprise, it is advisable to incorporate it into a private limited company or a Limited Liability Partnership.
A new institution can be set up either as a proprietary concern or Partnership or as a company. Where a company needs to be registered with the Ministry of Corporate affairs and is governed by The Companies Act 2013, A Partnership deed is governed by The Partnership Act 1932. It is usually easier to form a partnership, as it is cheaper and quick to register.
The advantage of Setting up one’s own institution is that the investment for setting up preschool is lesser as no amount has to be paid as franchise fees or royalty later.
Thank you for the detailed answer What about from a liability point of view ?
1) since trust owns the school your personal assets would not be attached in case suit is filed to claim compensation
2) employ trained teachers , install CCTV cameras , install fire safety equipment
Thank you for the detailed answer
What about from a liability point of view ?
The partnership agreement will take care of the liabilities as well as profit and loss sharing issues also.
Personnel property can not be attached but you can be made liable as a trustee.
Regards