Which statement best describes the difference between a charitable trust and a charitable company?

Which statement best describes the difference between a charitable trust and a charitable company?

• A. A charitable trust is governed by a trust deed.
• B. A charitable company is a registered company limited by guarantee.
• C. A charitable trust is a registered company limited by guarantee.
• D. A charitable company must be owned by private individuals.

Answer: (B)

The key difference is the legal form: a charitable trust is an unincorporated arrangement where trustees hold assets for beneficiaries under a trust deed, whereas a charitable company is a separate legal entity registered as a company limited by guarantee. This means a charitable company has corporate personality, can own property and enter contracts in its own name, and is governed by company law alongside charity law. That’s why the statement that its defining feature is being a registered company limited by guarantee best describes the difference. The other statements describe true aspects of trusts or claims about ownership that don’t capture what mainly sets the two apart.

The key difference is the legal form: a charitable trust is an unincorporated arrangement where trustees hold assets for beneficiaries under a trust deed, whereas a charitable company is a separate legal entity registered as a company limited by guarantee. This means a charitable company has corporate personality, can own property and enter contracts in its own name, and is governed by company law alongside charity law. That’s why the statement that its defining feature is being a registered company limited by guarantee best describes the difference. The other statements describe true aspects of trusts or claims about ownership that don’t capture what mainly sets the two apart.