Summary Of Regulations Enabling Exempt Private Trust Companies To Be Established In The BVI
INTRODUCTION
The Financial Services (Exemptions) Regulations, 2007 came
into effect on 1 August 2007.
The Regulations exempt British Virgin Islands
("BVI") companies from obtaining
trust licences under the BVI's Banks and Trust Companies
Act, 1990 (as amended) (the "BTCA")
if they satisfy certain conditions.
In order to qualify for the exemption a company (an
"exempt PTC") must satisfy each of
the conditions which are summarised in paragraphs 2.1 to 2.8
below.
CONDITIONS WHICH AN EXEMPT PTC MUST SATISFY
The company must be a BVI company that was originally
incorporated under the BVI Business Companies Act (the
"BCA"), but certain companies which
were originally incorporated under the International Business
Companies Act and which were voluntarily or automatically
re-registered under the BCA will also qualify1.
The company must be a limited company (whether limited by
shares or limited by guarantee and whether or not, in the case
of a company limited by guarantee, it is authorised to issue
shares).
The company's name must include the designation
"(PTC)". This must be placed before one of the
permitted endings for the name of a BVI company (such as
"Limited", "Ltd" or "Inc").
The company's memorandum must state that it is a private
trust company.
The registered agent of an exempt PTC must hold a class 1
trust licence under the BTCA. (All BVI companies which are
incorporated under the BCA, whether or not they are exempt
PTCs, are required by that Act to have registered agents and
most, but not all, of them have class 1 trust licences.) The
company must at all times ensure that the registered agent has
such a licence.
The company must not solicit trust business from members of
the public.
The company must carry on no business other than that of
being the trustee, protector or administrator of trusts (or of
managing or administering trusts). However activities which are
incidental or ancillary to trusteeship and trust administration
should not disqualify the PTC from falling within the
exemption.
All of the company's trust business must either be
"unremunerated trust business" or "related trust
business", but an exempt PTC is permitted to carry on a
mixture of unremunerated trust business and related trust
business. If at any stage it carries on trust business which is
neither unremunerated trust business nor related trust business
it will no longer be eligible for the exemption and will need
to obtain a trust licence. "Unremunerated trust
business" is considered further in paragraphs 3.1 to 3.5
below and "related trust business" is considered
further in paragraph 4 below.
UNREMUNERATED TRUST BUSINESS
"Unremunerated trust business" is defined by
paragraph 2(1) of the Regulations as trust business which is
carried on "if no remuneration is payable to, or received
by, the [exempt PTC], or any person associated with [it], in
consideration for, or with respect to, the services that
constitute trust business".
"Remuneration" includes money or any other form of
property and includes remuneration payable or received out of
the assets of the trust (or its underlying assets), from the
settlor or a beneficiary, or from any other person pursuant to
an arrangement with the settlor or a beneficiary.
Persons who will be regarded as being "associated
with" an exempt PTC for the purposes of the definition in
paragraph 2(1) of the Regulations include those who have a
legal or beneficial interest in it, its directors and employees
and its former directors and employees.
If remuneration is paid to a director of a PTC it will be
treated as being remuneration which is paid to a person who is
"associated with" the PTC within the meaning of the
definition in paragraph 2(1) of the Regulations unless
two conditions are satisfied. The conditions are that it must
be paid in relation to professional director services provided
to the PTC and that the director must not otherwise be
associated with the PTC (eg as a result of having a direct or
indirect beneficial interest...
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