Private Trust Companies in the British Virgin Islands
28 October 2020
The BVI Banks and Trust Companies Act, 1990 (as amended), (the "BTCA"), states that no company shall carry on any kind of trust business in or from within the BVI, unless the company holds a valid licence authorising it to carry on that kind of trust business.
"Trust business" is defined as the business of:
- "acting as a professional trustee, protector or administrator of a trust or settlement;
- managing or administering any trust or settlement; or
- acting, in relation to a Class I trust licence, as trustee under wills and settlements and as executor and administrator of deceased persons."i
However, the Financial Services (Exemptions) Regulations, 2007 (the "Exemption Regulations") provide an exemption for Private Trust Companies (the "PTC exemption").
Registration and name requirements
In order for a BVI company to benefit from the PTC exemption it must comply with the Exemption Regulations registration requirementii. In essence, this means that its memorandum must, on registration, contain a statement that it is a Private Trust Company (a "PTC")iii.
Restrictions as to the trust business
The PTC's trust business must be solely "unremunerated trust business" or "related trust business".iv
Unremunerated trust business
The business will be "unremunerated trust business" if no remuneration is payable to, or received by, the PTC, or any person associated with it, in consideration for, or with respect to, the services that constitute the trust business.
"Remuneration" includes money or any other form of property and it is immaterial whether remuneration is payable or received out of the assets, or underlying assets, of a relevant trust, from the settlor or beneficiary of a relevant trust or from any other person pursuant to an arrangement with the settlor or beneficiary of a relevant trust.
A person is "associated" with a PTC if: "…he has an interest, whether legal or beneficial, in the private trust company; he is a director or former director of the private trust company; or he is an employee or former employee of the private trust company."
However, payments made to a PTC to indemnify it in respect of costs and expenses paid or incurred by it will not be regarded as "remuneration" for these purposes. Furthermore, remuneration payable to or received by a director will not be "remuneration" if the director is a professional director and not otherwise associated with the PTC, whether by virtue of having a direct or indirect beneficial interest in the PTC or otherwise, although it may be a mixture of both.
Related trust business
"Related trust business" means trust business provided in respect of: "…a single qualifying trust; or a group of related qualifying trusts."
"Qualifying trust" means a trust where each beneficiary of the trust is: "…a connected person in relation to the settlor of the trust; a charity; or its settlor."
A person is a "connected person" in respect of any of the following relationships:
- his spouse;
- his descendants and their spouses;
- his parents, including step-parents;
- his grandparents and his spouse's grandparents;
- his parents-in-law, including step-parents-in-law;
- his brother, step-brother, sister, step-sister and their spouses and children;
- his spouse's brother, step-brother, sister, step-sister and their spouses and children;
- his parent's brother, step-brother, sister, step-sister and their spouses;
- children of the brother, step-brother, sister or step-sister of his parents, both present and future, including step-children and their spouses; and
- children of his brother, step-brother, sister or step-sister, both present and future, including step-children and their spouses.
Any of the relationships specified above that may be established by affinity or consanguinity may also be established by adoption.
A PTC must not: "…conduct any business that is not trust business; solicit trust business from members of the public; or carry on any trust business other than either unremunerated trust business or related trust business."
Requirements as to the registered agent
The registered agent of the PTC must:
- hold a Class I trust licence under the BTCA ;
- not agree to act as the registered agent of a PTC unless it has taken all reasonable steps to satisfy itself that the PTC complies with the restrictions as to activities;
- on a periodic basis (such frequency being determined by the risk of non-compliance assessed by the registered agent) take all reasonable steps to satisfy itself that the PTC complies with the restrictions as to activities;
- take all reasonable steps to ensure that up to date copies of the following are kept at its office in the BVI: the trust deed, any deed varying the trust deed and the documentation and other information on which it has relied to satisfy itself that the PTC complies with the restrictions as to activities; and
- immediately notify the BVI FSC in writing if at any time they form the opinion that the PTC does not comply with the restrictions as to activitiesv.
There is no requirement under the BVI Business Companies Act, 2004 to have local directors or a local authorised representative for a BVI PTC.
The only document required to be filed publicly for a BVI PTC is its memorandum and articles which, other than containing a statement that the company is a PTC, do not need to contain details of the directors, shareholders or any trust of which the PTC is the trustee.
There is no requirement to file the register of members in the BVI and, whilst there is a requirement to file the register of directors, this document is not a public document and thus is not available to the public.
There are no application or annual fees to obtain and maintain exemption as a PTC.
The only additional fees are the higher registration and annual fees (in each case, US$1,350 as opposed to US$450 for a regular BVI company at the time of writing).
i Bare trusts are exempted under 11 (1) of the Exemption Regulations.
ii However, there is no requirement, for example, for approval by the BVI FSC.
iii The BVI Business Companies (Company Names) Regulations, 2007 also require that the name of a private trust company must end with the designation ("PTC") placed immediately before its corporate prefix (e.g. Limited) and, under the BTCA, its name must not include "trust", "trustee", "trust company", "trust corporation" or "fiduciary" or any of their derivatives.
iv Although it may be a mixture of both.
v There being no annual reports or filings to be made by the PTC to the BVI FSC in order to maintain the Exemption Regulations exemption.