New Laws On Private Trust Companies Raise The Profile Of The British Virgin Islands.

Substantive new trust legislation relating to private trust companies came into force earlier this year in the British Virgin Islands (BVI), introduced by amendments to its financial services legislation in addition to The Banks and Trust Companies Act 1990 (the "Act") which regulates the operation of trust companies (and also banks) in the BVI.

Although the new legislation has now been enacted, a new regulatory framework (which will be published in the form of a new Regulatory Code) is still required to implement fully the new provisions. We understand from our discussions with the Financial Services Commission (FSC) that the draft Code is in the last stages of review and that its introduction is imminent.

Under the new framework, once the Regulatory Code has been implemented by the FSC, certain categories of private trust companies will be able to apply, on a fast track basis, to be exempted from the licensing requirements and other provisions of the Act. It is anticipated that most unremunerated private trust companies that do not offer trustee services to the general public will be able to apply for exemption from the provisions of the Act.

Moreover, according to the FSC, unremunerated BVI companies that merely hold assets as nominees (or as "bare trustees") will automatically be exempted from the requirements of the Act provided that they do not offer their services to the general public. It is anticipated that these exemptions will take retroactive effect once they have been granted.

The new legislation has received positive feedback from industry commentators and the BVI Branch of the Society of Trust and Estate Practitioners (STEP), which has welcomed the introduction of the new measures, as it is anticipated they will make a positive impact in the jurisdiction. The BVI will now be able to offer a quick and efficient application procedure to those seeking a reputable jurisdiction in which to incorporate private trust companies.

In addition to enabling family controlled structures to be established, private trust companies also offer trustees the benefits of limited liability and perpetual existence, which are normally the features of corporate vehicles. Furthermore, the use of private trust companies can lessen the tax burden by moving such liability from the settlor to the trust company.

Private trust companies have become increasingly popular in offshore financial centres in recent times and the new legislation is the latest of several financial services related statutes that have been enacted by the BVI government over the last few years. The ground breaking Virgin Islands Special Trusts Act 2003, the Trustee Amendment Act and the recently re-vamped Business Companies Act are just a few examples of recent enactments, as the BVI continues to cement its reputation as a premier offshore centre for financial services.

The BVI government, working in close collaboration with the FSC and private industry, remains firmly committed to optimising the conditions required to solidify the BVI's reputation as one of the premier and most effectively regulated offshore jurisdictions in the world. The FSC's admission to the International Organisation of Securities Commissions (IOSCO) in April of this year was further testament to this commitment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Naresh Chand

Appleby

British Virgin Islands

2nd Floor, Palm Grove House

Road Town

Tortola

HM EX

BRITISH VIRGIN ISLANDS

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