Provided below are a comparative summary of the legal, regulatory and corporate procedures in some of the popular jurisdictions toward establishing a Private Trust Company (“PTC”). In this article we provide a comparison between Barbados, the Cayman Islands and the British Virgin Islands
For brevity, a PTC in this article is defined as a company, incorporated in the relevant jurisdiction, having limited business purpose of acting as a trustee for a single trust or a limited group of related trusts.
In order to register with CIMA, a PTC is required to file a declaration at the time of the registration application, and on or before 31 January every year, stating its name, the names of its directors and registered office provider, with confirmation that the PTC is compliant with the Regulations.
Anti-money laundering and know-your-client checks are carried out by the licensed trustee providing the registered office.
The company is incorporated upon the filing of its Memorandum and Articles of Association with the Registrar.
Although the grant of exempt status does not require approval from the government, the onus for vigorous anti-money laundering and know-your-client lay with the PTC and its registered agents.
The licensing application process for a PTC in any of the three jurisdictions can be time consuming and add costs to the process.
There is no requirement that any of the directors be ordinarily resident in Cayman.
The PTC must have its registered office in Cayman provided by the holder of a trust licence.
The initial director is appointed by the subscriber to the memorandum of association. Thereafter, the addition or removal of directors will normally be effected in accordance with the provisions of the articles of association.
Other than a requirement that a BC must have at all times a licensed Registered Agent in BVI who holds a Class I trust licence, BVI does not require the appointment of any particular officer.
The initial director is appointed by the subscriber to the memorandum of association. Thereafter, the addition or removal of directors will normally be effected in accordance with the provisions of the articles of association.
In all three jurisdictions it is necessary to have at least one shareholder (unless the company is set up as one limited by guarantee). The names of all the shareholders must be maintained in a Register of Members which is maintained at the Registered Office of the relevant company. The Register is not open to public inspection in BVI or Cayman. In Barbados the Register is open to public inspection during reasonable business hours. In all three jurisdictions it is possible to use a nominee to hold the shares.
The ownership of a PTC is typically structured in one of two ways:
An existing licensed trust company may be appointed trustee of a purpose trust which would then incorporate the PTC. This is the most popular option as it allows clients to keep the administration of the PTC and the purpose trust in one office, providing a time and cost-efficient structure as well as maintaining a greater level of confidentiality. In addition, licensed trust companies in the various jurisdictions often have the option of using a nominee company to act as nominee of such licensed trust companies if desired. A further advantage of the purpose trust is that it may avoid tax issues which would apply if the settlor or other family member were to be owner of the shares of the PTC. The trustee of the purpose trust would be the sole shareholder of the PTC and its role would be to hold the shares in the PTC and to appoint directors. It would then be the appointed directors who would have the day to day control and running of the PTC as well as any underlying companies. Many clients using this technique prefer to have the option of a protector. A protector is often a family friend or confidante who would have the power to appoint and remove the trustees of the purpose trust allowing the client to retain a higher level of indirect involvement.
The PTC’s shares are in the name of an individual i.e. the settlor. Where this option is taken, control issues will need to be considered carefully. Complications may arise upon the death of the individual as the shares of the PTC will be included in his personal estate.
