CAYMAN ISLAND

Name of country

• CAYMAN ISLAND

Region

• Caribbean, three-island group (Grand Cayman, Cayman Brac, Little Cayman) in Caribbean Sea, 240 km south of Cuba and 268 km northwest of Jamaica

Population

• 63,131 (July 2021 est.)

note: most of the population lives on Grand Cayman

General Introduction

• If you have independent means or are a qualified business investor, obtaining permanent residency in the Cayman Islands can be a simple process.

Provenance Properties, the Cayman Islands’ official Christie’s Real Estate affiliate, can assist you in finding a home if you are seeking permanent residency in this thriving British Overseas Territory. With four residency certificate options, a growing number of discerning individuals are now living and working in one of the world’s top ten financial centres.

Wifi Speed

• Cayman offers the fastest internet speeds in the Caribbean with average speeds of 16.12Mbps across all three islands – not far off the UK average of 22.37Mbps.

Electrical outlet

• On the Cayman Islands the power plugs and sockets are of type A and B. The standard voltage is 120 V and the standard frequency is 60 Hz.

Per Capita GDP 

Real GDP per capita

• $73,600 note: data are in 2017 dollars (2019 est.)
• $71,800 note: data are in 2017 dollars (2018 est.)
• $69,573 (2017 est.)

Climate

• tropical marine; warm, rainy summers (May to October) and cool, relatively dry winters (November to April)

Citizenship-by-Investment

• The Cayman Islands have a permanent residency program that includes a path to eventual naturalization and citizenship. The Cayman Islands have no corporation, income, capital gains, inheritance, or sales taxes, making the program appealing to investors looking for a tax-efficient residence.

Investment and Requirements

Certificate of Permanent Residency for Persons of Independent Means 

• Persons who invest a minimum of two million Cayman Islands’ Dollars in developed real estate in the Cayman Islands may apply for a Certificate of Permanent Residence for Persons of Independent Means. As the Certificate title denotes, a holder has the right to reside indefinitely in the Cayman Islands.
• A holder will also have the option of seeking naturalization as a British Overseas Territories Citizen and, thereafter, the right to be Caymanian.
• A holder and his spouse may also have their permission to remain varied to allow the right to work in the Cayman Islands.

Residency Certificate for Persons of Independent Means 

• This is for persons who wish to reside long-term in the Cayman Islands without the right to work. Applicants will be required to demonstrate that they have invested a prescribed minimum amount in developed real estate in the Islands and that they meet certain financial standing requirements.
• A successful applicant will be granted permission to reside in the Islands for a period of 25 years (renewable).
• 1M Investment
• Annual Income of 120K CI
• 400,000 CI In local bank

Certificate of Direct Investment 

• The Certificate of Direct Investment is for persons who invest, or propose to invest, a minimum prescribed amount in a licensed employment generating business in the Cayman Islands and in which he/she will exercise substantial management control.
• An applicant must demonstrate a substantial business track record or an entrepreneurial background, including specific professional, technical and other knowledge relevant and necessary to carry on the business.
• 1 M in an employment generating business

Residency Certificate (Substantial Business Presence)

• This  is for persons who invest in, or who are employed in a senior management capacity within, an approved category of business in the Cayman Islands.
• A successful applicant is granted a Residency Certificate valid for 25 years (renewable) which entitles him to reside in the Islands and to work in the business in which he has invested or is employed in a senior management capacity.
•  Varies based on business investment; limited-status

Processing Time

• Between 4 to 5 months.

Key Benefits

• No restriction on foreign ownership of land
• No direct taxation in the form of corporate, capital gains, inheritance, personal income or recurring property taxes
• Convenient location with nonstop flights to London Heathrow and major North American cities, including a 70-minute flight to Miami
• A sophisticated infrastructure with modern hospitals, reliable telecommunications, quality education and an extensive paved road network
• Strong and stable economy
• An estimated 3.2% growth in 2019 (GDP)
• Stable, democratic government and a Governor appointed by the UK monarchy
• Low crime rate thanks to a well-established police force
• Judicial system based on English common law with the UK’s Privy Council serving as the highest court of appeal
• High-quality shops, services, hotels and restaurants
• Friendly, welcoming and educated population

Natural Resources

• fish, climate and beaches that foster tourism

Ethnic Groups

• mixed 40%, White 20%, African descent 20%, expatriates of various ethnic groups 20%

Languages

• English (official) 90.9%, Spanish 4%, Filipino 3.3%, other 1.7%, unspecified 0.1% (2010 est.)

Religion

• Protestant 67.8% (includes Church of God 22.6%, Seventh Day Adventist 9.4%, Presbyterian/United Church 8.6%, Baptist 8.3%, Pentecostal 7.1%, non-denominational 5.3%, Anglican 4.1%, Wesleyan Holiness 2.4%), Roman Catholic 14.1%, Jehovah’s Witness 1.1%, other 7%, none 9.3%, unspecified 0.7% (2010 est.)

Median Age

• total: 40.5 years
• male: 39.7 years
• female: 41.2 years (2020 est.)

Urbanization

• urban population: 100% of total population (2021)
• rate of urbanization: 1.13% annual rate of change (2020-25 est.)

 Government type

• parliamentary democracy; self-governing overseas territory of the UK

Unemployment Rate

• 4% (2008)
• 4.4% (2004)

Taxes

Headline Personal Income Tax Rate (highest marginal tax rate) 

• 0%

Headline Corporate Income Tax Rate (excluding dividend taxes)

•  0%

Corporate – Taxes on corporate income

• Corporate income, capital gains, payroll, or other direct taxes are not imposed on corporations in the Cayman Islands.

Individual – Taxes on personal income

• There are no income or withholding taxes imposed on individuals in the Cayman Islands.

Import duties

•  Import duty is paid, generally at a rate of 22% to 27%, on importation of most goods

Stamp duties

• Stamp duty is paid, generally at a rate of 7.5%, on transfers of Cayman Islands immovable property.
• Stamp duties also apply on legal or equitable mortgages or charges of immovable property or debentures. The stamp duty ranges from 1% to 1.5%, depending on the sum secured.

Trusts Act (2021 Revision)

(1) In this Part “beneficiary” means a person who will or 1nay derive a benefit or advantage, directly or indirectly, from the execution of a special trust enforcer means a person who has standing to enforce a special trust ordinary, in reference to a trust or power, signifies that it is a trust or the power which is not subject to this Part Power includes an administrative power as well as a dispositive power. Special in reference to a trust or power, signifies that it is a trust or which is subject to this Part standing to enforce” means the right or duty to bring an action for enforcement of a special trust; and includes a trust of a power, as well as a trust of property, and trustee has a correspondingly extended meaning.

(2) In this Part, a power is said to be held in trust if granted or reserved subject to any duty, expressed or implied, qualified or unqualified, to exercise the power or to consider its exercise.
(3) Except as provided in subsections (1) and (2), terms and expressions defined in section 2 have the same meanings in this Part.

 ( l) A trust or power is subject to this Part, and is described as special, if-

a) it is created by or on the terms of a written instrument , testamentary or inter vivas; and
b) the instrument contains a declaration to the effect that this Part is to apply.

(2) If a trust or power is created by written instrument in exercise of a special power, and the instrument contains no declaration as to the application of this Part, this Part shall, subject to evidence of a contrary intention, be deemed to be intended to apply; and for the purpose of subsection (1) the instrument shall be needed to contain a declaration to that effect.

(3) A trust or power which does not meet the requirements of subsection (1), and is not deemed to do so by virtue of subsection (2), is an ordinary trust or power and is not subject to this Part.

Nothing in this Part affects an ordinary trust or power directly or by inference.

The law relating to special trusts and powers is the same in every respect as the law relating to ordinary trusts and powers, save as provided in this Part. ‘

(l)The objects of a special trust or power may be persons or purposes or both.
(2) The persons may be of any number.
(3) The purposes may be of any number or kind, charitable or non­ charitable, provided that they are lawful and not contrary to public policy.

(l)A beneficiary of a special trust does not, as such, have standing to enforce the trust, or an enforceable right against a trustee or an enforcer, or an enforceable right to the trust property.
(2) The only persons who have standing to enforce a special trust are such persons, whether or not beneficiaries, as are appointed to be enforcers

a) by or ·pursuant to the terms of the trust; or
b) by order of the court.

(3) A right or duty to enforce a trust is presumed, subject to evidence of a contrary intention, to extend to every trust which is created by or on the terms of the same instrument, or pursuant to a power so created.
(4) The court may, on the application of a trustee or an enforcer, appoint an enforcer –

a) if the terms of the trust require the appointment of an enforcer but-

i) it is impossible to make the appointment without the
court’s assistance, or
‘ii) it is difficult to make the appointment without the court assistance;

b) if an enforcer With a duty to enforce is unable, unwilling or unfit to do so; or
c) if there is no enforcer who is of full capacity and who –

i) is a beneficiary; or
ii) has a duty to enforce and is fit and willing to do so.

ln the circumstances described in ,paragraph (c) of subsection (4), the trustee shall, within thirty days apply, to the court for the appointment of an enforcer, or for the administration of the special trust under the direction of the court, or for such other order as the court shall think fit and, if a trustee knowingly fails to do so, that person commits an offense and is liable on summary conviction to a fine of ten thousand dollars.

(6) Subsections (1) to (5) do not affect –

a) the enforcement, by a trustee, an enforcer or any other person involved in the administration of a trust, of a right to remuneration or indemnity; or
b) the enforcement of a trustee’s duties by a co-trustee or a successor trustee.

(7) Section 83 does not apply to special trusts.

 Standing to enforce a special trust may be granted or reserved as a right or as a duty.
(2) Subject to evidence of a contrary intention, an enforcer is deemed to have a fiduciary duty to act responsibly with a view to the proper execution of the trust.
(3) A trustee or another enforcer, or any person expressly authorized by the terms of the special trust has standing to bring an action for the enforcement of the duty, if any, of an enforcer.

Subject to the terms of that person’s appointment –

a) an enforcer has the same rights as a beneficiary of an ordinary trust –
i) to bring administrative and other actions, and make
applications to the court, concerning the trust; and
ii) to be informed of the terms of the trust, to receive information concerning the trust and its administration:ion from the trustee, and to inspect and take copies of trust documents;
b) in the performance of that person’s duties, if any, an enforcer has the rights of a trustee of an ordinary trust to protection and indemnity and to make applications to the court for an opinion, advice or direction or for relief from personal liability; and
c) In the event of a breach of trust an enforcer has, on behalf of the trust, the same personal and proprietary remedies against the trustee and against third parties as a beneficiary of an ordinary trust.

103. (})Subject to subsection (4), a special trust is not rendered void by uncertainty as to its objects or mode of execution.
(2) The terms of a special trust 1nay give the trustee or any other person power to resolve an uncertainty as to its objects or mode of execution.
(3) If a special trust has multiple objects and there is no allocation of the trust property between them, the trustee, subject to evidence of contrary intention, has discretion to allocate the trust property.
(4) If an uncertainty as to the objects or mode of execution of a special trust cannot be resolved, or has not been resolved pursuant to the terms of the trust, the court –
a) may resolve the uncertainty –

i) by reforming the trust;
ii) by settling a plan for its administration; or
iii) in any other way Which the court deems appropriate; or
b) insofar as the objects of the trust are uncertain and the general intent of the trust cannot be found from the admissible evidence as a matter of probability, may declare the trust void.
(5) This section applies to powers as to trusts.

104. (l)lf the-execution of a special trust in accordance with its terms is or become in whole or in part-
a) impossible or impracticable;
b) unlawful or contrary to public policy; or
c) obsolete in that, by reason of changed circumstances, it fails to achieve the general intent of the special trust, The trustee shall, unless the trust is reformed pursuant to its own terms, apply to the court to reform the trust cypress or, if or insofar as the court is of the opinion that it cannot be reinforce consistently with the general intent of the trust, the trustees shall dispose of the trust property as though the trust or the relevant part of it has failed.

(2)Section 72 does not apply to special trusts.

05. (l)Except as authorized by an order of the court, or permitted by or pursuant to this section –
a) the trustee of a special trust shall be, or include, a trust corporation; and
b) the trustee shall keep in the Islands at the office of the trust corporation a documentary record of-
i) the terms of the special trust;
ii) the identity of the trustee and the enforcers;
iii) all settlements of the property upon the special trust and the identity of the settlors;
iv) the property subject to the special trust at the end of each of its accounting years; and
v) all distributions or applications of the trust property.

(2) Repealed by section 6 of the Trusts (Amendment) Act, 2019 [Law 4 of 2019].

(3) The court may authorize non-compliance with subsection (1) on such terms as it thinks fit if it is satisfied that the execution of the trust will not be prejudiced.

(4) A person who, in the Islands or elsewhere, accordingly administers a special trust while there is a breach of paragraph (a) of subsection (1), apart from-

a) actions intended to bring the trust is to compliance with paragraph (a) of subsection (1) as soon as possible; and
b) actions intended to preserve the trust property pending compliance with paragraph (a) of subsection (1) commits an offense and is liable on summary conviction to a fine of ten thousand dollars and to imprisonment for one year, and on conviction on indictment, to a fine of one hundred thousand dollars and to imprisonment for five years.

(5) A trustee who knowingly fails to comply with paragraph (b) of subsection (1) commits an offense and is liable on summary conviction to a fine of ten thousand dollars.
(6) This section does not apply to the holder of a power which is granted or reserved by the terms of a special trust to a person other than the trustee of the special trust, even though the power is held in trust.
(7) This section does not apply (except as regards any antecedent offense) if the governing law of the trust has been changed from the law of the Islands.
(8) The Cabinet 1nay make regulations subject to affirmative resolution restricting the application of subsection

(1).106. (l) Section 239(1) of the Penal Code (2019 Revision) does not apply in relation to special trusts.
(2) For the purpose of the Penal Code (2019 Revision) property held upon a special trust shall be regarded, as against the trustee of the property or of any power in relation to the trust, and against any enforcer of the trust, as belonging to others (except to the extent of the beneficial interest, if any, of the trustee or enforcer under the terms of the trust), and an intention on the part of any such trustee or enforcer to defeat the trust shall be regarded accordingly as an intention to deprive others of their property.

A person who, as trustee, accepts a settlement of property upon a special trust without taking steps to ensure that the settlor, or the person making the settlement on that person’s behalf, understands who will have standing to enforce the trust commits an offense and is liable on summary conviction to a fine of ten thousand dollars and to imprisonment for one year, and on conviction on indictment to a fine of one hundred thousand dollars and to imprisonment for five years.

Part VI of this Act applies to special trusts but as though paragraph

(b) of section 89(4) were repealed and the following substituted –
“(b) in the case of a change from the law of the Islands, the new governing law would recognize the validity of the trust (without any material effect on its objects) and the standing of the enforcers to enforce the trust.”.

No land nor any interest in land in the Islands shall be subject, directly or indirectly, to a special trust, but a special trust may hold an interest in a company, partnership or other entity which holds land in the Islands, or an interest in such land for the purposes of its business.

STAR Trusts have been part of Cayman Islands late since October 1997, when the Special Trusts (Alternative Regime) Lai-v 1997 (thus STAR) came into effect, which is not incorporated into the Trusts Act (2021 Revision) of the Act).

STAR Trusts are very popular in commercial structures where there is trust to avoiding the “beneficiary principle” (which provides that there, must be an ascertainable beneficiary a proprietary interest in the trust property capable of enforcing the trust), the common law requirement of certainty and the rule against perpetuity. In essence, this means in practice is that a STAR Trust is very flexible as it operates:

to approved rights of beneficiaries not only to enforce the trust, but also their rights to seek disclosure of information regarding the trust and its on-going administration (the “Enforcer” of’ the trust is the only person (natural person or corporate entity) 1-with standing to enforce the terms( { the STAR Trust); such that any uncertainty as to objects or 1node of’ execution or administration of a STAR Trust can be resolved by the trustee ( or any other person the trust document so specifies) or by the court, if necessary. A STAR trust is therefore very unlikely to be declared void ab innate on grounds of uncertainty; and such that it may be created for an unlimited curation.

The only restrictions on the types of.purposes ( or objectives) a.re that they are lawful and not contrary to public policy. STAR Trusts are regularly used in complex loan transactions, asset securitization transactions or business joint ventures, for example. In certain offshore planned structures, it is not possible or desirable for the parties to become beneficiaries of a trust and the financial planners can be uncomfortable with establishing a charitable trust. furthermore, and having regard to the above, a STAR trust is often used in a transaction 1–whereby a party wishes to move off its balance sheet certain assets or where it prefers to not take legal or beneficial control c f assets for a particular period o.f time or until or after a special event.

A STAR Trust does not have to be registered with the regulatory authorities in the Cayman Islands which preserves it confidentially (but maybe subject to disclosure by Court order or under a Tax Information Exchange Agreement properly invoked in. according to its terms). Accordingly, there are no direct taxes.

In terms of· regulation., the trustee of a STAR Trust must be (or more than one trustee, must include) a trust company licensed in the Cayman Islands under the Banks and Trust companies Lai-v or a private trust company registered in the Cayman Islands. The trustee of’ a STAR trust must also comply with certain statutory requirements which include keeping documentary records of’ all settlements of· property upon trust and all distributions or applications of the trust Property.

UPDATE – Oct 20th 2022

1. INTRODUCTION

Of all areas of the law, the law of trusts has been among the slowest to evolve. In England, the basic statute is the Trustee Act of 1925, which has been updated to a limited degree by legislation in 1958 (the Variation of Trusts Act), in 1961 (the Trustee Investments Act), in 1964 (the Perpetuities and Accumulation Act) and in 2000 (the Trustee Act).

The English Trust Law Commission has launched a project entitled “Modernizing trust law for global Britain”, seemingly acknowledging that in an increasingly competitive international mark for trust business Britain should aspire to attract its share of this market by introducing certain selected improvements to the nearly 100-year-old basic legislation. But this review is currently on hold, with the Commission acknowledging that “the project will start as and when resources allow”.

In Scotland, which for historical reasons has its own law of trusts, the legislation is now over one hundred years old (the Trusts Scotland Act of 1921). A report on trust law has been published by the Scottish Law Commission and it is expected that a Trust Bill will be brought forward in the next 12 months. But many Scottish practitioners complain that the proposed changes do not go far enough in modernizing and updating the existing statute.

The situation in a number of Commonwealth countries whose legal systems or course derive from English law the law of trusts is similarly antiquated. The New South Wales Trustee Act dates from 1925, while in New Zealand the Trustee Act of 1956 was only recently replaced by the Trusts Act 2019.

But the record of venerability must be held by India where the basic act, the Indian Trustee Act 1882, still applies to all trusts formed in the sub-continent.

In the civil law jurisdictions, the trust has, until very recently, been treated as an alien concept. Two notable exceptions being Panama, where a trust law was introduced in 1925 (to be repealed and replaced by the Trust Law of 1944), and Liechtenstein where Articles 897-932 of the PGR date from 1926 and provide for a recognizable imitation of the common law trust.
But towards the end of the 1960s, all this was about to change with the enactment in a number of offshore jurisdictions of novel and imaginative legislation.

2. CAYMAN LEADS THE WAY

In 1966 the Attorney General of the Cayman Island engaged Milton Grundy to draft a trust law in order to enhance the appeal of the Islands as an offshore financial centre, an aim approved b the UK Foreign Office. The new law, enacted in 1967, incorporated many of the provisions of the English Trustee Act of 1925. But it contained a number of innovations

Two particularly novel features of the 1967 Act are shown in Annexe 1. The settlor could choose to register his trust with the Registrar of Trusts and thus obtain a certificate of registration. Upon application to the Cayman government, the trust could be granted a guarantee of tax exemption up to 50 years. A further provision of the law (s.83) stated that in the case of an ‘exempted trust all rights and remedies that the beneficiaries would otherwise have were vested in the Registrar of Trusts, the beneficiaries having no rights or remedies against anyone. This bold, and controversial provision enabled UK taxes to be avoided till blocked by the Finance Act 1969. But the provision of section 83 remain in force in the Cayman trust law today, as does the helpful option for the registration of trusts.

3. THE JERSEY MODEL

Jersey had a flourishing trust industry already in the 1950s. While the Channel Islands had acquired a “trust” concept by osmosis through long association with England the roots of Jersey law lie in Norman customary law, and there are fundamental differences between this legal system and English law. But this did not seem to deter London lawyers from routinely creating trusts in Jersey. Eventually, in 1984, Jersey did adopt comprehensive trust legislation and five years later Guernsey followed suit.

The Jersey legislation has been copied to a greater or lesser extent by several other offshore centres.

4. ASSET PROTECTION

In principle, trusts have always offered a measure of protection against claims brought by the settlor’s creditors. But the extent of this protection in English law has been limited by the Statute of 13 Elizabeth which dates from 1571.

This law, and its subsequent iterations, allows creditors to undo transfers of assets made by a debtor with the intent to defraud his creditor. In France, the equivalent procedure is found in the Pauline Action.

Driven largely by demand from the United States where many state laws rendered self-settled trusts ineffective against creditors the Cook Islands were the first jurisdiction to introduce asset protection legislation in 1984 (see Annexe 3).

Subsequently, the Cayman Islands passed more elaborate legislation (The Fraudulent Dispositions Act.1989), the effect of which is only to render voidable (at the instance of a creditor) disposition made with intent to defraud and at an undervalue (subject to a six-year time limitation The test for setting aside such a disposition is twofold: it must be made with intent to defraud and also at an undervalue. The possibility of setting aside a disposition only applies to creditors who existed at the time of transfer to the trust. The burden of proof lies with the creditor claimant.

Many other offshore jurisdictions have followed the Cook Islands example, but limitation periods vary from two years in Cyprus to six years under Bermuda law.

5. FIREWALLS

Many offshore trust jurisdictions have inherited English common law rules governing the conflict of laws. But these rules are not wholly clear or consistent. The Hague Trust Convention contains a series of provisions (in Articles 6 to 10) which assist in determining the law applicable to certain features of trusts, but the Convention clearly states (in Article 4) that the Convention does not apply to “acts by virtue of which assets are transferred to the trustee”.

The objective of what has become known as “firewall legislation” is to clarify, reiterate or vary domestic law applicable to a domestic law trust to:

• require that domestic law shall apply to determine certain questions relating to the formation, validity, and administration of the trust; and
• prevent the recognition of judgments of foreign courts (and in some jurisdictions, awards of arbitrators or tribunals) in relation to the property held pursuant to the terms of domestic law trust.

The Jersey Trust Law of 1984 contained very basic conflict rules covering the proper law of a trust and the jurisdiction of the local courts (see Annexe 2), but the first comprehensive expression of such rules is found in the Cayman Islands Foreign Element Law of 1987 (Annexe 4).

This is a developing area of the law in the offshore jurisdictions and the limits of firewall provisions were highlighted by the recent Cayman case of Re Stingray Trust.

6. RESERVED POWERS

In conventional trusts, the trustees own and control the trust assets and the settlor retains limited (if any) rights qua settlor in respect of them. But many settlors are not comfortable with the idea of handing over complete control of their assets to another party, not least to a professional trust company they do not know in a jurisdiction they will rarely visit.

The Hague Trust Convention acknowledges (in Article 2) that the reservation by the settlor of certain rights and powers is not necessarily inconsistent with the existence of a trust.

The British Virgin Islands was the first jurisdiction to introduce legislation providing for the creation of reserved power trusts (see Annexe 5) and more elaborate provisions have since been introduced in (inter alia) Bahamas, Bermuda, Cayman Islands, Jersey, Guernsey, Hong Kong, and Mauritius.

However, recent case decisions serve as warnings that there are limitations to the degree of control that can be granted to a settlor before the trust is held to be a sham, or an ‘illusory trust.

See: Mezhprom v Pugachev [2017] EWHC 2426 (Ch)
 Webb v Webb [2020] UKPC 22

7. STAR TRUSTS

In 1997 the Cayman Islands introduced the Special Trusts (Alternative Regime) Law. A STAR trust can have purposes that are both charitable and non-charitable. The beneficiaries’ rights to enforce the trust or obtain information about the trust fund and its administration from the trustee are restricted or removed and instead vested in an independent enforcer with standing to bring the trustees to account on behalf of the beneficiaries (see Annexe 7). |

The following are some examples of where STAR trusts have proved particularly attractive:

• where there is a need to ‘orphan’ or make ‘ownerless’ special purpose vehicles in a commercial context, for example, to hold assets off-balance sheet or to create bankruptcy remote structures.
• for orphaning private trust companies which act as trustees of family trusts;
• for holding operating companies on trust in such a way as to limit trustee involvement in the business of the operating company, or for investing in family companies where economic performance is likely to be poor or uncertain;
• in establishing trusts which, by vesting enforcement and information rights in an independent and trusted enforcer, will prevent beneficiaries prone to disagreement from consuming the trust fund assets in speculative legal claims and demands for information from the trustees; and
• for social benefit projects (both public and private) to enable certain community facilities or areas to be maintained, for the preservation of monuments, to provide financial support for example to an opera house and to fund particular political purposes.

8. TRUST VIEW

The Virgin Island Special Trusts Act 2003 (VISTA) seeks to provide statutory protection for trustees who hold the shares of underlying companies where, on the one hand the settlor wishes to retain as much control as possible over the management, particularly as to investments, of the company yet, on the other, the trustee would remain ultimately responsible (and therefore potentially liable) for losses incurred through mismanagement.

This dilemma was traditionally addressed through the inclusion of “anti-Bartlett” and similar provisions in trust instruments. The BVI legislation (see Annexe 7) seeks to resolve this dilemma in the following manner:

• the trustee’s obligation to oversee the underlying company and, where necessary, to intervene in its management can be entirely negated or partially limited;
• the trustee’s powers, as shareholder, in relation to voting the “designated shares” and appointment and removal of directors through voting the shares can be limited and defined in what are known as “office of director rules”;
• the trustee’s obligation to consider, for example, selling the designated shares and investing in less risky assets can be removed by an obligation to retain the shares indefinitely or only to dispose of them with the consent of the directors of the company or other persons named; and
• any vested beneficiaries’ rights, under the rule in Saunders v Vautier (1841) 49 ER 282, to wind up the trust are dis-applied for twenty years.

The law requires at least one of the trustees to be a BVI company licensed under the Banks and Trust Companies Act, or a BVI private trust company. VISTA provisions apply only to shares in BVI companies (hence most VISTA trusts are structures so that all assets are held through an underlying BVI company).