International Trusts

The Trustee Ordinance, 1961
The general principles of English trust law apply in the British Virgin Islands but have been supplemented by a statutory overlay in the form of the Trustee Ordinance 1961. This Ordinance was based on the English Trustee Act 1925. Apart from the recognition of the Hague Convention on the Law Applicable to Trusts the Ordinance remained unaltered until 1993. In 1993 the Trustee Amendment Act was passed which has modernised trust law in the British Virgin Islands and allowed it to compete effectively with other major offshore trust jurisdictions.

Significant features of the amended legislation are as follows:

• Ability to fix the perpetuity period at a term not exceeding 100 years.
• Ability to protect settlors dispositions to a British Virgin Islands trust from forced heirship laws of the settlors home jurisdiction.
• Broadened powers of investment for the trustee.
• Nil taxation regime in respect of offshore income and property.
• Inclusion of protector provisions to provide a "watchdog" in respect of trust assets and trustee decisions.
• Inclusion of purpose trust provisions enabling a trust to be settled for any lawful purpose.
• Inclusion of a Schedule of Powers the provisions of which are able to be included in the trust deed by reference. The powers are typical of those commonly found in offshore trusts.
• The exclusion of any registration requirements.
• Inclusion of a provision deeming that the reservation of a power by a settlor in respect of the trust or the fact that the trustee is also a beneficiary are not necessarily inconsistent with the existence of a trust.
• Inclusion of a provision allowing a trust to be amended or revoked by the trustee provided such power is expressly contained in the trust deed.  

VISTA
In 2003 the Virgin Islands Special Trusts Act ("VISTA") was passed. The purpose of the legislation is to enable trustees to retain shares in BVI companies, irrespective of the financial benefits of holding them. This allows VISTA trusts to be established to cater to a settlor's intention for the company shares to be held for his children, rather than simply sold for a profit or to reduce risk.

Traditionally, trusts have been an inappropriate vehicle for holding company shares, because of a rule of English trust law which is designed to help preserve the value of trust investments. This rule, which is known as the "prudent man of business rule", has traditionally made the trust an unattractive vehicle to hold assets which settlors intend trustees to retain. Furthermore, where a trust holds a business interest, the trustee is usually required by law to monitor (and where necessary intervene in) the management of the company.

Significant features (in addition to many of the features listed above) of VISTA are as follows:

• Change to the prudent man of business rule such that shares in a BVI company may be retained indefinitely; and, the management of the company may be carried out by its directors without any power of intervention being exercised by the trustee;
• Modification of the rule in Saunders v Vautier by preventing a sole or sui juris beneficiary(s) from requesting a transfer of the trusts assets of designated shares;
• The trust must hold shares in a BVI company;
• The trustee and any successor trustee must be a holder of a trust license under the Banks and Trust Companies Act, 1990;
• A VISTA trust can not be created by the exercise of a power conferred by another trust.

The above is only intended as a general outline of some of the significant features of BVI trust law.

Should you require any further information, please contact Portcullis TrustNet (BVI) Limited.

Application for a licence may be made through Portcullis TrustNet (BVI) Limited. We would be happy to assist with any queries you may have in relation to such applications.