New BVI Trust & Property Acts

On August 28th, 2003, the Virgin Islands Special Trust Bill and Property (miscellaneous Provisions) Bill, received their first readings before the BVI Legislative Committee, together with the legislation amending the existing Trustee Act. The new legislation is very progressive and removes some of the current constraints of English Trust Law. It will make the BVI Trust a much more user friendly vehicle and greatly enchase the attractiveness of the BVI as a trust jurisdiction.

The new legislation comes after years of intensive review of BVI and International Trust legislation. Conducted by a special committee of the BVI branch of the Society of Trust and Estate Practitioners, (STEP) and Trust Practitioners and Academics. It is anticipated that the new legislation will come into force in late 2003.

VIRGIN ISLANDS SPECIAL TRUST BILL (VISTA) will enable shareholders to set up trust of shares in BVI companies, that disengage the trustees from management responsibility of the company, permitting the shares to be retained as long as the directors see fit. These Trust will be called VISTA Trusts.

With the new legislation, there will be a complete removal of the monitoring and intervention obligation of the Trustees. Trustees will not be liable for retaining shares (for example where there may be a drop in the market and the shares will lose value). The Trust instruments, will be able to set out rules regarding the appointment and removal of the directors of the company. Share sales can be prohibited without the directors consent and there is the possibility of enforcement by interested persons, such as beneficiaries and directors.

The new act will circumvent the difficulties that arise when the trustees and squeezed between exposure to potential liability for not putting the Trust interests ahead of the company and pressure from the settler to retain shares. To a settler and his/her family, the self managed company and represents much more than impersonal investments and the VISTA Trust will be ideal where a settler intends the company’s shares to be retained and its affairs to be managed by its directors, without trustee interference.

It is very essential to understand that this act will not apply to all trust. It is confined to Trusts that hold shares in BVI IBC’s and local companies and as regulatory safeguard will provide that a BVI licensed Trust Company shall act as Trustee.

Another essential part of the new legislation is the Trustee (Amendment) Bill. This bill will make amendments to the existing Trustee Act. The STEP Committee that assisted with drafting the bill, is of the opinion that the new rules are drawn up so that they are likely to command a substantial degree of International recognition. Only Jersey and Anguilla have similar laws and this should make the BVI a very attractive Trust jurisdiction. Some of the areas of the bill that had been amended, include the dealings between trustees and third parties (the amendments will make BVI Trust much more attractive vehicles for commercial transactions).

The sections dealing with charities and purpose Trusts have been overhauled and variation of powers. The Trust duty stamp will be increased to $100 and there will be an exemption from duty for charitable Trust.

Finally the PROPERTY (MISCELLANEOUS PROVISIONS) BILL, is intended to modernize BVI Law in several areas. Most importantly it will abolish the requirement that deeds executed by individuals be sealed and will allow a document to qualify as a deed if it is drawn up so that it is expressed to be a deed and is witnessed. Though this is a very short summary of the three new bills, the new legislation is innovative and eciting and wil make BVI an even more attractive jurisdiction for Trust formations.