A private trust company (PTC) may act as trustee of trusts without the need to obtain a trust license in BVI. In order to qualify for this exemption, the trustee must carry on only “related trust business” or “unremunerated trust business.” PTCs have proved a very popular alternative, especially among ultra-high-net-worth families, as an alternative to appointing a third party trust corporation as trustee of family trusts, including VISTA trusts and purpose trusts.
PTCs can be a very effective element of a BVI trust structure for a number of reasons. Firstly, because the board of the PTC can be made up of family members, trusted family advisors or those familiar with the industry of a family business if that is the underlying trust asset. Additionally, PTCs are likely to be more familiar with the dynamics of the family and their investment culture and more reactive than a third party corporate trustee. The PTC’s attitude to risk, for example in terms of investment decisions, may well be less conservative than a corporate trustee for various reasons.
However, it is important that a PTC is not simply viewed as a “family friendly” trustee. The position of trustee is a fiduciary office and the trustee is required to discharge its duties to the requisite standard of care irrespective of whether it is a PTC or a corporate trustee. It is therefore crucial that PTCs conduct their business in a suitable fashion and administer the trust to the standard of care required of them. Failure to do so may open the door to breach of trust claims by beneficiaries of the trust in the future.
A PTC must:
? Be a BVI company limited by shares or guarantee
? Contain an express statement in its memorandum of association that it is a PTC
? Must end with the designation “(PTC)” placed before the corporate suffix
PTCs cannot conduct any business which is not “trust business” or solicit trust business from members of the public. Additionally the trust business must either be “Unremunerated Trust Business” or “Related Trust Business”.
Unremunerated trust business requires that payments made to the PTC are only in respect of costs and expenses incurred in acting as trustee of a trust – the PTC is not permitted to make a profit. Only “professional directors” are remunerated for providing director services (and such directors may not own shares in the PTC). No person “associated” with the PTC is remunerated in consideration of services provided by the PTC which constitute trust business.
Related Trust Business requires that the relevant trust is exclusively charitable or all the beneficiaries of the trust include the settlor and/or are “connected” to the settlor, which means that each beneficiary and the settlor fall within a class of family relationship defined in the BVI legislation.
If the related trust business requirements are satisfied, a PTC may receive remuneration or make a profit and lay directors and associated persons may be paid.