The Cayman Islands Monetary Authority ("CIMA") is responsible for processing private trust company registrations and granting restricted trusts licences and the procedure and criteria for the application process are set out in some detail on CIMA's website.
A private trust company registration enables a Cayman Islands company which might otherwise be required to obtain a trust license or restricted trust licence to avoid the need to do so. The registration process is intended to be a "fast track" procedure permitted in certain specified circumstances as set out below.
A restricted trust license entitles a trust company to provide trust services to a limited (usually named or referred to by category eg members of a particular family or families) number of persons.
There are several reputable trust companies in Cayman which provide registered office and trust administration services on a contractual basis and this will usually satisfy CIMA in relation to the need for a private trust company to have its registered office at such a trust company and the requirement for trust expertise within a restricted trust licence company.
See the Cayman Islands Banks and Trust Companies Law (as amended) (the "BTCL") generally.
REGISTRATION AS A PRIVATE TRUST COMPANY
"Private trust company"
On 15 September 2008, pursuant to an enabling amendment to the BTCL, the Cayman Islands enacted the Private Trust Company Regulations, 2008 (the "PTCR"), in respect of what are usually referred to as private trust companies ("PTCs").
Under the PTCR:
"A company that is a [PTC] and is registered under paragraph (2), does not require a licence to carry on connected trust business."
Under paragraph 2 of the PTCR a private trust company means a trust company which:
1. is incorporated in the Islands; and
2. conducts no trust business other than "connected trust business".
"Connected trust business"
Connected trust business means trust business in respect of trusts the contributors to the funds of which are all, in relation to each other, connected persons.
A person is a connected person in relation to another person if:
1. they are in a relationship listed in the Schedule to the PTCR;
2. one is contributing to the funds of a trust as the trustee of a trust of which the other is a contributor;
3. each is in a group of companies; or
4. one is a company and the other is a beneficial owner of shares or other ownership interests of that company or of any other company in the same group of companies.
The Schedule of connected persons states that:
1. For the purposes of [the PTCR], the following persons constitute connected persons in relation to an individual:
(b) the descendants of the individual and their spouses;
(c) parents, including step-parents;
(e) parents-in-law, including step-parents-in-law;
(f) brother, step-brother, sister, step-sister and their spouses and children;
(g) parent's brother, step-brother, sister, step-sister and their spouses;
(h) children of the brother, step-brother, sister or step-sister of the individual's parents, both present and future, including step-children, and their spouses; and
(i) children of the individual's brother, step-brother, sister or step-sister, both present and future, including step-children, and their spouses.
2. For any of the relationships listed above that may be established by blood, that same relationship may also be established by adoption.
3. The term "descendants of the individual" means the individual's children, the children of his children, the children of those children, and so on.
4. The term "children" includes step-children.
"Group of companies"
Group of companies has the same meaning as under the Securities Investment Business Law (as amended) such that a group of companies will comprise:
"...every company which, directly or indirectly, is a subsidiary [as widely defined] of the same holding company, and such a group includes the holding company."
The PTCR then go on to lay down certain requirements in respect of PTCs:
1. A PTC must maintain its registered office at the office of a company that holds a trust licence under the BTCL.
2. In relation to each relevant trust, up to date copies of the trust deed or other document containing or recording the trust, its powers and provisions, and any deed or other document varying the trust, its powers or provisions must be kept at such registered office.
3. A PTC is required to register with CIMA and, in order to be registered, must, at the time of registration and on or before the 31st day of January every year thereafter during the continuation of the registration:
(a) file with CIMA an annual declaration, in such form as CIMA may approve, declaring:
(i) the name of the PTC;
(ii) the names of the directors of the PTC;
(iii) the name of the holder of the Trust licence providing the registered office of the PTC or the address of the PTC's place of business, as the case may be;
(iv) that the company is a PTC to which the PTCR apply; and
(v) that the PTC is in compliance with the requirements of the PTCR; and
(b) pay to CIMA an initial registration fee of CI$3,500.00 and thereafter an annual registration fee of CI$3,000.00.
4. A PTC must not in any manner solicit or receive contributions in respect of trusts of which it is trustee, from:
(a) the public; or
(b) persons other than those who are, in relation to each other, connected persons.
5. The words "Private Trust Company" or the letters "PTC" must be included in the name by which the PTC is registered.
APPLYING FOR A RESTRICTED TRUST LICENCE
CIMA will require, as a minimum, the following information for licensing purposes.
The Registrar of Companies must approve the name of the applicant company. The proposed name must not be similar to that of any company carrying on business in the Cayman Islands or to any major banking organisation in any other jurisdiction. A name will not be accepted if it suggests a status or association which the Registrar considers does not exist. If a personal name is to be used, the applicant should explain the reasons for its choice. Once approved, the company name can be reserved on payment of a fee.
Directors, shareholders and officers
All Directors and senior corporate officers and shareholders must be approved by CIMA. At least one and preferably more of the Directors and officers must have senior banking or trust experience (as may be appropriate). The applicant must give the following information for each such person:
1. a completed and signed form of Personal Questionnaire for Directors, Shareholders and Controllers. We would be pleased to send you copies of this form on request;
2. two character references for each from professionals who have known the applicants for some time, have no family connections with them and no financial interest in the outcome of the application;
3. two or more financial references verifying the financial standing of each individual shareholder or annual reports for each corporate shareholder and its parent company (if any);
4. a police clearance certificate. If such certificates are not available in a jurisdiction, an affidavit of no convictions is acceptable; and
5. evidence of availability of banking or trust professional knowledge and experience (as appropriate) at a senior level for at least one Director and that at least two of the directors will be actively involved in the business.
This should be filed with CIMA and the applicant should give a detailed outline of the type of business it proposes to carry on. The business plan should include:
1. the business aims of the applicant;
2. projected financial statements for the next two years;
3. details of management structure and personnel; and
4. details of anticipated customer base, including the names, addresses and relationship to each other of the settlors or providers of funds of the proposed trusts.
The applicant Directors are required to submit an undertaking not to undertake trust business from anyone except those listed.
The applicant must submit details of the proposed paid-up capital. This should include the number and class(es) of shares and the number of shares of each class to be issued to each shareholder. Please refer to the section below entitled "Minimum Capital Requirements". In addition, the applicant must provide details of subsidiary companies and capital employed in those subsidiaries.
The applicant should provide business references from two banks or trust companies, as appropriate.
The applicant should state the date selected as the end of its financial year.
Auditors and accounts
The applicant must appoint approved local auditors.
All applicants must submit an audited opening balance sheet at the time of application, and annually after that within 90 days of their financial year-end. The information contained in these is kept strictly confidential.
The application fee is CI$1,000.00 and upon approval, there is a fee of CI$7,000.00 due upon receipt of written notice of approval of the issue of the restricted trust license which is payable annually thereafter.
Previous involvement of personnel
The applicant must provide details of any involvement of any shareholder, director or officer with any previous application for a license.
Review of additional documents
CIMA has discretion to call for copies of any documents which it requires to assist it in its deliberations on the application. As a result, copies of the underlying deeds of trust and a copy of any administration agreement which is entered into between the private trust company and a professional trust company on the Island to provide trust administration services, are often sought.
Physical presence in Cayman advisable
CIMA is unlikely to approve an application for a licensee that does not intend to have a physical presence in the Cayman Islands, unless an existing 'A' licensee is to represent it.
Business plan details
In preparing their business plan, applicants should include details of the following:
1. overall objectives and reasons;
2. customer base (eg corporate, private, related party, geographical distribution etc);
3. asset structure (loan portfolios, investment policy, liquidity guidelines etc);
4. management structure and overall staffing (if applicable); and
5. off-balance sheet and fee-earning activities.
Minimum capital requirements
The minimum paid-up capital must be subscribed in cash (or readily marketable securities) and is required as follows:
1. The paid-up capital required for a restricted trust company is subject to a statutory minimum of CI$20,000.00 (US$24,000.00).
2. A licensee is entitled to use its paid-up capital as working capital for the purposes of its business, provided that in so doing it does not allow it to fall below the stipulated minimum.
British Virgin Islands
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