Private trust companies (PTCs) are well-known in private wealth
planning and are particularly attractive to ultrahigh net worth
families wanting to consolidate their various family interests in a
bespoke private structure to take advantage of the many benefits,
such as dedicated close involvement in management, in-house
specialist knowledge and expertise, continuity, flexibility and
potential costs efficiency which PTCs offer.
Usually a double structure of a company and a trust are used to
establish the PTC arrangement. A typical PTC is a limited company
established for the sole purpose of acting as trustee of a trust or
group of related trusts. In order to avoid issues arising from
ownership or control of the PTC, the shares in the PTC are usually
'orphaned'. In Guernsey this can be achieved by the shares
being held by the trustee of a non-charitable purpose trust.
Charitable trusts and companies limited by guarantee are also
sometimes used to hold the shares in a PTC.
The introduction of foundations in Guernsey offers a rather neat
alternative to the typical structure. A Guernsey Foundation can be
used to replace both the PTC and the purpose trust, removing an
additional layer of administration and cost.
A foundation can be established for the sole purpose of acting
as a trustee. As a legal person of full corporate capacity, a
foundation could act and exercise all the powers and would be bound
to the obligations of a trustee in the same manner as any trustee
which is a company. Unlike a company, a foundation has no members
or shareholders, and is therefore already an orphaned structure.
Accordingly there is no need to establish a trust or other holding
vehicle to deal with issues arising from ownership and control.
The result is a simplified single structure consisting of a
private trust foundation (PTF).
In contrast to directors of companies who owe fiduciary duties
to the company, councilors owe a duty to the foundation to act in
good faith in the exercise of their functions. As the foundation is
established for a purpose guardian has a duty to the founder and
the beneficiaries to act in good faith and 'en bon pere de
famille' to enforce the constitution and the purpose. It is not
mandatory to have a Guernsey licensed fiduciary on the council or
As The Regulation of Fiduciaries, Administration Businesses and
Company Directors, etc (Bailiwick of Guernsey) Law, 2000 ('the
Fiduciaries Law') only applies to fiduciary services provided
by way of business, like a PTC, a PTF does not need a fiduciary
license in Guernsey if the PTF is not paid for its services as
trustee. If it is paid, directly or indirectly, a PTF will be
deemed to be carrying on business and fall within the ambit of the
Fiduciaries Law. PTFs will generally need on-going funding,
particularly in complicated structures, and rather than having to
fund the PTF upfront, the PTF may wish to charge administrative or
management fees to the structures under its control. In that case
the PTF will either need to apply for a fiduciary license or
alternatively an exemption under the Fiduciaries Law. The Guernsey
Financial Services Commission ('the Commission') has a
discretion whether or not to grant such an exemption.
The Commission evaluates each application on its own merits.
Historically exemptions have generally been granted for PTCs on
condition that the PTC does not offer its services to the public
but that these are limited to a particular family or connected
group of persons. The Commission would normally require that the
board of the PTC includes at least one corporate director holding a
full fiduciary license and that the licensee is responsible for the
administration of the PTC. The same considerations should apply as
for any application for an exemption for a PTC. The Commission
considers applications on a case by case basis and has a discretion
whether or not to grant a PTF an exemption from the requirement to
hold a fiduciary license.
The establishment of a private trust foundation may be a useful
alternative to the customary PTC. Benefits of the PTF would include
the avoidance of the complexity and cost required by the
'double' company and trust required for the typical PTC
structure and the simplicity of a single entity with real
personality. A PTF should be able to obtain an exemption from the
requirement to hold a fiduciary license under the Fiduciaries Law
provided it does not provide services to the public but acts as
trustee of trusts established for a family or closely defined group
of beneficiaries and there is an appropriate level of involvement
by a local fully licensed fiduciary.
The New Generation fund administration platform – this is perhaps how we should now refer to Mauritius. As at February 28, 2007 more than US$36 billion were invested by Mauritius domiciled investment funds, including in Indian equities.
India and Mauritius signed a protocol for the amendment of the convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes of income and capital gains convention...
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