Last year, the Gibraltar Government introduced the Private Trust Company Act 2015, which will no doubt prove an especially attractive proposition for Family Offices
Gibraltar's introduction of legislation governing the operation of Private Trust Companies, which came into effect in 2015, is a valuable addition to the jurisdiction's trust offering, providing greater regulatory protection which is sure to attract potential clients seeking to benefit from a higher level of control in the management of a trust, and safeguard against fiduciary risk.
While, previously, it was possible for any limited company to act as a trustee, provided it was not engaged in licensable activity, the Private Trust Company Act 2015 sets out specific legislative framework within which the PTC is formally recognised and can operate. This development has been applauded by the Society of Trust and Estate Practitioners, who have communicated to the Gibraltar Finance Centre that they are 'delighted at the steps Gibraltar is taking' in this respect.
Appointing a Private Trust Company as a trustee of a trust, or group of trusts under the same family, can deliver numerous benefits especially, but not exclusively, for Family Offices. A Private Trust Company is, for example, easily integrated with other family entities such as an existing company or philanthropic organisation, with a view to:
- consolidating several family trusts under one umbrella for increased efficiency in asset management and protection;
- retaining more family control over a trust's investment and distribution decisions;
- ensuring continuity for families by resolving any trustee successor issues which may arise over the lifetime of a trust;
- providing more robust protection from fiduciary risk thereby easing liability concerns for individual family members named as trustees; and
- allowing for long-term structural and administrative flexibility, meaning that a Private Trust Company can adapt to changing family circumstances and wishes.
The Gibraltar Finance Centre has assured that the registration system will remain voluntary, so as to avoid unfairly disadvantaging those Private Trust Companies in respect of which the associated registration and renewal fees may be disproportionate to the size of the trust. This provision, the Finance Centre have asserted: 'fills in a gap in Gibraltar's offering as an international finance centre without prejudicing those who may have felt caught by a mandatory system of registration'.
Certainly, the benefits of registering a Private Trust Company will prove attractive for many but there are, however, specific requirements which must be met in order for an application to be successful. For example, the company can only provide trustee services to the Designated Individual and their nuclear family- this includes spouses, civil partners, children and other remoter issue. Also, crucially, the PTC must appoint a Gibraltar-Registered Administrator and hold at least one Board Meeting each calendar year at the registered office with the Registered Administrator in attendance.
It is important to note that the Registered Administrator must:
- hold a valid Class VII or Class VIII Licence;
- hold the Designated Instrument identifying the Designated Individual; and
- annually submit a declaration of Compliance to the Registrar.
In respect of these requirements, Fiduciary Trust Limited, part of the Fiduciary Group of companies, is able to act as the Registered Administrator for a Private Trust Company, and can additionally provide accounting services and the preparation of financial statements, as well as an introduction to our associated law firm Isolas 1892 for any relevant Gibraltar legal services which may be needed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.