A Managed Trust Company is able to offer Trust services to the public using the staff, premises and other facilities of a full-presence licensed Trust Company in Bermuda.

Under the Trust Companies Act, 1991, such Managed Trust Company is able to seek a Trust Licence which can be obtained through the Bermuda Monetary Authority from the Minister of Finance. A local Trust Company or an exempted Trust Company will act as Manager.

Minimum Criteria for a Managed Licence

The applicant trust company must be able to show that it meets the minimum criteria for all trust company licences:

(a) the company's objects and powers encompass the carrying on of trust business and all other activities necessary for, or incidental to, the carrying on of trust business;

(b) a minimum paid up capital of $250,000;

(c) "adequate" insurance;

(d) an approved auditor;

(e) (in the case of a Managed Trust Company) a management agreement with a full-presence Bermuda licensed trust company such as Cedar;

(f) available liaison personnel in its offices outside Bermuda with appropriate knowledge, skill and experience necessary for the conduct of trust business.

Application Procedure for a Managed Licence

Any applicant must contemporaneously with its application for consent to register a Trust Company submit to the Authority an application for a licence for that company to carry on trust business. The Minister of Finance has delegated to the Authority the responsibility for reviewing each application. After carrying out a full review, the Authority will make a recommendation to the Minister of Finance.

An application for a licence to carry on trust business must include the following:

(a) A diagram illustrating the exact ownership structure including all direct, intermediate and ultimate owners of the company, whether owned individually, in partnership or under a trust. Details of custodian arrangements, and where applicable, the primary provider of investment advisory services for trust assets must be named. Copies of the company's Memorandum of Association and intended Bye-laws must also be submitted;

(b) Information on the experience and expertise of the individuals who will be administering the company. This information must be provided on each intended director, chief executive officer, chief financial officer and company secretary (by whatever name called) and any other person ,ho has or may have an influence over trust assets;

(c) A business plan.

Cedar and Richards, Francis & Francis can advise and assist with appropriate presentations in respect of all licence criteria.

The Trust Companies Act provides for the Minister of Finance granting a licence subject to such conditions as the Minister sees fit to specify in the licence. Each application will be considered on its own merits and, therefore, the Minister may impose different conditions on certain companies. Such conditions may vary between each trust company and may be amended at a later date.

Licensing

The terms of the licence remain in force until the licence is cancelled. The Minister can cancel a licence if the trust company has ceased to carry on trust business or can cancel or amend the terms of the licence either:

(a) at the request of the trust company;

(b) if the trust company has contravened a condition of the licence or a requirement under the Trust Companies Act;

(c) if the company is insolvent;

(d) if the company is carrying on business in a manner detrimental to one or more of its creditors, its shareholders or the public interest.

Supervision and Regulation - A company licensed to carry on trust business will be a "financial institution".

Under the provisions of the Bermuda Monetary Authority Act, the Trust Companies Act and in accordance with the conditions attached to a licence, a trust company will be required to report to the Authority on its operations and activities on a regular basis. In addition, the trust company, by virtue of being a "financial institution", will be expected to comply with various codes of conduct agreed between financial institutions and the Authority.

Trust companies are required to pay to the Bermuda Government an annual licence fee before 31 March in each year.

The main policy requirements are set forth above. In addition,

1. Both exempted and local licensed Trust Companies can be permitted to manage other Trust Companies. Exempted Trust Companies can manage only other exempted companies, while local Companies can manage either local or exempted Companies.

2. A licensed Managed Trust Company would be likely to have conditions attached to its licence to require it to:

(a) obtain the approval of the Minister of Finance if it intends to cease being managed and, within Bermuda, to take on its own staff and operate its own office;

(b) obtain the approval of the Minister of Finance for each of its top executives;

(c) obtain the approval of the Minister of Finance if at any stage it proposes to change Managers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought for your specific circumstances.