An Overview Of BVI Offshore Trust Sector

Being the world’s leading financial center, the British Virgin Islands (BVI) is a premier destination to set up offshore businesses. Instead of finding a professional BVI trustee service provider, wealthy people prefer opening a Private Trust Company by themselves.

This article has been prepared for the assistance of clients considering creating BVI offshore trust companies. Its purpose is to give a concise overview of the key legal criteria and general guidelines that apply to the formation and management of BVI trust companies.

BVI offshore trust sector is promising for wealthy business owners

Introduction to BVI trust companies

In a trust, a person (a.k.a. Settlor) transfers assets to a different person (a.k.a. Trustee), who is given legal title to the trust's assets, not for his personal benefit but for the benefit of other people (known as the Beneficiaries, who may include the Settlor), or for a specific purpose.

BVI trust companies are a type of business managing or administering any trust or settlement; acting as a professional trustee, protector, or administrator of a trust or settlement. In addition, a BVI trust company is acting as trustee under wills and as the executor/administrator of decedent's in relation to Class I trust license.

The components of a BVI trust company normally include:

• The Settlor: The person who establishes the trust, transfers assets to the trustee, and directs the trustee to manage and dispose of those assets on behalf of the beneficiaries.

• The Trustee: The person who manages funds or assets that have been set aside in a trust for someone else's benefit.

• The Beneficiaries: The people who have the right to profit from the assets kept in trust.

• The Trust Fund

• The Protector: The person carries out specific administrative and strategic tasks that are typically not the responsibility of the Settlor, Trustee, or Beneficiaries.

A BVI Private Trust Company (or "PTC") is created with the specific business purpose of serving as trustee for a single trust or a connected group of related trusts. International business owners or High-Net-Worth families often use BVI Private Trust Companies to act as trustees of trusts when they do not wish to transfer their assets to a third party trust company, or wish to establish separate family trusts.

Benefits of forming a BVI Private Trust Company:

• Allow the Settlor to retain effective control over the investment and management of assets settled in the trust.

• The Settlor can be the sole director of a BVI Private Trust Company, or family members can be in the board of directors.

A VISTA trust is used purely for the holding of shares in a BVI International Business Company

Other characteristics of a BVI Private Trust Company:

• No local directors or authorized representatives required;

• Memorandum and articles of a BVI PTC are required to be filed publicly. However, they do not need to contain details of the directors, shareholders or any trust of which the PTC is the trustee.

• The register of members is not required to be filed in the BVI Private Trust Company<, while the register of directors must be filed. It is not a public record and is not accessible to the general public.

Governing Laws and Regulations of BVI Offshore Trust Business

The BVI trust law is mostly based on English trust law, although it has evolved beyond English law to allow for purpose trusts. The Virgin Islands Special Trusts Act 2003 (the "VISTA legislation"), which was most recently revised by the Virgin Islands Special Trusts (Amendment) Act 2013, is a supplement to the Trustee Ordinance Act 1961 ("the Act").

Together, the Financial Services Commission Act of 2001, the Regulatory Code of 2009, and the Banks and Trust Companies Act of 1990 create an overarching legislative framework for the regulation and oversight of trust business conducted in and out of the Virgin Islands by the Commission.

The Banking & Fiduciary Services Division, under the direction of the Financial Services Commission, is in charge of overseeing the trust business. It makes sure that all BVI trustee service providers operating in and from the BVI comply with the trust laws, international regulatory standards, and recognized best business practices. The Banks and Trust Companies Act 1990 (BCTA) is administered by the Division with regard to trust business.

In 2021, The Financial Services (Exemptions) Regulations 2007, also known as the Private Trust Company Regulations, was amended, and are now in effect as the Financial Services (Exemptions) (Amendment) Regulations 2021. The recent legislative changes enhance the appeal of BVI Private Trust Company , which are:

• Remuneration payable to “professional” directors: Previously, if a BVI Private Trust Company is conducting "unremunerated" trust business, then the PTC or any person related with it are not allowed to receive remuneration. For now, a director of an unremunerated PTC may receive remuneration for professional director services.

• Amendment to “business activity” requirements of PTCs: PTC will now be able to carry out certain additional activities other than providing trustee services in BVI.

Opening an offshore company in BVI has many advantages

BVI trustee services are popular among international investors. The jurisdiction has developed a close connection with the private sector to ensure that it keeps up with demands. BVI offshore trust sector continues to draw positive attention from the global financial world and is seen as adaptable and innovative.

Before setting up a BVI Private Trust Company, the prospective Settlor should always seek legal and tax advice from professionals to minimize the risk. For more information about offshore companies, please contact One IBC now.