Offshore Trusts Report: British Virgin
The Virgin Islands Special Trusts Act, 2003 (VISTA)
The 'VISTA' law allows BVI trusts to exclude the so-called “prudent
man of business rule” which has traditionally made the trust
an unattractive vehicle to hold long-term assets and requires trustees
to monitor and intervene in the affairs of underlying companies.
The Act enables a shareholder to establish a trust of his company
that disengages the trustee from management responsibility and permits
the company and its business to be retained as long as the directors
The legislation permits the entire removal of the trustee’s
monitoring and intervention obligations (except to the extent that
the settlor otherwise requires); permits the settlor to confer on
the trustee a duty to intervene to resolve specific problems (eg
a deadlocked board); and allows trust instruments to lay down rules
for the appointment and removal of directors (so reducing the trustee’s
ability to intervene in management by appointing directors of its
Some of the features of the Act are as follows:
The Act does not apply to BVI trusts
generally: it only applies where there is a provision in the
trust instrument directing the Act to apply.
Where the new Act applies, designated
shares will be held on “trust to retain” and the
trustee’s duty to retain the shares as part of the trust
fund will have precedence over any duty to preserve or enhance
their value. The trustee will not therefore be liable for
the consequences of holding (rather than disposing of) the
The Act specifies that, subject to
any contrary provisions in the trust instrument, unless the
trustee is acting on an “intervention call” (as
defined in the Act), the trustee may not exercise its voting
or other powers so as to interfere in the management or conduct
of any business of the company; the management or conduct
of the company’s business will be left to those appropriate
to deal with it, namely its directors, whose fiduciary duties
to the company remain intact, except to the extent that the
trustee/shareholder is refrained qua trustee from exercising
some of the powers of a shareholder.
The new statute also provides that
the trust instrument may include “office of director
rules” specifying how the trustee must exercise its
voting powers in relation to appointment, removal and remuneration
of directors, and the trustee is generally required to follow
these rules. Except in compliance with these rules, the trustee
must generally take no steps to procure the appointment or
removal of the company’s directors.
The Act further provides that the
trust instrument may specify that the trustee may intervene
in the affairs of the company in specified circumstances,
ie when required to do so by an “intervention call”
by a beneficiary, an object of a discretionary power of appointment,
a parent or guardian of either of them, the Attorney General
(in relation to charitable trusts), the enforcer (in relation
to purpose trusts) or other specified persons.
The Act specifies that (unless the
trust instrument provides otherwise) the trustee is permitted
to dispose of designated shares in the management or administration
of the trust fund, but can only do so with the consent of
the directors of the company (and that of such persons as
are specified in the trust instrument).
The statute contains provisions enabling
beneficiaries, directors and others to apply to the court
for enforcement of the terms of the Act and, on the application
of a specified person, the court is empowered to authorise
the trustee to sell designated shares where retaining them
is no longer compatible with the wishes of the settlor.
The Act is confined to shares in BVI
International Business Companies and Companies Act companies.
The trustee of a VISTA trust must
be a company which holds a licence to undertake trust business
under the Banks and Trust Companies Act, 1990.
In July, 2005, the British Virgin Islands
said it would amend its legislation so that special trust vehicles
could hold shares in private trust companies (PTCs), thus broadening
the appeal of the vehicles.
British Virgin Islands News
BVI To Review Taxes And Fees Monday 15/3/2010 British Virgin Islands Prime Minister, Ralph O’Neal has said that the territory
will run a budget surplus during 2010, although the government still intends to review indirect taxes and fees on financial services.
Caribbean Explores Fiscal Cooperation Tuesday 9/3/2010 Ahead of the World Bank meeting, to be held on March 11-12, where CARICOM Finance
Ministers will meet to discuss challenges that the region faces, CARICOM Secretary
General, Edwin Carrington said it was vital for Caribbean economies to increase economic cooperation and remove fiscal barriers, for the prosperity of the region going forward.
China Clarifies Tax Treatment Of Corporate Income Earned Abroad Wednesday 27/1/2010 The Chinese Ministry of Finance, acting through the State Administration of Taxation, has issued a Circular to clarify corporate income tax provisions with regard to income earned abroad.
OECD Reports On Its Progress With International Tax Standards Wednesday 20/1/2010 According to the Organization for Economic Cooperation and Development, the focus of the Global Forum on Transparency and Exchange of Information is now shifting – from commitments and agreements to achieving an effective implementation of the standards.
UK's Wealthy Head For Sunnier Climes As Tax Storm Brews Wednesday 16/12/2009 New research would appear to confirm that, while not quite the 'exodus' popularly characterized in the press, there is nevertheless a steady stream of wealthy financiers, entrepreneurs and bankers leaving Britain as a result of the Labour government's recent tax increases.
BVI Signs TIEAs With China And Ireland Wednesday 9/12/2009 The government of the British Virgin Islands took a further step on December 7
to conclude Organization for Economic Cooperation and Development model Tax Information Exchange Agreements, signing texts with Ireland and China.
OECS States Agree Upon Draft Outline For New Treaty Wednesday 25/11/2009 The new Treaty of the Organisation of Eastern Caribbean States will be
signed in the St. Kitts capital, Basseterre on December 29.
Crown Dependencies Welcome Foot Report Findings Monday 2/11/2009 The British Crown Dependencies have welcomed the findings of the UK government's review
of the dependencies, published on October 29, which recognizes their economic benefit to the United Kingdom, and efforts to achieve compliance with international
BVI Makes OECD White List Monday 17/8/2009 The British Virgin Islands has signed its 12th Tax Information Exchange Agreement after concluding an agreement with New Zealand, meaning that the jurisdiction is now considered to be "substantially" in compliance with the Organization of Economic Cooperation and Development's tax snoopers' standard.
BVI Signs OECD Model Agreements With Nordic States Wednesday 20/5/2009 The British Virgin Islands government announced this week the signing of bilateral
tax information exchange agreements with the six Nordic countries, the Faroe Islands,
Finland, Greenland, Iceland, Norway and Sweden at the Icelandic Embassy in Copenhagen,
Denmark, on May 18.