2006 Private Trust Companies Legislation
In November, 2006, it was announced by the Bahamas Financial Services Board that comprehensive new Private Trust Companies legislation had passed both houses of parliament.
Under the legislation, a Bahamian PTC, like other structures such as foundations, does not require regulatory approval. The PTC need only to arrange its affairs with a regulated Bahamian service provider or Registered Representative.
A Registered Representative, as defined in the legislation, is a bank or trust company or a licensed financial and corporate services provider approved by the Central Bank of the Bahamas for the provision of these services.
The BFSB says that this feature distinguishes the Bahamian PTC from those that are available in other jurisdictions, and allows for exclusive interaction between the client and its Registered Representative without additional regulatory involvement. As a result, client information need only be delivered to the offices of the client’s service provider.
The framework for the PTC legislation was developed in early 2005 by a working group consisting of the BFSB, the Association of International Trust Companies in the Bahamas (AIBT) and The Society of Trust and Estate Practitioners (STEP), in consultation with the Central Bank and the government.
Wendy Warren, CEO and Executive Director of the BFSB noted that the PTC legislation was designed with a long-term view and approach in mind.
“As much as possible we wanted to establish PTC legislation that could stand the test of time, and provide a stable platform for decision-making. In other words we did not take any short cuts," she explained.
"We carefully considered a number of factors such as what the PTC legislation intends to accomplish, our clients’ needs and the regulatory themes that may emerge in the future. In summary, the legislation provides clarity for clients and their advisors and a light regulatory touch," she added.
In addition to its light regulatory touch and providing access to a broad range of service providers, the Bahamas’ PTC legislation has a number of other distinguishing features:
There may be more than one designated person; they must be related by consanguinity or other family relationship to each other.
The PTC may be established during or after the life of the designated person(s).
The PTC may act as trustee to trusts settled by persons related by consanguinity or other family relationship to the designated person or one of the designated persons.
The PTC may act as trustee to existing trusts that meet the above mentioned criteria.
The beneficiaries of a trust administered by a PTC are not
restricted to family members of the designated person or
Directors of the PTC are not required to be resident in the Bahamas.
The PTC in selecting its Registered Representative in The Bahamas may also determine in discussion with the Registered Representative whether it is best that the Registered Representative serves as Director, Secretary or Bahamas Agent to the PTC.
There is no requirement for a Special Director where the Registered Representative is a Bahamian bank or trust company. Otherwise a director of good reputation and who possesses at least five years’ experience in a discipline relevant to the administration of trusts is required. Relevant disciplines include one or more of law, finance, commerce, investment management or accountancy.
While the growth of PTCs may spur the establishment of family offices in The Bahamas, there is no requirement for a PTC to establish a physical presence in the jurisdiction.
The BFSB expects the PTC vehicle to be most useful to families with operating companies, charitable foundations and wealthy individuals from civil law countries.
In May 2007, it was announced by Parliamentary Secretary, Ministry of Finance, Michael Halkitis that legislative amendments to allow for the formation of Private Trust Companies had been introduced.
According to Halkitis, these amendments demonstrated the government’s “firm commitment to ensuring the delivery of superior financial services to local and international clients."
“This is a progressive step in the continued growth and development of our financial services industry and of our economy," he told a Private Trust Company seminar.
At that time, the government revealed, it was consulting with relevant stakeholders, including the Association of International Banks and Trust Companies, the Bahamas Financial Services Board, the Society of Trust and Estate Planners, the Financial Services Consultative Forum, the Central Bank of The Bahamas, various members of law firms, the Attorney General’s Office, the Ministry of Finance, and the Ministry of Labour and Financial Services.
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