Limited Partnerships

COVERDALE TRUST SERVICES LIMITED
POST-HURRICANES IRMA AND MARIA
UPDATE #1 – SEPTEMBER 25, 2017

The Board of Directors of Coverdale Trust Services Limited wishes to express its heartfelt concern for and support of all of its staff, clients and the wider BVI community and neighbouring territories who have been so hard hit by the recent passage of Hurricanes Irma and Maria.

We are happy to report that we have made contact with all our members of staff in the BVI and all have been accounted for and are presently safe. We acknowledge the effort that they are making to get our office up and running as soon as possible. This has not been an easy task given the communication difficulties on the island and the extent of destruction suffered as well as the need to be mindful of the threat of further storms, but we are making progress.

We are pleased to report that we are working hard to be in a position to update you soon as to the expected timing for resumption of normal operations. In the meantime, we wish to assure our clients that we are working diligently to restore operations at the earliest possible opportunity.

Please be advised that our offices have now re-opened for business after passage of the recent hurricanes in the BVI which caused significant damage to local infrastructure and telecommunications. We are happy to report that our staff are all safe and have been able to return to work.

There was significant damage to our offices but, assuredly, our server remains uncompromised and properly secured. Although our communications and internet services are not yet at 100 percent functionality, full restoration will occur within a few days.

Unfortunately, communication via telephone has not yet been restored; however, we anticipate that restoration will be achieved during the course of next week. In the interim, if urgent assistance is required please call (284) 541 9125 or (284) 541 9126.

We thank you for your patience and assure you that our team remains committed to meeting your needs.

The following list of useful links will take you to sites which we at Coverdale consider to give a broader view of the Territory and its global position.

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About PTCs

Private Trust Companies ("PTCs") are a useful tool used by many high net worth individuals and their family offices. Coverdale and other PTCs act as trustees for trusts established for an affiliated group.  The directors and officers of the PTCs are usually family members and family advisors.  They are often used to establish trusts that hold assets that the family prefers to have administered by persons with whom they are familiar.  PTCs are particularly popular with clients from civil law jurisdictions who are not comfortable giving control over family assets to a professional trustee.

They are also used to hold assets that professional trustees are often not able or not willing to administer such as operating companies, real estate, yachts, art work and jets.

There is no need to have the PTC licensed as a trustee, provided that certain conditions are met.

A PTC must:

A company must meet the following conditions to be considered a PTC:

• be a BVI company limited by shares or guarantee;
• must state in its memorandum of association that it is a PTC
• must have PTC in the company name

The following are the business activity requirements that a PTC must satisfy:-

    It cannot carry on any business other than that of being the Trustee, Protector or administrator of trusts.

    It cannot solicit trust business from members of the public.

    It can only engage in “unremunerated trust business” or “related trust business”.

The term “Unremunerated trust business” means that no compensation may be payable to, or received by, the PTC, or any person associated with it, in consideration for, or with respect to, the trust services provided by the PTC.

A PTC will be treated as carrying on “related trust business” if it acts as trustee of (i) a single trust, all the beneficiaries of which are charities or have certain specified blood, marital or adopted relationships to the settlor (i.e. the person establishing the trust), or (ii) more than one trust, each of the settlors of which have those relationships to each other and all the beneficiaries of which have those relationships to the settlors of the trusts (or are charities).

For more information on the use of Private Trust Companies, please contact us and we will get back to you as soon as possible.

Coverdale act as trustee for trusts governed by BVI law, including BVI's unique VISTA Trusts. The Virgin Islands Special Trusts Act ("VISTA") was first enacted in 2003 and subsequently amended in 2013. The VISTA trust is unique to the British Virgin Islands and has become very popular since they were introduced.

A traditional trust places a fiduciary duty on the trustee to ensure that the trust assets are protected and enhanced during the life of the trust. Generally the trust assets are invested through a BVI company and this means that the trustees take control of the company so that they can oversee the management of the assets and ensure that they adhere to the "prudent investor rule".

The application of this rule makes the trustees act very conservatively during their stewardship of the trust assets. The resulting vigilance by the trustee can also incur additional costs in both time and money.

Advantages of VISTA trusts

  • The VISTA trust removes the trustee's obligation from the prudent investor rule and the trustee has no obligation to oversee the management of the underlying company.
  • The settlor can outline in the "office of director rules" how and in what circumstances the trustee should use its voting powers to interfere in the management of a company (removing and appointing directors can be stipulated in accordance with the settlor's wishes).
  • A standard VISTA trust can be established for a period of up to 360 years.
  • It is also possible to add shares from an existing BVI trust to a VISTA trust, so that they become subject to VISTA legislation.

Common uses of VISTA trust

  • For people with family owned businesses (especially for a sole director/shareholder) who wishes to run their company independently as well as benefiting from a trust's estate planning ability.
  • For people unfamiliar with the concept of trusts, as it allows them to have some comfort when transferring assets to a third party that they can continue to manage the underlying assets.
  • For trust assets that are invested in what the trustees would traditionally consider high risk investments (i.e. real estate development/speculation or more risky investment strategies).

Requirements to settle a VISTA trust

  • A VISTA Trust must be established.
  • The trust assets must be shares in a BVI company, which must be transferred into the name of the trustee.
  • A BVI licensed trust company or a BVI Private Trust Company must act as one of the trustees or the sole trustee.
  • The proper law of the trust must be that of the BVI.