The Private Trust Companies Act, 2012-22 (the Act) has been enacted into law in Barbados and was proclaimed on May 16, 2014. The Act provides an innovative product to enhance the international structure offering for companies and ultra high net worth individuals and families.
A Private Trust Company (PTC), essentially, is a company which is incorporated for the main purpose of acting as a trustee of a specific trust, or a number of related trusts. To give some perspective, this can be compared to a professional trust company which is in the business of acting as trustee, and providing trust administration services to the public at large for a fee. PTCs have been quite popular in various jurisdictions for about 20 years, with the main benefits including:
- Allowing wealthy individuals and/or families to establish trusts and maintain a substantial degree of control over the trustees. This control is achieved by the individuals or family members being directors on the board of the PTC
- A corporate structure tends to be more readily understandable by non-professionals, particularly those from non-trust jurisdictions, and can be easily integrated into a family office or commercial structure
- PTC structures can enhance confidentiality, which is of particular interest to clients from jurisdictions where concerns over financial privacy are driven by issues of personal safety
- PTC structures offer some protection to trustees in circumstances where the underlying assets of a trust comprise speculative investments, or investments which involve a degree of risk (e.g. private shares of an operational company owned by the family) which might, in some circumstances, be regarded as unacceptable to a risk–averse professional trustee.
In order to qualify as a PTC under the Act, certain conditions must be met. These include:
- The company must be a Barbados company which was first incorporated under the Companies Act, Cap. 308 of the Laws of Barbados
- The articles of incorporation must state that it is a PTC and the name of the company must end with the words "Private Trust Company", or the abbreviation "PTC"
- The company must not solicit trust business from members of the public
- No business other than that of being the trustee, protector or administrator of the trust (or managing or administering trusts) must be carried on by the company
- All of the company's trust business must be 'related trust business'
- The company must appoint at least one 'Special Director' who is a resident of Barbados and has at least five years' experience in a discipline related to the administration of trusts. This discipline may include law, finance, accounting, investment management, or trust and estate planning
- The company is required to have a Registered Agent in Barbados at whose office the registered office of the company shall be located.
The Registered Agent's Obligations
The Registered Agent of the PTC must satisfy itself that the conditions of the Act are met, and it is required to do this both at the outset, and on a continuing basis thereafter. It is also obliged to take all reasonable steps to ensure that up-to-date copies of documents, such as the trust deed and any document varying its terms (in relation to each PTC for which it acts as registered agent),are kept at its office in Barbados.
The Registered Agent is required to file an annual declaration of compliance which includes a statement to the effect that the PTC satisfies the requirements of Money Laundering and Financing of Terrorism (Prevention and Control) Act 2011-23 of the Laws of Barbados, and that it operates only as a PTC.
If the trust is managed by a trustee licensed under the International Financial Services Act, Cap. 325, and its activities are restricted to engaging exclusively to trading (i.e. buying, selling, holding or managing) securities, it is exempted from tax under the laws of Barbados.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.