Trust Corporation International

Jurisdictional ComparisonsCompany Law and Foundations

3Trust Law | Jurisdiction Comparisons

AboutTrust CorporationInternationalTrust Corporation International is a trustee and wealth administration business operating out of Guernsey in the British Isles. We are an independent fi rm practising the highest standards of client service and care. Drawing from our legal and accounting heritage, we specialise in wealth structuring, tax planning, trust and succession strategies.

We have over 50 employees and enjoy a high level of staff retention which leads to an enhanced level of client service. We do not operate in departments nor do we operate a strict separation of administrative duties. In a sense we operate as a single team with many client structures requiring a cross section of experience drawn from our staff skill set.

We have an internationally diversifi ed client base and many of the families we represent are resident in the US or have US connections.

Most of our clients come through referrals from either professional advisors or existing clients. We do not promote products nor do we accept commissions or retrocessions. We tend to work closely with the professional advisors of our clients and have an enviable level of client retention.

We have a US based hub, Regent Capital Advisors LLC, registered with the Nevada Secretary of State, that we can use to administer PTCs but we also work with organisations in other States.


Contents8. Companies – Jurisdictional comparison

General jurisdictional overview

10. Basics

16. Formation

19. Transfer of shares

20. Directors

24. Members

26. Company administration

27. Accounting requirements

28. Typical regulatory consents

29. Cell companies

32. Foundations – Jurisdictional comparisons

46. Who we are


Highly skilled, independent specialists


Guernsey Bermuda BVI* Cayman Islands

Location

British Isles(Channel Islands)

North Atlantic Ocean Caribbean Western Caribbean

Language

English English English English

Time zone

GMT GMT – 4 GMT – 4 GMT – 5

Capital

St Peter Port Hamilton Road Town George Town

Population

65,000 70,000 30,000 60,000

Legal system

Guernsey has its own legal system which is a blend of French Norman law and UK customary law and statutes

Their system of law is based on English common law



Government/political system

Self governing democracy with unicameral parliament

Self governing multi party democratic parliamentary system

Parliamentary democracy with judicial, executive and legislative branches

Democratic ministerial government

Guernsey Bermuda BVI Cayman Islands

Jurisdictional status

UK Crown Dependency British Overseas Territory

British Overseas Territory

British Overseas Territory

Currency

Pound Sterling Bermudan dollar which has parity against the US dollar

US dollar Cayman Islands dollar fi xed at CI$1 to US$1.25

Tax information exchange

Multilateral automatic exchange of information through CRS with effect from 2017




Regulator

Guernsey Financial Services Commission

www.gfsc.gg

Bermuda Monetary Authority

www.bma.bm

British Virgin Islands Financial Services Commission

www.bvifsc.vg

Cayman Islands Monetary Authority

www.cimoney.ky

Number of fully licensed trust companies/corporate service providers

158 30 134 150

Number of banks with full licence

32 4 6 11

Companies – Jurisdictional comparison General jurisdictional overview*British Virgin Islands*British Virgin Islands


Basics


Public/private companies

The CGL does not distinguish between public and private companies.

The BA does not distinguish between public and private companies.

The BCA does not distinguish between private and public companies.

The CCL does not distinguish between private and public companies.

Share buybacks/redemptions

Permitted if permitted by the Articles. Buybacks need to be approved by the Gco’s shareholders. Buybacks and redemptions must satisfy the solvency test immediately after the redemption or buyback.

Permitted if permitted by Memorandum of Association or By-Laws.

Permitted, unless the redemption is pursuant to a right of the shareholder to have his shares redeemed, and is treated as a ‘distribution’ subject to the solvency test.

Permitted if permitted by the Articles. Redemptions and repurchases are subject to satisfying the solvency test.


Companies legislation

The Companies (Guernsey) Law, 2008, (CGL)

Companies Act 1981 (BA) The BVI Business Companies Act 2004, (BCA)

The Companies Law (2013 Revision), (CCL)

Types of company available

A Guernsey company (Gco) can be:

• limited by shares (having a par value or no par value) or by guarantee;

• a company with unlimited liability;

• a mixed liability company; or

• a cell company (see section H).

A Bermuda exempted company (which conducts business internationally from Bermuda) (Bco) can be:

• a company with limited liability – by shares or guarantee;


• a limited duration company.

A British Virgin Islands company (BVIco) can be:

• limited by shares (having a par value or no par value);

• a guarantee company;


• a restricted purpose company;

• a segregated portfolio company (see section H).

A Cayman Islands (Cayco) can be:

• limited by shares (having a par value or no par value);

• a guarantee company;


• a mixed liability company;

• segregated portfolio company (see section H);

• a limited duration company (30 years or less).


Basics (continued)


Migrations

It is possible to migrate Gcos to other jurisdictions and vice versa.

It is possible to migrate Bcos to other jurisdictions and vice versa.

It is possible to migrate BVIcos to other jurisdictions and vice versa.

It is possible to migrate Caycos to other jurisdictions and vice versa.

Capital requirement

None. Minimum issued share capital of B$12,000 or equivalent in another currency.

None. None.

Currency of shares

Any currency. Any currency. Any currency. Any currency.


Distributions

Guernsey has fl exible capital maintenance rules.

It is possible to distribute from any account or source and dividends need not be paid from distributable profi ts or revenues, provided the directors determine that post distribution:

• Gco will be able to pay its debts as they fall due; and

• assets of the Gco will exceed its liabilities.

Reference is made to contributed surplus. However distributions may not be declared or paid unless the directors determine that immediately after the distribution:

• the Bco will be able to pay its debts as they fall due; and

• assets of the Bco will exceed liabilities.

There is no reference to any reserve or capital accounts. However distributions may not be declared or paid unless the directors determine that immediately after the distribution:

• the BVIco will be able to pay its debts as they fall due; and

• assets of the BVIco will exceed liabilities.

Reference is made to the appropriate reserve or capital account.

The share premium account is generally distributable and the share capital account (and capital redemption reserve) can be utilised for redemptions/repurchases (but not for dividends), provided that immediately following the distribution, the Cayco will be able to pay its debts as they fall due.

15

Planning together, thriving together


Formation


Fee

£100 for ‘standard’ process. £350 for ‘rapid’ process or £750 for ‘special’ process regardless of proposed share capital.

Government fees are payable as follows:

Up to $12k = $1,995

$12k – $120k = $4,070

$120k – $1.2m = $6,275

$1.2m – $12m = $8,360

$12m – $100m = $10,455

$100m – $500m = $18,670

Over $500m = $31,120

US$350 to issue up to 50,000 shares and US$1,100 to issue more than 50,000 shares.

Based on authorised share capital, as follows:

Up to US$50k = $732

US$50k to $1m = $1,098

US$1m to $2m = $2,298

Over US$2m = $3,010

US$488 for express service.


Timing

24 hours for a ‘standard’ incorporation; two hours for ‘rapid’ incorporation and 15 minutes for a ‘special’ incorporation.

A Gco is incorporated on the date of issue of the certifi cate of incorporation.

The Bermuda Monetary Authority must approve the incorporation of all Bcos and the timing varies.

Same day with the certifi cate of incorporation and return of the stamped Memorandum and Articles issued within 3-5 days.

There is no ‘fast track’ procedure for the return of incorporation documents.

The incorporation date is the date of fi ling.

The certifi cate of incorporation and the Memorandum and Articles are returned within 3-5 days or within two days (express).


Formation (continued)


Anti-money laundering (AML)/Client Due Diligence (CDD)

In line with UK and FATF standards. Compliance primarily falls on regulated Guernsey service providers.

CDD documents are required for benefi cial owners holding 25% or more. Rules adjusted for listed companies.

• Bermuda Monetary Authority (BMA) – vetting of benefi cial owner.

• Individual ultimate benefi cial owner holding 10% or more interest must submit a personal declaration to the BMA.

Compliance primarily falls on regulated BVI service providers.

CDD checks are performed on benefi cial owners of more than 10%. Rules are adjusted for listed, large public and certain regulated companies.

Corporate service providers are required to perform CDD on the person(s) seeking to incorporate and control the Cayco. Abridged due diligence is possible if the Cayco will be controlled by a person regulated in a jurisdiction with equivalent AML controls.


Process

In accordance with Memorandum or Articles.

Shares may trade and settle freely on CREST, the London Stock Exchange paperless settlement system.

Approval required in certain circumstances. Shares are transferred in accordance with the requirements of the Articles. If shares are listed on an approved stock exchange, the shares can be evidenced and transferred in accordance with the laws, rules and regulations that apply to that stock exchange.

A written instrument of transfer is required to transfer shares in a BVIco.

Shares are transferred in accordance with the requirements of the Articles. If shares are listed on an approved stock exchange, the shares can be evidenced and transferred in accordance with the laws, rules and regulations that apply to that stock exchange.

Pre-emption rights

There are no statutory pre-emption rights.


Apply only when stated in the Memorandum or Articles.


UK Takeover Code

Does apply. Does not apply. Does not apply. Does not apply.

Transfer of shares


Directors


Minimum number

One director. One director. One director. One director.

Individual/corporate directors

May be a natural person or (subject to conditions) a body corporate.

May be a natural person or a corporate entity.

May be a natural person or (except regulated entity) a corporate.

May be a natural person or a corporate entity.

Residence

A director need not be resident in Guernsey. The regulator may in some cases require Guernsey resident directors as a condition of giving regulatory consent.

No residency requirement for directors.

A director need not be resident in the BVI. The regulator will usually require a regulated BVIco to appoint one or more BVI resident directors.

No residency requirement for directors.


Director duties

Directors are subject to customary, common law and statutory duties to:

• act honestly and in good faith in the best interests of the Gco;

• exercise powers for a proper purpose;

• not fetter discretion;

• avoid confl icts or duty; and

• exercise care, diligence and skill of a reasonably diligent person.

Directors duties have been codifi ed in BA and are refl ective of the position at common law to:

• act honestly and in good faith in the best interests of the Bco;

• exercise care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

There is statutory footing to the equitable and common law duties owed by a director:

• a director must act honestly and in good faith and what he believes to be in the best interests of the BVIco;

• a director must exercise power for a proper purpose;

• common law duty of care and skill.

Directors are subject to equitable, common law and statutory duties to:

• act honestly and in good faith in the best interests of the Cayco;

• exercise powers for a proper purpose;

• not fetter discretion;

• avoid confl icts of duty; and

• exercise care, diligence and skill of a reasonably diligent person.


Elegant solutions, structured to perfection


Members


Minimum number

One member. One member. One member from the date of appointment of the fi rst directors.

A least one member.

A limited duration Cayco must have 2 members.

Public information

Publicly available information is registered offi ce, directors, resident agent (if any) and principal activities.

Publicly available information is register of directors and offi cers.

The BVIcos certifi cate of incorporation and Memorandum and Articles are available publicly.

Publicly available information is name, date of incorporation, registered number, registered offi ce and status (ie active).

Bearer shares

Not permitted. Not permitted. Permissible, but must be placed with an approved or authorised custodian and therefore immobilised.

Permissible, but must be placed with an authorised or recognised custodian and therefore immobilised.

Treasury shares

Can be held. Can be held. Can be held. Can be held.


Limited liability

Yes. Similar to the UK. Yes. Similar to the UK. Yes. Similar to the UK. Yes. Similar to the UK.

Resolutions

A special resolution is required to amend the Articles, commence a summary winding up and for certain other purposes. Requires a three-quarters’ majority. Can also be passed by a written resolution signed by at least 75% of the total voting rights.

A resolution is required to amend the Memorandum and bye-laws, commence a winding up and for certain other purposes. Requires a majority, can also be passed by a majority written resolution.

BVI law does not defi ne ‘special resolution’. The BVIco’s Articles may make provisions for varying levels of the percentage of votes required to pass a resolution.

A special resolution is required to amend the Articles, commence a voluntary liquidation and for certain other purposes. Requires a two-thirds’ majority, or such higher majority required by the Articles. Can also be passed by unanimous written resolution.


Company administration


Registered offi ce in jurisdiction

Yes. Certain statutory books and records must be held.




Company secretary

Not required. Required. Not required. Not required.

Ongoing requirements

Must fi le an annual validation and pay £250 for non-regulated companies, £500 for fi nancial product companies, £750 for cell companies plus £100 for each incorporated cell or £10 for each protected cell.

All Gcos must hold an AGM, unless the shareholders otherwise resolve (90% majority).

Annual government fee is determined by authorised share capital as for formation and declaration.

All Bcos must hold an AGM, unless the shareholders by majority resolve.

Annual fee of US$350 for up to 50,000 shares and US$1,100 for more than 50,000 shares.

AGM is not required by law.

Must pay an annual fee and fi le an annual return.

The annual fee is determined by authorised share capital:

Up to US$50k = $854

US$50k – $1m = $1,220

US$1m – $2m = £$2,420

Over US$2m = $3,132

Accounting requirements


Accounts

Accounting records must be kept for six years.

Required to maintain books of account.

Required to maintain books of account.

Books of account must be retained for fi ve years.

Auditors/fi ling accounts

Unless exempt (generally small, dormant or asset-holding companies), must appoint auditors. No requirement to fi le accounts.

Required, but members and directors may waive the requirement to appoint auditors.

No requirement to appoint auditors or to fi le accounts.

Unless regulated, no requirement to appoint auditors or fi le accounts.


Typical regulatory consents


Issue of shares/securities

No consent is required.

Approval required in certain circumstances.

No consent is required unless regulated.

No consent is required unless regulated.

Circulation of prospectus

A prospectus for registered open-ended collective investment schemes, registered closed-ended collective investment schemes or offers to the public (more than 50) of any general securities and derivatives must comply with Guernsey’s Prospectus Rules.

The rules do not apply to an offer listed on an exchange, in respect of a company domiciled in a IOSCO member country.

A company offering shares to the public shall publish a prospectus prior to the offer unless it is listed or subject to a competent regulatory authority.

No prospectus fi ling requirements exist unless the BVIco qualifi es as a public fund.

Regulated mutual funds must fi le their offering document with the Cayman regulator.

A Cayco is not permitted to offer its securities to the public in the Cayman Islands unless it is listed on the Cayman Stock Exchange.

Cell companies


Types

PCC cells do not have separate legal personality. ICC cells are separate companies with their own legal identity.

Both provide for segregated assets and credit ring-fencing.

Does not apply. Segregated portfolio companies.

Prior approval is required.

Segregated portfolio companies.

31

Meticulousin what we do


Foundations – Jurisdictional comparisons

Guernsey Jersey Liechtenstein Panama

Law

The Foundations (Guernsey) Law, 2012.

Foundations (Jersey) Law, 2009.

Persons and Companies Act, 1926 (as amended, 2008), Art. 552 §§1-43.

Private Interest Foundation Law, 1995.

Regulatory board

Guernsey Financial Services Commission.

Jersey Financial Services Commission.

Charitable foundations are supervised by the Liechtenstein Public and Land Registry (Family foundations are generally unregulated).

Panamanian Public Registry.

Minimum assets

Any property comprising initial endowment.

Does not require an initial endowment.

Assets or cash with the value of CHF/€/US$30,000.

Assets or cash with the value of US$10,000.


Registration fee

£100 for a registration within 24 hours; £350 within two hours.

£200 (or £400 for a ‘same day’ incorporation).

Registration is only compulsory in the case of charitable foundations (CHF700). Family foundations need not be registered (and therefore their existence is not a matter of public record), although the foundation’s core information (date of establishment, objects, members of the foundation board, legal representative) needs to be submitted to the registrar (CHF300). Stamp duty may also be due, in the case of family foundations this amounts to 2% (subject to a min of CHF200 and a max of CHF250,000).

US$350.

Required documents

Charter & Rules. Charter & Regulations. Charter (‘Statutes’). Separate regulations if provided for in Charter.

Charter.


Foundations – Jurisdictional comparisons (continued)


Required parties

• Founder

• Council

• Guardian – only required if there are disenfranchised benefi ciaries

• Benefi ciaries/Purposes

• Resident agent – if neither a councillor nor a guardian are Guernsey licensed fi duciaries

• Founder

• Council (including at least one Qualifi ed Member)

• Guardian


• Founder

• Council Member (at least two)

• Protector/Supervisory Body (optional)

• Auditor (for supervised foundations)


• Founder

• Council Member (at least one corporate member or three individuals)


• Local agent (compulsory)

• Protector/Supervisory Body (optional)

Annual fees

£500 except if a Guernsey registered charity, which is £0. Corporate income tax – 0%; no other Guernsey taxes apply.

£150 plus £100/£200 to be registered as an ISE for GST purposes.

Annual corporate income tax of 12.5% on its net income with a minimum of CHF1,200. The Liechtenstein foundation can be taxed as a Private Asset Structure if the conditions are met.

US$400 administration fee paid to the government.


Request for local representation

If neither a councillor of the foundation nor a guardian of the foundation are Guernsey licensed fi duciaries, the foundation must appoint a ‘resident agent’. The resident agent must be both a Guernsey licensed fi duciary and resident in Guernsey. Such resident agent has powers to inspect foundation documents and information. Only a Guernsey licensed fi duciary may apply to register a foundation.

The Jersey Law requires that there is a qualifi ed person on the foundation’s council (the ‘Qualifi ed Member’). A qualifi ed person is a person licensed under the Jersey Financial Services Commission (Jersey) Law 1998 to conduct foundations business. Only a Jersey licensed fi duciary may apply to register a foundation.

At least one member of the foundation’s council that is authorised to manage and represent the foundation must be a qualifi ed professional with place of residence in Liechtenstein or another Member state of the European Economic Area.

There is nothing under the Panamanian Law that states that there must be a person who is regulated involved in the governance of the foundation.




Protector/Guardian

A Guardian is required only where there are no benefi ciaries (ie the foundation is for a purpose only) or where the benefi ciaries are disenfranchised, ie they do not have a right to trust information. Both the founder and body corporates are able to be appointed as guardians.

A Guardian is required. The Guardian has a monitoring function to ensure the foundation’s council carries out its functions. The Qualifi ed Member or the Founder (but no other council member) may act as the Guardian of the foundation. A Protector is optional.

Optional. Optional. The law contains a non-exhaustive list of powers which may be conferred on a protector/supervisory body.


Continuation

An overseas foundation (ie a foundation with legal personality registered or established under a law other than Guernsey law) may apply to be registered as a Guernsey foundation. Application for migration into Guernsey – £100; application for migration from Guernsey – £1,500.

Foundations from various jurisdictions and Jersey companies (each a ‘Recognised Entity’) may continue as Jersey foundations (and vice versa) for an administrative charge of £500.

A Liechtenstein foundation may re-domicile to/continue in a foreign jurisdiction. There is a charge of CHF700.

A Panama foundation may re-domicile to/continue in a foreign jurisdiction.


Evolvingwith our clients




Mergers

There is no ability for a Guernsey foundation to merge with any other entity.

There is ability for:

• two or more Jersey foundations to merge; and

• one or more Jersey foundations to merge with one or more Recognised Entities.

There is no ability for a Liechtenstein foundation to merge with any other entity, although it may be converted into an Anstalt or a Treuunternehmen with legal personality.

There is no ability for a Panamanian foundation to merge with any other entity.


Benefi ciaries’ Right to Information

Generally benefi ciaries have a right to information. However this can be restricted such that the benefi ciaries are ‘disenfranchised’ and have no rights although a guardian is then required.

No, unless the charter or regulations explicitly provide otherwise.

A ‘person of standing’ (which includes a benefi ciary) may however make an application to the Royal Court for the terms of the foundation to be properly enforced.

In the case of a revocable foundation, the benefi ciaries have no information rights. In addition, the Liechtenstein Law contains possibilities to restrict the information rights of benefi ciaries by transferring those rights to other bodies such as an internal controlling body (similar to a protector) to carry out supervisory duties. In such cases, the rights of the benefi ciaries can be limited to an indefeasible minimum (their own rights, the foundation’s purpose, the organisation of the foundation). In the case of charitable foundations, which are generally subject to the supervision of the authorities, the benefi ciaries have no information rights.

The rights of the benefi ciaries are set down in the foundations charter or By-Laws, or by resolutions passed by the foundation’s council.




Publicly available information

Only ‘Part A’ of the register is publicly available. This records the name and registered number of the foundation, the name and address of the councillors and the guardian (if any) and the details of the registered offi ce. As part of the registration process, the charter must also be fi led with the registrar but may only be disclosed in certain circumstances (eg as part of criminal investigations).

The charter is the only document that is publicly available.

The charter of a private foundation is not a public document (unless the foundation requests to be registered).

The charter is the only document that is publicly available.


Charitable/Philanthropic purposes permitted

Yes. Yes. Yes. Yes.

Time period

None. None. None. None.

Corporate body as founder/Protector/Council member

A corporate body may act as a founder, councillor or guardian.

A corporate body may act as founder, council member (whether Qualifi ed Member or not) and guardian.

A corporate entity may act as a founder, protector or a council member.

A corporate body may act as a founder or as a council member.




Reservation of powers

Subject to the terms of the constitution, certain powers can be reserved, ie to amend, revoke or vary the terms of the constitution including its purposes and to terminate the foundation – limited to the duration of a founder’s life, or where a corporate founder, 50 years from the creation of the foundation.

In principle there is complete fl exibility – the terms of the charter and regulations can provide that any particular power or powers of the foundation may either be reserved to or subject to the veto of the founder or any other person.

Subject to the terms of the charter, an individual (as opposed to corporate) founder may reserve certain powers, ie to amend, revoke or vary the terms of the constitution including its purposes and to terminate the foundation – limited to the duration of the founder’s life.

No express provisions contained in the Law.


General duties

Councillors have a duty to the foundation to act in good faith in the exercise of their functions. Guardians owe a duty to the founder and benefi ciaries to act in good faith and en bon père de famille to enforce the constitution and the purpose and in the exercise of their functions.

The members of the council have no fi duciary duties to the benefi ciaries of the foundation. Their duty is to administer the foundation in accordance with its objects (as set out in the charter). The role of the guardian is to ensure that the council performs its role properly. The role of the Qualifi ed Member involves ensuring that the foundation is not used for criminal purposes, such as money laundering.

The members of the council owe no fi duciary duties to the benefi ciaries of the foundation. Their duties are owed to the foundation. Their duty is to administer the foundation in accordance with its objects (as set out in the charter). Professionals may not limit their liability.

Subject to the terms of the charter, the foundation council is accountable to the benefi ciaries and any protector/supervisory body. A benefi ciary may challenge any acts of the foundation that may damage the rights conferred upon him/her, either by applying to the protector/supervisory body (if any) or the court.


Who we are

Michael BetleyChairman

E: [email protected]: +44 1481 748048

Ken WrigleyDirector

Email: [email protected]: +44 1481 748047

Andréa Daley TaylorDirector

Email: [email protected]: +44 1481 748042

Trust Law | Jurisdiction Comparisons

Contact details

Trust Corporation International

PO Box 665, Roseneath

The Grange, St Peter Port

Guernsey GY1 3SJ

Tel +44 1481 730430

Fax +44 1481 730460

www.trustcorpci.com

Trust Corporation of the Channel Islands Limited trading as Trust Corporation International is licensed by the Guernsey Financial Services Commission.

Documents

Trust Corporation International