BVI Trust legislation changes Virgin Islands Special Trust Act, 2003 Features of the VISTA Trust VISTA Trust Considerations

Virgin Islands Special Trust Act, 2003

VISTA trusts enable shareholders to establish a trust of his company that disengages the trustee from management responsibility and permits the company to operate as long as the directors think fit. Although the VISTA trusts may not function as "authorised custodians", holding bearer shares, they will enable BVI licensed Trust Companies to act as trustees holding the designated shares on behalf of clients.

The Virgin Islands Special Trusts Act 2003 is a short document, which is relatively self explanatory. In general, it limits the liability of the trustee and removes the trustees duties of monitoring and intervention. It also encourages licensed trust companies to act as trustees for special trusts for designated shares, and in part it may be a reaction to the recent adoption of the International Business Companies (Amendment) Act 2003, which immobilises bearer shares and significantly amends the BVI corporate legislation.

Section 3 of the VISTA Act 2003 clearly states:

"The primary purpose of this Act is to enable a trust of company shares to be established under which

- the shares may be retained indefinitely; and

- the management of the company may be carried out by its directors without any power of intervention being exercised by the trustee."

Section 4 of the VISTA Act 2003 states the conditions necessary to establish a VISTA trust:

- the trust is created by or on the terms of a written testamentary or inter vivos instrument;

- a designated trustee is sole trustee of the trust (a designated trustee is a licensed Trust Company under the Banks and Trust Companies Act 1990);

- the terms of the trust require that any successor trustee (mediate or immediate) is a designated trustee acting as sole trustee;

- the trust is not created in the exercise of a power conferred by another trust.

Section 5 of the VISTA Act 2003 establishes the duties of the trustee with respect to the designated shares. It specifically exempts the trustee from losses arising directly or indirectly from holding, rather than disposing of, designated shares.

Section 12 of the VISTA Act 2003 sets the rules preventing beneficiary(ies) from requesting a transfer of the trusts assets of designated shares. It states that notwithstanding any rule of equity or practice of the court to the contrary, but subject to subsection (2), neither a beneficiary who is solely interested in any designated shares, nor all the beneficiaries who together are the persons interested in any designated shares, are entitled to call for or direct a transfer of those shares or to terminate or modify the trust if this right has been excluded by the trust instrument.

Other provisions established in the legislation include that for the existence of an inquirer or protected as interested persons who can request the intervention of the trustee in the company. The trust instrument may contain the "office of director rules" - special provisions regarding how the directors are to be appointed, removed and remunerated. These rules may govern:

- tenure of office of a particular person

- appointment of a director at a future date or event

- removal of a director in specified circumstances

- the number of directors holding office

- trustee acting on the direction of a committee or third party, who might also have fiduciary duties

It should be specifically stated in the trust instrument that it applies to the shares ("designated shares"), and these should be identified either specifically or generally.

This legislation provides only a limited number of grounds on which it is possible to complain

The VISTA Act 2003 provides only a limited possibility to complain about the lack of intervention by the trustee into the corporate management. Nevertheless, an interested person or a director or possible future director may apply to the court in the case of a breach of the fiduciary duty.