The sole purpose of Private Trust Companies (“PTC’s”) is to act as trustee for a specific trust or trusts. PTC’s are commonly used where the assets to be held in trust go beyond the typical investments a professional trustee offering services to the public has expertise in administering. Shares in a family company and interests in a commercial vessel or aircraft are examples of assets typically held on trust by a PTC. The Settlor (or his trusted management team) can remain in administrative control of the family company or persons can be put in place that have specialists skills and qualifications to administer the shares or other unique assets that are held by the PTC.
The Private Trust Companies Regulations (“the Regulations”) came into force in August 2008. The Regulations allow for the registration of a PTC with the Cayman Islands Monetary Authority (“CIMA”) where the PTC is incorporated in the Cayman Islands and conducts no trust business other than connected trust business. Prior to the Regulations coming into force, one would have been required to obtain a restricted trust licence from CIMA (an option which remains) for conducting such business. This required substantial disclosures and approvals and other ongoing vetting and regulation by CIMA including a capital requirement and the requirement for an annual audit. Under the Regulations, qualifying PTC’s now have the choice of a more straightforward registration process.
The Regulations define connected trust business as trust business in respect of trusts of which there is one or more than one contributor to the funds of which are all, in relation to each other, connected persons. Connected persons include those in the same family as provided in the Regulations and those in the same group of companies.
The Regulations were amended on 1 February 2019 and include the changes outlined below.
Amendments to fees
The amendments provide a welcome reduction of both the initial registration fee and annual registration fee to CI$3,500 (US$4,268.29). A surcharge (not exceeding 1/12 of the annual registration fee for every month or part of a month that the fee remains unpaid) will now be incurred for any failure to pay the annual registration fee on or before 31 January of any year. A fee of CI$300 (US$365.85) has now been introduced where a PTC surrenders its registration.
Inspection of Records
CIMA is entitled at all reasonable times, to inspect all documents and records held or which should be held at the registered office of a PTC (e.g. up to date copies of the trust deed or other documents recording the terms of the trust and the names and addresses of the trustees, contributors, and beneficiaries, and all financial and transactional records of the company and its connected trust business).
Declarations and notifications
On registration or as part of the annual declaration to be filed with CIMA on or before 31 January every year a PTC is now required to provide the names and addresses of members (if any) and to file in the form specified by CIMA proof of the identification of the directors and shareholders of the PTC. Matters previously (and still) required to be filed at the time of registration and as part of its annual declaration include:
- the name of the PTC (which must include the words “Private Trust Company” or the letters “PTC”):
- the names and addresses of its directors;
- the names and addresses of its shareholders;
- the name of the holder of the Trust Licence providing its registered office;
- confirmation that the company is a PTC incorporated in the Cayman Islands and conducts no business other than connected trust business; and
- a declaration that the company is in compliance with the Regulations.
CIMA must be notified within 30 days of any change in the information provided to it for the registration of the company.
Requirement for natural persons to be a director
Any company registering as a PTC with CIMA or a PTC making any change to the membership of its board of directors on or after the 1 February 2019 must have a natural person appointed as a director.
Cancellation of Registration
CIMA may refuse or cancel the registration of a PTC if it has reasonable grounds to believe that a company or any principal of the company is breaching any applicable laws or that the PTC is not being operated by fit and proper persons. A principal includes –
- a person who is entitled to exercise control of ten percent or more of the voting power over the PTC or over its parent company;
- a person whether a shareholder or not in accordance with whose directions or instructions the directors of the PTC or the directors of its parent company are accustomed to act; or
- a director of a PTC.
A PTC may also request the cancellation of its registration with CIMA.