Private Trust Companies (PTCs) have become popular, especially amongst high net worth families and clients from civil law jurisdictions who are reticent about the prospect of transferring their wealth to an independent third party trustee when establishing a trust.
The board of a PTC is generally made up of family members, family advisors and those familiar with the family business. The board of a PTC is likely to be more familiar with the dynamics of the family and their investment culture and more reactive than a third party corporate trustee. A PTC's attitude to risk, for example in terms of investment decisions, may well be less conservative than a corporate trustee and so more appropriate where the nature of the underlying business involves a level of inherent business risk.
General requirements and restrictions
A PTC must:
- be a BVI company, limited by shares or guarantee
- contain an express statement in its memorandum of association that it is a PTC
- end with the designation "(PTC)" before the corporate suffix. In addition, the name cannot include the word `trust' or derivatives thereof
- have a registered agent (see below)
PTCs can only act as trustee, and cannot conduct any other business, nor solicit trust business from members of the public.
The Registered Agent
The registered agent of a PTC must itself hold a Class 1 Trust License in the BVI. The registered agent is responsible for ensuring that the PTC remains compliant with the relevant BVI legislation. As a result, the registered agent will be required to conduct periodic reviews of the actings of the PTC. The registered agent is also required to hold copies of the trust deeds. Harneys Fiduciary can provide registered agent services to PTCs.
Ownership of PTCs
Although the shares in a PTC will not themselves be of any significant financial value, they will be of strategic importance to a family.
If the PTC shares are owned by an individual outright, it will be necessary to obtain a grant of probate from the BVI court on the death of a shareholder. This can cause delay, and means that details of the owner and successor to the shares will become public. Accordingly, it is common for the shares to be held in trust. Harneys can advise on the establishment of a trust for this purpose.
Duties of PTCs
It is important that the PTC properly discharges itself of its fiduciary duties as trustee and administers the trust to the requisite standard of care. Failure to do so may open the door to breach of trust claims of the beneficiaries of the trust in future.