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

Features of the VISTA Trust

Some features and innovative measures introduced by the Virgin Islands Special Trust Act are as follows:

VISTA Act does not apply to all BVI trusts but only to those where the trust instrument contains a provision directing the Act to apply. Where the new Act applies, designated shares will be held on "trust to retain" and the trustee's duty to retain the shares as part of the trust prevails over any duty to preserve or enhance their value; therefore, the trustee will not be liable for the consequences of holding the shares. The trustee of a VISTA trust must be a company which holds a licence to undertake trust business under the Banks and Trust Companies Act, 1990.

The Act specifies that, subject to any contrary provisions in the trust instrument, the trustee may not exercise its voting or other powers so as to interfere in the management or conduct of any business of the company. Company management will be left to those appropriate to deal with it, namely its directors, whose fiduciary duties to the company will remain intact. The Act also provides that the trust instrument may include "office of director rules", specifying how the trustee must exercise its voting powers in relation to appointment, removal and remuneration of directors, and the trustee will generally be required to follow these rules.

The Act provides that the trustee must generally take no steps to procure the appointment or removal of the company's directors, except in compliance with these rules. Also, the trust instrument may specify that the trustee may intervene in the affairs of the company in some specific circumstances, for example, in case of "intervention call" of a beneficiary, an object of a discretionary power of appointment, the Attorney General (for charitable trusts), the enforcer (in relation to purpose trusts) or other specified persons. The trustee is permitted to dispose of designated shares in the management or administration of the trust fund, but can only do so with the consent of the directors of the company (and that of such persons as may be specified in the trust instrument).

There are also provisions contained in the new statute, which enable beneficiaries, directors and others to apply to the court for enforcement of the Act terms. In its turn, the court is empowered to authorise the trustees to sell designated shares where retaining them is not compatible with the wishes of the settlor.

The Act does not in any way alter the restraints placed on directors and others by criminal law. The company law duties of directors also remain unchanged.

The Act is confined to shares in BVI companies, but non-BVI company shares also may be held  by a BVI company. VISTA applies to BVI companies if there is the intention that those assets should be held subject to a VISTA trust.

The enactment of this new statute, which is consistent with the historical development of the trust, meets the legitimate needs if international clients of offshore jurisdictions and puts the BVI in the forefront of the most progressive jurisdictions. It gives opportunities for many business individuals who would otherwise set up trusts to hold shares in their companies, but who did not do it as a result of the rigidity of the “prudent man of business” rule.