Virgin Islands Special Trusts Act (Revised 2020)

Summary

This is the revised Virgin Islands Special Trusts Act (VISTA), which creates a special trust regime for shares in BVI business companies. It lets a settlor direct that certain BVI company shares held in trust become designated shares, which the trustee must retain indefinitely and generally cannot interfere with in terms of company management, regardless of financial performance.

• Designation of shares: A trust meeting specified conditions (written instrument, at least one designated trustee at all relevant times, not created under a power of another non qualifying trust) may direct that some or all Virgin Islands shares in the trust fund become designated shares subject to the Act.
• Retention duty: Once shares are designated, the trustee holds them on trust to retain them, and this duty overrides any duty to preserve or enhance trust fund value; the trustee is not accountable for losses from holding rather than disposing of the shares.
• Non intervention restrictions: Trustees must not exercise voting or other powers to interfere in company management, must leave business conduct and dividend decisions to directors, and must not instigate litigation against directors, seek to appoint or remove directors, wind up the company, or seek court relief, except as the Act allows.
• Intervention only on call: A trustee may only intervene in company affairs following a valid intervention call by an interested person and only in the prescribed circumstances set out in the Act.
• Director related duties: Trustees must follow any office of director rules in the trust instrument regarding appointment, removal and remuneration of directors, and must ensure the company has at least the minimum number of directors required by its constitutional documents and BVI law.
• Prohibition on trustee acting as director: A trustee of designated shares must not be, or become, a director of the company.
• Disposal and enforcement: Designated shares may only be disposed of in accordance with the Act's disposal provisions, and interested persons or the court can enforce the trustee's obligations, including ordering disposal in defined circumstances.
• Ascertaining settlor's wishes: Where the Act or a trustee needs to ascertain the settlor's wishes, the trustee must consult the settlor if alive and practicable, or otherwise rely on the settlor's most recently communicated wishes or a good faith assessment of likely wishes.

The Act limits trustees' fiduciary responsibility and duty of care over the company's affairs except when acting on a valid intervention call, and allows the trust instrument to modify or exclude beneficiaries' entitlement to call for transfer of designated shares for up to 20 years from the trust's creation (or a shorter period stated in the instrument). It applies to trustees holding BVI company shares in trust (particularly designated trustees, being holders of trust licences under the Banks and Trust Companies Act or qualifying private trust companies), settlors, protectors, beneficiaries and other interested persons under such trusts.

Key obligations

• A trustee of designated shares must retain those shares and must not dispose of them except as permitted under the Act.
• A trustee must not exercise voting or other powers over designated shares to interfere in the management or conduct of the company's business, and must leave conduct of the business and dividend decisions to the directors.
• A trustee must not instigate or support action against company directors for breach of duty, procure appointment or removal of directors, wind up the company, or apply to court for relief in relation to the company, except as provided by the Act.
• A trustee must intervene in the company's affairs only following a valid intervention call by an interested person and only in prescribed circumstances.
• A trustee must ensure the company maintains at least the minimum number of directors required by its memorandum, articles and BVI law, and that director identity conforms to any applicable office of director rules.
• A trustee of designated shares must not be or become a director of the company.
• Where the trust instrument excludes beneficiaries' entitlement to call for transfer of designated shares, that exclusion cannot have effect beyond 20 years from the trust's creation unless a shorter period is specified.
• A trustee must, where required to ascertain the settlor's wishes, consult the settlor if living and practicable, or otherwise rely on the settlor's last communicated wishes or a good faith determination of likely wishes.

Applies to

designated trustees (holders of a trust licence under the Banks and Trust Companies Act), private trust companies, trustees of Virgin Islands trusts holding BVI company shares, settlors, protectors, beneficiaries and other interested persons under such trusts, BVI business companies whose shares are held on trust

Deadlines

• 20 years from the creation of the trust (or such shorter period as specified in the trust instrument): Maximum period during which the trust instrument may exclude a beneficiary's entitlement to call for or direct transfer of designated shares or to terminate or modify the trust relating to them.