Approved Form of the Domestic Business Trust Deed (30 July 2013)

Summary

This is the BVI Financial Services Commission's approved template deed for a domestic business trust, used by a licensed insurer that qualifies as a specified foreign insurer under the Insurance Regulations, 2009. It sets out the standard terms on which a Class I trust licence holder (the trustee) holds approved assets on trust to satisfy the insurer's domestic liabilities, with the Commission as a party confirming the trustee's fitness and approving the trust's terms.

• Purpose of the trust: The insurer transfers approved assets to a trustee to be held for the benefit of Insurance Contract Holders, ensuring the trust fund value at least equals the insurer's domestic liabilities (or US$250,000 if liabilities are lower, unless the Commission directs a lesser amount).
• Trustee reporting: The trustee must provide the Commission and the company a monthly statement of trust fund assets and their valuation basis, due on or before the 14th day of each month.
• Company reporting and top up duty: The company must provide a quarterly statement of its domestic liabilities and must immediately pay or transfer assets into the trust fund whenever its value falls below the required liability threshold.
• Trustee changes: A trustee may resign on 42 days' written notice to the Commission and company; the company must appoint a replacement trustee within 60 days of a resignation or removal notice, failing which the Commission may appoint one itself.
• Payments and approvals: Payments or transfers out of the trust fund (other than to satisfy domestic liabilities or under specified exceptions) require prior written approval from the Commission.
• Compliance covenant: The company covenants to comply with the Insurance Regulations at all times during the trust period and to take steps the trustee or Commission reasonably require to ensure compliance.

As an approved form, the document itself does not impose new regulatory requirements beyond those in the Insurance Act 2008 and Insurance Regulations 2009; it standardises the contractual terms that specified foreign insurers, their trustees, and the Commission must use when establishing a domestic business trust.

Key obligations

• Trustee must provide the Commission and the company a monthly statement of trust fund assets and valuation basis on or before the 14th day of each month.
• Company must provide the Commission and the Trustee a statement of its domestic liabilities on or before the 14th business day of the month following each quarter.
• Company must immediately pay or transfer additional approved assets into the trust fund if its value falls below the required amount of domestic liabilities.
• Trustee must obtain the Commission's prior or simultaneous written approval before making most payments or transfers of trust fund assets.
• Trustee must give at least 42 days' written notice to the Commission and company before resigning, and resignation is not effective until a replacement trustee is appointed.
• Company must appoint a new trustee as soon as reasonably practicable and in any event within 60 days of a resignation or removal notice.
• Company must comply with the Insurance Regulations at all times during the trust period and take steps required by the trustee or Commission to ensure compliance.
• Trustee and company must provide the Commission such information as it requires concerning the trust and allow the Commission access to trust records.

Applies to

licensed insurers (specified foreign insurers), trustees holding a Class I trust licence under the Banks and Trust Companies Act, British Virgin Islands Financial Services Commission (as approving party)

Deadlines

• on or before the fourteenth day of each calendar month (or first business day following if not a business day): Trustee must provide the Commission and company a statement of trust fund assets and valuation.
• on or before the fourteenth business day of the month following each quarter: Company must provide the Commission and Trustee a statement of its domestic liabilities.
• not less than 42 days' written notice: Minimum notice period for the Trustee to resign.
• not less than 60 days after notice of resignation or removal: Deadline for the company to appoint a new trustee, failing which the Commission may appoint one.