In Hong Kong the new Hong Kong Trust legislation is in place effective from 1 December, 2013. This text modernises the Trust Law to bring it in line with other leading Trust jurisdictions. We cover this in more detail in a separate news bulletin at:
http://www.rosemont-int.com/news/20-09-2013-hong-kong-s-trust-law-reform-2013/
In the BVI further amendments to the Trustee Act and VISTA came into effect on 16th May 2013. These changes to the Perpetuity Period, Private Trust Companies, and Vista Trusts are looked at in more detail at:
http://www.rosemont-int.com/news/28-11-2013-amendments-to-the-bvi-trust-legislation-may-2013/
Below we consider the following developments:
- Cyprus Trust Register
- Amendments to the French Trust Reporting
- New Zealand revision to Trusts Act proposed
- Proposal for a Luxembourg Foundation “La Fondation Patrimoniale »
- Italian and Belgian reporting obligations re Trusts
- Jersey Trust Law amendment re “Hastings-Bass”
- New trust law in Hungary
Cyprus Trust Register
In early September 2013 amendments to the ‘Fiduciaries Law’* 2012 and the International Trusts Laws of 1992 to 2012 came into force with the intention of modernising the jurisdiction’s trusts laws and improve transparency and regulation in line with international standards.
Under the new laws a register of trusts will be maintained by the regulatory bodies established under the 2012 Fiduciaries Law. The register would hold details of:
1. The trust name;
2. Names and addresses of all the trustees, both current and past;
3. The date the trust was established;
4. Should there have been a change in the governing law, the date of that change will be recorded; and
5. Date of termination.
It is the obligation of any Cyprus resident trustee to provide this information to the authority within fifteen days of the trust being established or of any change other changes to the trust, including its termination. Trustees of existing trusts are required to provide the information within six months of the new law.
The register will be kept for five years after the termination or transfer from Cyprus of a trust.
On a trust being established the service provider must obtain identity data of the settlor, beneficiaries and trustees as well as the activities of the trust and any other individuals associated with the trust. The information collected by the service provider will be retained by them and only disclosed pursuant to a request by the duly authorised authority.
The 2012 Regulation of Fiduciaries, Administration Businesses and Corporate Directors Law requires that trust and corporate services providers are licensed by the Securities and exchange Commission in Cyprus after having demonstrated to the Commission’s satisfaction that they are ‘fit and proper’ persons to undertake such activity.
*The Law Regulating Companies Providing Administrative Services and Related matters
Amendments to French Trust Reporting
In November 2013 the French government obtained approval of a new law aimed at combating tax evasion which included provisions material to trusts which can be summarised as follows:
a) Under the Act a new Trusts Registry will be established in France and will contain details of the identity of the settlor, the beneficiaries and trustees and include the date of creation of the trust. The Register would be open to consultation but details have yet to be provided as to how the consultation would operate.
b) The existing legislation provides for a fine to be imposed of €10,000 or 5% of the assets held in trust, whichever is the higher, should the trustees fail to comply with their filing obligations. The penalties have been subject to a significant increase to €20,000 or 12.5% of the trust assets whichever is higher on each occasion there is a failure to disclose.
c) A trust with French resident administrators or trustees will now be subject to the disclosure obligation thus extending the existing provision of disclosure beyond a French resident settlor, or deemed settlor, beneficiary or French situs assets.
d) Finally, disclosure must be on French specific forms provided by the French tax authorities and in French.
New Zealand revision to Trusts Act proposed
The New Zealand authorities are acting to introduce new legislation following a lengthy Law Commission report on New Zealand trust law and recommended wide ranging changes to the existing 1956 Trusts Act.
The proposed legislation will include a definition of a trust’s core features described in a statutory list. A court can find a trust does not exist if the listed features are not apparent, which will include an intention held by the settlor to create a trust. Excluded from the definition are purported trusts in which the sole settlor and sole beneficiary is the one individual.
The Act will impose mandatory duties on trustees of all trusts including:
- To understand and follow the terms of the trust;
- Act honestly and in good faith;
- Act for the benefit of the beneficiaries or to advance the purpose of the trust;
- Exercise stewardship over the trust assets for the beneficiaries or to advance the trust’s purpose; and
- Exercise their powers for proper purpose.
It will no longer be possible to limit or exclude a trustee’s liability for breach of trust as a result of the trustee’s dishonesty, wilful misconduct or gross negligence.
Trustees will be required to inform potential beneficiaries of their rights under the trust and that they can request information. The trustees would be obliged to provide information to those beneficiaries to enforce the trust.
The duration of a trust will also be increased from the present 80 years to 150 years.
Proposal for a Luxembourg Foundation “La Fondation Patrimoniale"
A new draft law for a Fondation Patrimoniale has been placed before the Chamber of Deputies with the intention of extending the range of structuring entities for succession planning and management of assets that are available in Luxembourg.
The object of the proposed foundation would be to manage and administer the founders’ assets for the benefit of one or more beneficiaries or objects. While excluding the exercise of a profession, commercial or agricultural activity it can hold shares and interests in companies providing it does not take part in the management of those companies.
It is intended that such a structure would be used to maintain the cohesion of family assets, the continuity of management of an enterprise, privacy and to achieve a family objective and would be reserved to individuals and entities engaged in the management of individuals’ inheritance (‘patrimoine’).
Italian and Belgian reporting obligations affecting non-resident Trusts
Recently introduced Italian rules now require the disclosure to the tax authorities by anyone connected with a non-resident trust of the trust’s existence and its assets.
In Belgium from the tax year 2014 there will be a new form of reporting requirement for legal structures established by individuals. The aim of the law is to require the disclosure of the identity of the settlor, founder and beneficiaries of structures. Included in the law are trusts, foundations and similar structures.
It is expected that armed with this information the Belgian authorities will be able to monitor transfers, income or benefits and to tax those activities as well as to control reporting in the tax declarations.
New trust law in Hungary
Hungarian law is a codified legal system as such does not recognise the common law concept of trust. However, this will change with the addition of a new element to the Civil Code that will allow ownership to be transferred for a limited time and a form of agency contract.
A Hungarian trust will not have a separate legal personality. There must be a written agreement to transfer the legal ownership of the assets and the transfer must be for a specific purpose for the management of the asset for the benefit of the beneficiary. There must be an agreement between the owner/settlor, the beneficiary and the trustee. The term of the agreement must also be a defined fixed term of no more than fifty years.
The general principal will apply that creditors’ claims against the assets placed into the trust cannot be brought by creditors of the settlor, beneficiary or the trustees.
The trustees are required to maintain confidentiality, keep the asset separate from their own and other assets and to transfer the asset at the conclusion of the trust. They will be obliged to provide information and allow their activities to be reviewed by the beneficiary and the settlor. A trustee will have the power to dispose of trust assets and charge fees and is not compelled to follow the instructions of the settlor and beneficiary.
Further detailed regulatory and supervisory rules are awaited together with rules on the practical implementation of the Code.
Jersey Trust Law amendment in “Hastings-Bass”
As a result of an amendment in October 2012 to the Trusts (Jersey) Law 1984, the law on the doctrine of mistake has been incorporate into Jersey law. Under the amendment the Jersey courts are able to provide discretionary relief in the instance of a mistake by a trustee or settlor, frequently known as the rule in ‘Hastings-Bass’.