Fetaures of the VISTA Trust

Some of the features of the new Act are as follows:

• The Act does not apply to BVI trusts generally:  it only applies where there is a provision in the trust instrument 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 fund will have precedence over any duty to preserve or enhance their value.  The trustee will not therefore be liable for the consequences of holding (rather than disposing of) the shares.
  
  
• The Act specifies that, subject to any contrary provisions in the trust instrument, unless the trustee is acting on an “intervention call” (as defined in the Act), 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; the management or conduct of the company’s business will be left to those appropriate to deal with it, namely its directors, whose fiduciary duties to the company will remain intact, except to the extent that the trustee/shareholder will be refrained qua trustee from exercising some of the powers of a shareholder.
  
  
• The new statute 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.  Except in compliance with these rules, the trustee must generally take no steps to procure the appointment or removal of the company’s directors.
  
  
• The Act further provides that the trust instrument may specify that the trustee may intervene in the affairs of the company in specified circumstances, i.e. when required to do so by an “intervention call” by a beneficiary, an object of a discretionary power of appointment, a parent or guardian of either of them, the Attorney General (in relation to charitable trusts), the enforcer (in relation to purpose trusts) or other specified persons.
  
  
• The Act specifies that (unless the trust instrument provides otherwise) 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 are specified in the trust instrument).
  
  
• The new statute contains provisions enabling beneficiaries, directors and others to apply to the court for enforcement of the terms of the Act
  
  
• and, on the application of a specified person, the court is empowered to authorise the trustees to sell designated shares where retaining them is no longer compatible with the wishes of the settlor.
  
  
• The Act is confined to shares in BVI companies, but there should be no reason why shares in non-BVI companies (or other assets) should not be held by a BVI company to which VISTA applies if it is the intention that those assets should (effectively) be held subject to a VISTA trust.
  
  
• 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 enactment of this new statute, which is consistent with the historical development of the trust, demonstrates that the BVI is in the forefront of those jurisdictions which are able to introduce innovative measures which meet the legitimate needs of their international clientele.

It should provide opportunities for many individuals who would otherwise wish to set up trusts to hold shares in their companies, but who have hitherto felt disinclined to do so as a result of the rigidity of the “prudent man of business” rule.

Serious consideration should be given to the establishment of a VISTA trust in the following circumstances:

• When the settlor wishes to retain control, since matters can, if appropriate, generally be structured so that settlor–control can be retained at the director (company) level.
  
  
• When the settlor intends the shares which he wishes to settle on trust and/or the underlying assets of the company to be retained.
  
  
• When trustee involvement in the underlying company’s affairs is undesirable or inappropriate.
  
  
• Where charitable or non-charitable purpose trusts are needed for securitisations and off-balance sheet transactions.
  
  
• Where the underlying assets of the trust are to comprise of speculative investments or investments which involve a degree of risk which would otherwise be regarded as inappropriate for the trustees of a non-VISTA trust.

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