Using Barbados to Protect Wealth: China Edition (Part 3)

Securing wealth created by Chinese investors: Barbados Private Trust Companies

Barbados has recently enacted legislation permitting the establishment of private trust companies by the enactment of the Private Trust Companies Act, 2012-22, which is now in force. The use of private trust companies is particularly popular with settlors who wish to retain an appropriate level of control with regards to the administration of trust assets. This can be effected by the settlor and / or members of his family acting as directors on the board of the private trust company (“PTC”).

Under the proposed legislative framework, a PTC is required to conduct exclusively “connected trust business” i.e. trust business in respect of trusts the settlors of which are connected to each other through the specified relationships of blood, affinity and adoption. A PTC is prohibited from soliciting or receiving assets to be held on the terms of the trust from members of the public.

The PTC is required to be licensed on initial registration and thereafter annually. In addition, it is required to have a registered agent who maintains copies of the trust instrument (and any variation documents) in respect of the trusts of which the PTC acts as trustee at the registered office and which registered agent has an obligation to take reasonable steps to ensure that such PTC complies with all statutory requirements. To ensure that the PTC is properly administered (a critical point in preserving the integrity of trusts of which the PTC acts as trustee), it is required to have at least one director who is appropriately qualified and is resident in Barbados. There are no capitalisation requirements for the PTC and there is a statutory obligation of confidentiality in relation any application made in connection with a prospective PTC and generally in relation to the affairs of the PTC.

A PTC will not be subject to income tax in Barbados, where it is managed by a licensee under certain legislation and its activities are restricted to investment activities. No tax, duty or other impost will generally be levied on a PTC, its shareholders or transferees in respect of any transfer of assets to a non-resident of Barbados or a resident of Barbados licensed under certain legislation

Originally published as part of an article which appeared in Protecting Wealth Guide: A Jurisdictional Guide | China Edition.

If you have any questions in relation to the foregoing, please do not hesitate to contact Melanie Jones, Partner and Tara E. Frater, Partner.