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Short title and commencement.
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1.
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This Act may be cited as the Virgin Islands Special
Trusts Act, 2003 and shall come into force on such
date as the Governor may, by Proclamation published
in the Gazette, appoint.
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Interpretation
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2.
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(1)
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In this Act, unless the context otherwise requires
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"business" in relation to a company includes
the holding of shares or other assets and non-commercial
activities;
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"business risk" in relation to a company
includes
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(a)
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any risk attached to any business of the company, or
any connected company, when conducted in the manner
in which it has in fact been conducted; or
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(b)
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any risk which can be expected to be attached to any
projected business of the company;
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"court" means the High Court;
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"designated shares" means Virgin Islands
shares comprised in a trust fund and in respect of
which a valid direction under section 4(1) has been
made;
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No. 9 of 1990
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"designated trustee" means a holder of a
trust license under the Banks and Trust Companies Act,
1990;
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"interested person" in relation to a trust
means
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(a)
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a beneficiary of the trust;
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(b)
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an object of a discretionary power over any of the
capital or income of the trust;
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(c)
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a parent or legal guardian of any minor person falling
within paragraphs (a) or (b);
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(d)
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where any of the purposes of the trust are exclusively
charitable, the Attorney General;
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Cap.
303
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(e)
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an enforcer referred to in section
84A of the Trustee Ordinance;
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(f)
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a protector; or
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(g)
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an appointed enquirer.
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"intervention call" means a call by an interested
person under section 9(1) for a trustee to intervene
in the affairs of a company;
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"legal guardian" in relation to a minor person
means a person legally recognised as his guardian in
any jurisdiction with which the minor has a substantial
connection;
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"office of director rules" means rules referred
to in section 7(1) and any amendments thereto for the
time being in force;
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"trust fund" in relation to a trust means
property for the time being subject to the trust;
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Cap. 285
Cap.
291
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"Virgin Islands shares" means shares in a
company incorporated under the Companies Act or the
International Business Companies Ordinance which is
not
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(a)
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a company which has a license under the Banks and Trust
Companies Act, 1990;
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No. 5 of 1994
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(b)
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a company which is licensed as an insurer under the
Insurance Act, 1994 or which is authorised to act
as an insurance manager under that Act;
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No. 6 of 1996
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(c)
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a company which is registered as a public fund, or
recognised as a private fund, under the Mutual Funds
Act, 1996;
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(d)
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a company which is licensed as a manager or administrator
of mutual funds under the Mutual Funds Act, 1996;
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No. 8 of 1990
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(e)
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a company which has a license under the Company Management
Act, 1990.
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(2)
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In this Act,
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(a)
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references to voting powers in respect of shares shall
be taken to include references to powers to direct
the voting of shares held by a nominee;
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(b)
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references in relation to a trust to a protector are
to any person or committee whose consent is requisite
for the exercise of any powers;
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(c)
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references in relation to a trust to an appointed enquirer
are to any person who by, or under any power conferred
by, the terms of the trust is appointed to make intervention
calls
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(d)
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references to the memorandum and articles of a company
are to its memorandum of association and its articles
of association;
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(e)
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a company shall be taken to be connected with another
company if
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(i)
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that other company holds, directly or through a nominee,
shares in it;
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(ii)
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it is controlled directly or indirectly by that other
company; or
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(iii)
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it is connected with a company which is itself connected
with that other company;
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(f)
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a ground for complaint concerning the conduct of a
company's affairs is permitted if it is specified
as such in the trust instrument, and the expression "permitted
ground for complaint" shall be construed
accordingly.
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(3)
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In this Act, the following definitions shall, where
the context admits, apply in relation to, or in the
context of a provision referring to, designated shares:
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"company" means the company that has issued
the designated shares;
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"disposal" means
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(a)
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the exercise of voting powers leading, or capable of
leading, to the liquidation of the company or the
cancellation of the shares or of any rights attached
to them;
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(b)
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the creation of any legal or equitable interest in
the shares;
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and "dispose" shall be construed accordingly;
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"settlor" means the person by whom the trust
was created;
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"trust" means the trust on which the designated
shares are held;
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"trustee" means the trustee for the time
being of the trust;
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"trust instrument" means the instrument containing
the terms of the trust.
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Primary purposes of this Act.
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3.
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The primary purpose of this Act is to enable a trust
of company shares to be established under which
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(a)
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the shares may be retained indefinitely; and
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(b)
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the management of the company may be carried out by
its directors without any power of intervention being
exercised by the trustee.
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Designated shares.
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4.
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(1)
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Where a trust fulfils the conditions specified in subsection
(4), the terms of the trust may, subject to subsection
(3), direct that the provisions of this Act shall
apply
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(a)
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to all Virgin Islands shares comprised in the trust
fund; or
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(b)
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to such Virgin Islands shares comprised in the trust
fund as may be specified in the direction.
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(2)
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For the purposes of subsection (1), Virgin Islands
shares comprised in the trust fund shall be taken
to include Virgin Islands shares becoming so comprised
at any time after the creation of the trust, whether
added to the trust fund by way of additional settlement
by the original settlor or any other person, acquired
on a new issue by the company or in the course of
management or administration of the trust fund, or
acquired in any other manner.
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(3)
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A direction under subsection (1) shall not be made
in respect of shares added to the trust fund by a
trustee of another trust in the exercise of a power
in that other trust.
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(4)
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The conditions referred to in subsection (1) are
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(a)
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the trust is created by or on the terms of a written
testamentary or inter vivos instrument;
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(b)
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a designated trustee is sole trustee of the trust;
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(c)
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the terms of the trust require that any successor trustee
(mediate or immediate) is a designated trustee acting
as sole trustee;
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(d)
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the trust is not created in the exercise of a power
conferred by another trust.
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(5)
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A direction under subsection (1) may identify the shares
to which it relates either specifically or by any
general description.
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(6)
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Subject to subsection (7), where a person ("the
first person") is a settlor in relation to a trust
of designated shares and additional property is settled
on the terms of the trust by another person, the first
person shall be considered for the purposes of this
Act as the settlor in relation to the trust of the
additional property.
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(7)
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If the trust instrument provides that subsection (6)
shall not apply, then, in the case of a trust comprising
property which has been provided by more than one
person, this Act shall apply as if each person had
created a separate trust in relation to the property
which he has provided.
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Trustee's duties in relation to designated shares.
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5.
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(1)
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Subject to section 9, designated shares shall be held
by the trustee on trust to retain them.
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(2)
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The trustee's duty to retain designated shares shall
have precedence over any duty to preserve or enhance
the value of the trust fund.
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(3)
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Without prejudice to subsection (2), the trustee shall
not be accountable for losses arising directly or
indirectly from holding, rather than disposing of,
designated shares, including, in particular, losses
arising from any of the factors specified in subsection
(4).
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(4)
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The factors referred to in subsection (3) are
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(a)
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the absence, or inadequacy, of financial return from
any designated shares;
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(b)
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a decrease in value of any designated shares;
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(c)
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speculative or imprudent activities of the company
or depletion of the company's assets by disposition;
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(d)
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any act or omission of the directors of the company,
regardless of whether it is made or carried out in
good faith;
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(e)
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liquidation or receivership of the company;
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(f)
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share market fluctuation;
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(g)
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the loss of opportunity to make gains from reinvestment
of the proceeds of designated shares;
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(h)
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the liabilities and expenses of the company, including
directors' remuneration and expenses.
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(5)
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Every reference in subsection (4) to the company shall
include a reference to any company connected to it.
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Restrictions on trustee's powers.
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6.
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(1)
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Subject to the terms of the trust and to sections 7
and 8, the obligations specified in subsections (2)
and (3) shall apply to a trustee of designated shares.
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(2)
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Voting or other powers in respect of designated shares
shall not be exercised by the trustee so as to interfere
in the management or conduct of any business of the
company, and in particular, the trustee
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(a)
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shall leave the conduct of every such business, and
all decisions as to the payment or non-payment of
dividends, to the directors of the company,
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(b)
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shall not require the declaration or payment of any
dividend by the company or exercise any power the
trustee may have of compelling any such declaration
or payment.
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(3)
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A trustee of designated shares
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(a)
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shall take no steps to instigate or support any action
by the company against any of its directors for breach
of duty to the company;
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(b)
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shall take no steps to procure the appointment or removal
of any of the directors;
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(c)
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subject to section 9, shall take no steps to wind up
the company; and
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(d)
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subject to the provisions of this Act, shall not apply
to the court for any form of relief or remedy in
relation to the company.
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Provisions relating to directors.
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7.
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(1)
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The trust instrument may contain rules for determining
the manner in which voting and other powers attributable
to designated shares should be exercised by the trustee
in relation to
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(a)
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the appointment of directors of the company,
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(b)
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the removal of directors,
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(c)
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the remuneration of directors, or
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(d)
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any of the matters referred to in subsection (2),
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and may make provision for those rules to be amended.
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(2)
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The office of director rules may, in particular
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(a)
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require the trustee to ensure that a particular person
holds or retains office as director;
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(b)
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require any person to be appointed to the office of
director at some future date or upon some future
event;
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(c)
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require the removal of a director in specified circumstances;
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(d)
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prescribe, subject to the requirements of the memorandum
and articles of the company and the law of the Territory,
the minimum and maximum number of directors (whether
one or more) to hold office at any time or times;
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(e)
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require the trustee, in relation to the appointment
and removal of directors, to act, generally or in
any specified circumstances, on the decision of a
third person or committee;
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(f)
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provide for the conferral of fiduciary duties on a
person or committee referred to in paragraph (e);
or
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(g)
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provide for the establishment, continuance, and procedures
of a committee referred to in paragraph (3).
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(3)
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Subject to subsection (9) and to section (8), the trustee
shall at all times use its voting and other powers,
so far as those powers allow, to ensure
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(a)
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that the company has at least the minimum number of
directors to meet the requirements of its memorandum
and articles and the law of the Territory; and
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(b)
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that, except in an exempted case, the identity of the
directors of the company conforms with the office
of director rules, if any, for the time being applicable.
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(4)
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No person becoming or remaining a director of the company,
whether in consequence of the office of director
rules or otherwise, shall, in the capacity of director,
owe fiduciary or other obligations under the trust,
or have any fiduciary or other obligations to the
trustee, but nothing in this subsection shall affect
any duty which that person owes, as director, to
the company.
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(5)
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Persons for whose appointment the office of director
rules may provide include
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(a)
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any settlor or protector of the trust;
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(b)
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both ascertained and ascertainable persons.
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(6)
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A trustee shall incur no liability for securing, sanctioning
or not opposing the appointment of a director where
that appointment is in conformity with the office
of director rules.
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(7)
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Where there are no office of director rules, and in
an exempted case, a trustee shall incur no liability
for securing, sanctioning, or not opposing, the appointment
of a director of the trustee's own selection, if
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(a)
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the trustee concludes in good faith that the appointment
in questions is consistent with the wishes of the
settlor; and
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(b)
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the selection is not motivated by a desire on the part
of the trustee to reduce business risk, except to
the extent, if at all, that the trustee in good faith
concludes that a reduction would be consistent with
the wishes of the settlor.
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(8)
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For the purposes of this section, an exempted case
is any case in which either
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(a)
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the office of director rules make no provision in that
case; or
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(b)
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the rules make provision but the trustee concludes
in good faith that it would be impossible, unlawful,
impracticable, or plainly inconsistent with the wishes
of the settlor, to ensure compliance with the rules
in that case.
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(9)
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A trustee shall have no duty
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(a)
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to act pursuant to subsection (3) unless and until
it receives actual notice that circumstances requiring
such action have arisen; or
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(b)
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to enquire as to whether circumstances requiring action
pursuant to subsection (3) exist.
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Cap. 304
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(10)
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Where, on any question concerning the appointment of
a director, a trustee makes application to the court
under section 6 of the Trustees' Relief Act, the
court, in giving its opinion, advice, or direction,
shall not seek to reduce business risk, except to
the extent, if at all, that the court concludes that
a reduction would be consistent with the wishes of
the settlor.
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Intervention by trustee in management in prescribed
circumstances
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8.
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(1)
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Where, in relation to a trust of designated shares,
an interested person has a complaint concerning the
conduct of the company's affairs, and the ground
for that complaint is permitted, he may, in writing,
call upon the trustee to intervene in the affairs
of the company to deal with the complaint.
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(2)
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A trust instrument may specify one or more permitted
grounds for complaint, but need not specify any.
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(3)
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Upon receiving an intervention call, the trustee shall,
if satisfied that the complaint is substantiated,
take such, if any, action as the trustee considers
appropriate to deal with the complaint in the interests
of the trust.
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(4)
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Action taken under subsection (3) may include
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(a)
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making or procuring changes in the directorship of
the company in accordance with the provisions of
its memorandum and articles and the law of the Territory,
but otherwise on such terms as the trustee thinks
fit, provided that in making, procuring or maintaining
any such change, the trustee may disregard section
7(3)(b) if and for so long as, in the opinion of
the trustee, it is expedient to do so for the purposes
of dealing with the complaint;
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(b)
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procuring action by the company to recover any losses
caused by the conduct giving rise to the complaint;
or
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(c)
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seeking such advice on the complaint and the manner
of addressing it as the trustee considers appropriate.
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(5)
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In considering and taking action under subsection (3),
the trustee shall
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(a)
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have regard to
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(i)
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any wishes of the settlor; and
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(ii)
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the efficient functioning of the company;
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(b)
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disregard business risk, except to the extent that
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(i)
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the ground for complaint consists of or arises from
any disagreement among the directors as to the business
risk, or
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(ii)
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any wishes of the settlor require business risk to
be considered.
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(6)
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After acting pursuant to subsection (3), or deciding
not to act, the trustee's obligation to intervene
shall be at an end unless and until another intervention
call is made.
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(7)
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It shall be a ground for declining to act on an intervention
call if, apart from any other reason for declining,
the call is made on substantially the same ground
as one previously made, and there appears to the
trustee to be no reason to alter, or act further
on, the decision previously taken by it.
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(8)
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Where a trust instrument specifies one or more permitted
grounds for complaint, the following provisions of
this subsection shall apply:
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(a)
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an interested person may request the trustee to provide
such information concerning the affairs of the company
and any connected company as is reasonably required
for that person to judge whether an intervention
call is necessary, and the trustee shall use all
reasonable endeavours to provide that information
and may, if considered necessary for this purpose,
procure the replacement of any of the directors with
the trustee's own representative;
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(b)
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where there is an appointed enquirer he shall be under
the following duties:
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(i)
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a duty to make reasonable enquiries as to whether there
is a permitted ground for complaint as often as appears
appropriate in the circumstances, and not less than
once in any period of twelve months;
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(ii)
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a duty to make an intervention call under this section,
and provide the trustee with evidence of the relevant
ground for complaint, whenever it appears to him
to be appropriate;
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(c)
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where there is no appointed enquirer, the trustee shall
use all reasonable endeavours to ensure that at all
times at least one interested person of full capacity
is given the following documents and information
concerning the trust, but without prejudice to any
right of that person to documents and information
apart from this paragraph:
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(i)
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a copy of the trust instrument and other trust documents,
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(ii)
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the name and address of the trustee,
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(iii)
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the name, registered office, and principal place of
business, of the company,
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(iv)
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the names and addresses of all directors of the company,
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(v)
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the nature of the current activities of the company,
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provided that , where practicable, any person to whom
information is given under this paragraph shall be
a person who, in the reasonable opinion of the trustee,
has acquired, or is likely to acquire, by appointment
or otherwise, a substantial equitable interest in
some or all of the designated shares or their proceeds
or is the parent or legal guardian of such a person.
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(9)
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All expenses incurred in dealing with an intervention
call or considering the complaint on which it is
based, including trustee remuneration where applicable,
and the cost of any advice, shall be borne by the
trust fund and its income in such proportions as
the trustee decides, and if there is any deficiency
in liquid funds the trustee may take such steps as
are available to the trustee under the memorandum
and articles of the company and the law of the Territory
to make up the shortfall out of dividends from the
company and may, if considered necessary for this
purpose, procure the replacement of any of the directors
with the trustee's own representative.
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(10)
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The trustee shall, where practicable, procure the removal
from office of a director appointed for the purpose
specified in subsection (8)(a) or (9) when the purpose
for which the director was appointed is achieved,
if removal is appropriate for the purpose of any
action decided upon by the trustee pursuant to subsection
(3) or, subject to such action, for the purpose of
compliance with the office of director rules.
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Power to dispose.
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9.
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(1)
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This section shall apply to a trust of designated shares.
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(2)
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Subject to subsection (3) and to the terms of the trust
instrument, the trustee shall have power, in the
management and administration of the trust fund,
to sell or otherwise dispose of designated shares,
but the existence of this power
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(a)
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shall not carry an implied duty to exercise it for
the purpose of preserving or enhancing the value
of the assets of the trust or to consider its exercise
for that purpose; and
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(b)
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shall not render the trustee liable, in consequence
of not exercising it, for losses of this kind referred
to in section 5(3).
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(3)
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Subject to section 11, the trustee shall not, unless
the trust instrument otherwise provides, sell or
dispose of designated shares in the management or
administration of the trust fund without
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(a)
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the consent of the directors of the company or of a
majority of them if more than one; and
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(b)
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such, if any, consents as are made requisite by the
trust instrument.
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(4)
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A sale or other disposal in exercise of the power conferred
by subsection (2) shall be made in such manner, and
upon such terms and conditions, as the trustee, acting
in its fiduciary capacity, thinks fit.
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Cap
303
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(5)
|
Section
59 of the Trustee Ordinance shall not apply to
the trust to the extent that it permits the court
to confer upon the trustee any power of sale or other
disposal.
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Enforcement.
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10.
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(1)
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Where in the case of a trust of designated shares there
is a breach of a duty or obligation imposed on this
Act on its trustee, any of the persons specified
in subsection (3) may, subject to the terms of the
trust, apply to the court for relief.
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(2)
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The court shall, if satisfied that the application
under subsection (1) is well founded, grant relief
by
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(a)
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making such order as it considers appropriate to attain,
as nearly as may be, the outcome that the court considers
would have been, or would most likely have been,
attained in respect of the trust, the company, its
directors and generally if the breach had not occurred;
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(b)
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making such, if any, supplementary or incidental order
as the court deems, in the circumstances of the case,
reasonably required having regard to the primary
purpose of this Act state in section 3,
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provided that no order shall be made under this subsection
to prejudice any interest in property which was acquired
from the trustee in good faith, for value and without
actual or constructive notice of the trust, or from
the company in good faith and for full consideration,
or to prejudice any interest deriving from such an
interest.
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(3)
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The persons referred to in subsection (1) are
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(a)
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any interested person;
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(b)
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any director of the company;
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(c)
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any person who, under applicable office of director
rules, would be a director if the trustee had complied
with its obligations under section 7.
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(4)
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Without prejudice to subsection (1) to (3), but subject
to subsection (5), where in the case of a trust there
is a breach of a duty or obligation imposed by this
Act on its trustee, the breach shall be, and be actionable
in civil proceedings as, a breach of the trust.
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(5)
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Where civil proceedings are instituted in relation
to a breach of a duty or obligation, the court shall,
in granting any remedy, take account of any relief
granted or available in respect of the breach on
an application under subsection (1).
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(6)
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References in subsection (4) to a breach shall be taken
to include references to a prospective breach.
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(7)
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Subject to the terms of the trust and to sections 7
and 8, where designated shares are held on trust,
no act or omission of a director of the company shall
be a ground for any person to seek intervention by
the court in the affairs of the trust.
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Power of court to order disposal.
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11.
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(1)
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Where it is shown to the court that the retention of
the shares is no longer compatible with the wishes
of the settlor, the court shall have power, on the
application of any interested person, to order or
authorise a sale or other disposal of any designated
shares, and a sale or other disposal so ordered or
authorised shall not require any consent referred
to in section 9(3).
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(2)
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In making an order, or giving authority, under this
section, the court may impose such, if any, terms
and conditions in relation to the sale or other disposal
as it thinks fit.
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Modification of rule
in Saunders v. Vautier.
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12.
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(1)
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Notwithstanding any rule of equity or practice of the
court to the contrary, but subject to subsection
(2), neither a beneficiary who is solely interested
in any designated shares, nor all the beneficiaries
who together are the persons interested in any designated
shares, shall be entitled, although in existence
and ascertained and of full capacity, to call for
or direct a transfer of those shares or to terminate
or modify the trust relating to them if and so far
as that entitlement is, without offending any rule
of perpetuity or remoteness, excluded by the trust
instrument.
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(2)
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No such exclusion of entitlement shall have effect,
or continue to have effect, after the expiration
of 20 years from the creation of the trust.
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(3)
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Where a person who receives designated shares, or an
interest in them, is a person who, by virtue of such
an exclusion or entitlement, has no present right
to receive the shares or that interest, he shall,
without prejudice to the generality of subsection
(1), hold those shares or that interest on trust
to transfer the same to the trustee, and the court
shall order him so to do on the application by the
trustee or any person specified in section
10(3).
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Cap.
303
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(4)
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During any such exclusion of entitlement, section
58 of the Trustee Ordinance shall not apply to
the trust.
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Disqualification of trustee as a director.
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13.
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A trustee of designated shares shall not be, or become,
a director of the company.
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Ascertaining wishes of settlor.
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14.
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(1)
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Where it is necessary under this Act for the court
or a trustee to ascertain the wishes of the settlor,
the following provisions of this section shall apply.
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(2)
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Where the settlor is alive, the settlor shall, where
possible and practicable, be consulted as to his
wishes.
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(3)
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Where the settlor is dead, or it is not possible or
practicable to consult him, his wishes shall be taken
to be
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(a)
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such wishes as he has most recently communicated to
the trustee, or
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(b)
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where no wishes or relevant wishes have been communicated,
such as the court, or the trustee in good faith,
believes most likely to have been his wishes from
the evidence available to it.
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Limitation of trustee's duties.
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15.
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(1)
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A trustee of designated shares shall have no fiduciary
responsibility or duty of care in respect of the
assets of, or the conduct of the affairs of, the
company, except when acting, or required to act,
on an intervention call.
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(2)
|
Without prejudice to the generality of subsection (1),
a trustee of designated shares
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(a)
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shall not be required to make any enquiry as to whether
any facts exists which would, or may, whether with
or without any other information, form the basis
of an intervention call;
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(b)
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shall not be obliged to inform any interested person
of any fact of which it becomes aware, or which it
suspects, concerning the assets of the company or
the conduct of its affairs;
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(c)
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shall not incur liability as accessory to a director's
breach of duty by reason of any omission on the part
of the trustee to take action where the trustee is
aware, or suspects, that there has been or will be
such a breach, or by reason of any act or omission
in compliance with the provisions of section 7.
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Regulations.
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16.
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The Minister may make regulations for the purpose of
carrying the provisions of this Act into effect.
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