BVI VISTA trusts
BVI Offshore Trust Sector

Overview

Being the world’s leading financial center, the British Virgin Islands (BVI) is a premier destination to set up offshore businesses. Instead of finding a professional BVI trustee service provider, wealthy people prefer opening a Private Trust Company by themselves.

All the information herein enclosed has been prepared for the assistance of clients considering creating BVI offshore trust companies. Its purpose is to give a concise overview of the key legal criteria and general guidelines that apply to the formation and management of BVI trust companies.

BVI VISTA Trusts

The Virgin Islands Special Trusts Act 2003 in the British Virgin Islands, amended in 2013, introduced a novel form of trust known as a “VISTA trust.” This trust type was designed to address a common challenge associated with the use of trusts for holding shares in underlying companies. The issue revolved around the settlor’s desire to retain maximum control over the company’s management, especially in terms of investments, while the trustee remained ultimately responsible (and possibly liable) for preventing losses due to mismanagement or unprofitable investments.

Although this predicament had been somewhat alleviated through the contemporary incorporation of “anti-Bartlett” and similar provisions in trust instruments, it was believed that incorporating the solution into statutory law would provide greater certainty and assurance. This approach aimed to ensure that the preferences of potential settlors could be accommodated without causing potential trustees to hesitate in taking on the trusteeship.

The Solution

As one might anticipate, implementing the solution involved incorporating several safeguards and specific statutory provisions:

• A VISTA trust must have at least one trustee who is either a BVI company licensed under the Banks and Trust Companies Act or a BVI private trust company.
• VISTA’s application is not automatic for all BVI trusts; it must be explicitly stated in the trust instrument (although non-VISTA trusts in the BVI can be converted).
• VISTA is limited to the designated shares in a BVI company or companies only. Consequently, most VISTA trusts are structured to hold all assets through an underlying BVI company.
• The trust deed can outline “permitted grounds for complaint,” enabling an “interested person” to request the trustee’s intervention in the company’s management through an “intervention call.”
• Interested persons, directors, and potential directors of the underlying company have the authority to petition the court if the trustee violates its duties or obligations under VISTA.
• If retaining the shares no longer aligns with the settlor’s wishes, any interested person can petition the court for permission to sell or dispose of the shares.
• In cases where ascertaining the settlor’s wishes is necessary, there is an obligation to consult the settlor. If this is impractical or the settlor is deceased, the settlor’s communicated wishes or the most likely interpretation of those wishes must be taken into account.

Specific Applications of VISTA Trust

The utilization of a VISTA trust is particularly advantageous for a client in scenarios such as:

• The client desires to maintain control.
• The client intends to keep the shares, which they wish to settle in trust, and/or the underlying assets of the company.
• The involvement of trustees in the affairs of the underlying company is undesirable or inappropriate.
• The client aims to prevent the trustee from being able to facilitate the disposal of underlying assets, especially in family-held businesses where retaining the shares holds greater importance than maximizing the value of assets in the trust.
• The client wishes to prevent the trustee from being able or required to intervene in the affairs of the company and its subsidiaries.

Conclusion

In summary, VISTA simplifies the establishment of a trust for shares in a BVI company and is particularly well-suited for clients seeking to retain effective control over their BVI companies while simultaneously leveraging the advantages of structuring their assets through a BVI trust.

Furthermore, the Act underscores the BVI’s leadership in the offshore sector by continually developing and advancing innovative solutions to meet the needs of their international clientele.