The British Virgin Islands Government legislated the Virgin Islands Trust Act 2003 in March 2004 . It was intended to innovate trusts in the form of holding shares in a BVI-incorporated company and then disengaging the trustees from their duties. It in turn allows the Company and business to be retained and run by its directors.
Unlike traditional trusts where the trustees are enshrined to exercise his/her authority for the benefit of beneficiaries. The trustees are normally responsible for administering the trusts on a daily basis. Having said that, they are also required, by law, to manage and monitor the performance of the underlying company, including its assets. By doing so, the trustees might be in a position to sell the shares of the Company in order to maximise the financial performance of trust assets. As a result, the actions of the trustees might sometimes be in conflict with family members of the settlor.
VISTA trusts remove these obstacles by enabling the settlor and his/her family to create a mandate that the trustees have no legal duties to interfere in the management of the Company. The key takeaways of the VISTA trusts are the following:
*The application of VISTA trusts is only available to BVI Companies only.
*The trustee’s legal responsibility to oversee the underlying Company, including its assets, can be wholly or partially removed based on the terms of the trust.
*The trustees might retain or dispose of the shares in the underlying Company with the consent of the Directors of the Company or other individuals named in the trust deed.
*BVI trusts that are not VISTA trusts can be converted into VISTA trusts provided that they have met the criteria
*If the trustees breach the obligation of non-intervention in the VISTA trusts, although it is unlikely to occur throughout the management in the BVI, the beneficiaries of the VISTA trust and the directors are able to apply to a court for the enforcement of the terms, including selling the underlying shares and assets of the Company.
The terms of the VISTA trust can call on the trustees to transfer the shares in the underlying Company to designated beneficiaries in the event that the settlor has passed away. This, in turn, allows the settlor to transfer the underlying assets to his/her family members on the announcement of the death without the settlor making a will beforehand.
Last but not least, if assets in a non-BVI Company are to be held in the VISTA trust, then these assets should be held by the BVI Company which is ultimately held by the VISTA trust.
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