BVI To Remain At Vanguard Of Offshore Finance With New Laws

by Amanda Banks, Tax-News.com, London

22 March 2007

New legislation on the horizon which will enhance the BVI's trust company laws and rules governing the legal profession, along with the development of the Caribbean’s first Commercial Court and the appointment of a Managing Judge for the Eastern Caribbean Supreme Court, will all contribute to the jurisdiction's position as a leading offshore financial centre, according to Walkers, the offshore law firm.

Substantive private trust company legislation came into force on 15 January 2007 and the enactment of subsidiary regulations specifying which companies will be exempt is imminent, says Walkers. Under the newly enacted legislation, certain private trust companies may be exempted from licensing requirements and other provisions of the Banks and Trust Companies Act, under procedures implemented by the Financial Services Commission. Unremunerated BVI private trust companies which do not offer their services to the general public will be able to apply for these exemptions, according to the Commission.

"These regulatory changes will enhance the BVI’s attractiveness as a jurisdiction for the incorporation and use of private trust companies," Christopher McKenzie, Partner and head of Walkers’ private client department in the BVI, stated, adding: "These developments are extremely positive news for estate planners and will promote more structures that use both a trust governed by BVI law and a BVI private trust company as trustee by striking the right balance between the level of regulation versus the level of exemption.”

Private trust companies enable family-controlled structures to be established, offer trustees the benefits of limited liability and perpetual existence which are usually the features of corporate vehicles, and can lessen the tax burden by moving the liability from the settlor to the trust company.

“Walkers is particularly well-positioned to advise private trust companies on these changes, since partners Chris McKenzie and Jack Husbands were leading members of the committee of the Society of Trust and Estate Practitioners (STEP) which proposed the reforms,” Heidi de Vries, managing partner of Walkers’ BVI office, said. “Chris has been advising on trust regulations locally for more than 10 years, and associate Lisa E. Penn-Lettsome served as Deputy Managing Director of the BVI Financial Services Commission when these reforms were originally considered.”

Walkers notes that another important step that the BVI Government is taking is the development of the first Commercial Court in the Caribbean, as part of the Eastern Caribbean Supreme Court, which celebrated its 40th anniversary last month. Mr. Justice Gordon of the Court of Appeal, who is helping to co-ordinate the creation of the Commercial Court, met with heads of the litigation departments of the BVI law firms, including Walkers, last month to outline the court's plans.

“The appointment of a dedicated judge of the Commercial Division of the High Court, coupled with the recent appointment of a Managing Judge for the Eastern Caribbean Supreme Court, illustrates the court’s commitment to increased efficiency,” observed Jack Husbands, the head of Walkers’ BVI litigation department. “These enhancements will, in turn, help attract business and legal matters to the BVI.”

The BVI Government has also introduced the Legal Profession Bill, which makes provision for the fusion of the barrister and solicitor branches of the legal profession, and which promotes legal education and the discipline of legal practitioners. According to Walkers, this Bill models legislation that onshore jurisdictions have used to regulate their legal professions, and is yet another example of the BVI’s focus on providing unparalleled legal services.

Walkers said that it has already seen the impact of these changes through an increase in major institutional work for the BVI office, including sophisticated, high-value corporate transactions and complex international litigation cases, and has added to its workforce in the jurisdiction as a result.

“We anticipate that the changes to the BVI court system and the introduction of private trust company legislation will fuel the rise in the number of legal matters with global impact that we see,” Ms. de Vries added. “Through Walkers’ network of offices worldwide, our BVI clients can also benefit from a broad view of regulations and legal systems in others offshore centres to decide what is the best solution for them.”

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