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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, t |
