Bahamas - Private Trust Companies and Family Office

Families need dynamic and professional advisors to help them manage their wealth. PTC and the Family Office structures can be used as vehicles to help families achieve their goals, while dealing with complex tax, legal and regulatory issues.

Published: Date: Updated:

Investor Resources October 15, 2010 January 25, 2012

Source: Bahamas Financial Services Board © 2010

Snapshot: The Private Trust Company (PTC) was established to provide trusteeship to a defined class of trusts. In The Bahamas, this class of trust is defined by reference to the designated person(s). The designated person(s) is identified at the establishment of the PTC and with whom all other settlors of trusts, for whom the PTC acts as trustee, must be related. With this requirement, the PTC can act as trustee for an unlimited number of trusts and can benefit anyone (subject to due diligence requirements) from the assets of the trusts. PTCs in The Bahamas were enhanced by legislation in the form of the Banks and Trust Companies Regulation (Amendment) Act, 2006, followed by the Banks and Trust Companies (Private Trust Companies) Regulations, 2007.

Features:

Incorporation:

• can be incorporated under Companies Act, 1992, or International Business Companies Act, 2000

• minimum share capital $5,000

Designated person:
• individual named in designating instrument

• if more than one designated person named, then each designated person must be a blood relative or related by some other family relationship to the other designated person(s)

• can be deceased and trust established by testamentary disposition

Designating instrument:
• names designated person(s)

• kept at office of registered representative

Form of acknowledgement:
• settlor acknowledges awareness that PTCs do not require:

• directors to possess expertise in trust administration

• a fidelity bond

• capital exceeding $5,000

• an annual audit

Special director:
• except where an officer of a licensee serves as registered representative, there must be at least one special director

• special director must possess at least five years experience in discipline relevant to trust administration (law, finance, commerce, investment management, or accountancy) and be of good repute

• need not be resident in The Bahamas

Registered representative:
• must be separate legal entity

• shall be either a licensee of The Central Bank of The Bahamas (the Central Bank) or a Financial and Corporate 

Services Provider approved by the Central Bank

• must be resident in The Bahamas

• provides the services of a secretary, director, or Bahamas agent

• ensures PTC is established for lawful purpose and that it operates as a PTC

• must have minimum share capital of $50,000

• must retain copies of certain documents in relation to the PTC

• required to verify and maintain in The Bahamas records of such verification relating to the identities of:

• settlor and any person providing funds or assets subject to trust(s) administered by the PTC

• designated person(s)

• protector of trust(s) of which the PTC is trustee

• any person with a vested interest under trust(s) of which the PTC is trustee

• shall report suspicious transactions to Financial Intelligence Unit

Penalties:
• if a PTC fails to comply with directions from the governor of the Central Bank or engages in illegal conduct, then the PTC or its registered representative is subject to sanctions including a fine of no more that $5,000; a Supreme Court Order compelling compliance; amending or varying conditions of the license; requiring substitution of any director or officer; appointing a person to advise a receiver to assume control of the PTC or registered representative’s affairs; or such other action as the governor deems necessary.

• governor of the Central Bank has discretion to petition court to transfer trusteeship to a new trustee

Sidebar:
 
Family office evolves, with The Bahamas at the forefront
Families need dynamic partnerships and advisors who will help them manage their wealth. The family office helps families achieve their goals while dealing with increased regulations, and complex issues of taxation, distribution planning and charitable giving. An important tool used by the family office is the trust. Assets will often be transferred to trusts (with underlying corporations to facilitate separation of various assets) as a means of facilitating the smooth transition from one generation to the next. Other essential services of the family office include: evaluating life insurance needs; active coordination of legal/tax/accounting matters of business interests; financial reporting and audits; coordinating the purchase of non-financial assets; and corporate governance reporting. The Bahamas is an ideal location for the establishment of family offices, scoring high marks on all the following requisites:

• Infrastructure (airports, communications, high-end services);

• Nature of assets and issues of control, such as where main tangible assets are held, whether business interests are involved and whether they are mobile or fixed;

• Tax neutrality and tax treaties;

• Regulatory and compliance obligations;

• Exchange of information and access to information, and confidentiality; and

• Financial environment.