Private trust companies (“PTCs”) are privately owned corporate trustees and are increasingly being used by high net-worth private clients seeking to establish a private wealth structure. A PTC does not provide general trust company business services, acting instead as trustee in relation to specific trusts.
What Regulations effect a PTC?
Whilst general trust company businesses are regulated by the Financial Services (Jersey) Law 1998 (the “Law”), a PTC is exempt from registering in Jersey under the Law in accordance with the Financial Services (Trust Company Business (Exemptions)) (Jersey) Order 2000 when it fulfills the following criteria:
the PTC’s purpose is to provide services in relation to specific trusts which, where there is more than one trust, are connected;
the PTC does not provide or solicit services in relation to the public;
the administration of the PTC is by a person registered to carry out trust company business; and
the name of the PTC is notified to the Jersey Financial Services Commission (the “JFSC”), although there is no public record of PTCs in Jersey.
Administration of a PTC
For the purpose of the exemption, although it is stated that ‘administration’ must be undertaken by a person registered to carry out trust company business, there is no guidance as to what constitutes ‘administration’. Therefore, there is no requirement that any of the board of directors be provided by the trust company service provider, although the presence of an experienced trust practitioner could be valuable in ensuring the proper management of the trust and the sufficient flow of information.
The benefits of a PTC
A PTC enables the settlor of a trust to retain greater control over the structure as the PTC can be owned either directly by the settlor or indirectly, perhaps through a purpose trust or foundation. This personal structure also allows for greater privacy and swifter decision-making as there is no third-party intermediary.
PTC’s in Jersey are not required to seek exemption from regulation, pay any fees relating to their status as a PTC, or capitalize the PTC. There is also no requirement for a PTC to apply its own anti-money laundering procedures (“AML”), to appoint a money-laundering reporting officer or money-laundering compliance officer, nor is there a requirement for a PTC to register with the JFSC for AML purposes.
The disadvantages of a PTC
The main disadvantage of a PTC is the costly structure in cases where it is desirable to maintain a degree of anonymity. This is because, in order to do so, it is necessary to establish a company or foundation in addition to the trust. A PTC structure must also be properly established to avoid the possibility that it is attacked for being a sham.
Type of company: Private, can be incorporated in any jurisdiction
Licensing requirements: None
Registration requirements: None
JFSC approval: No, just need to notify name
Public record of shareholders necessary?: Yes, if a Jersey company
Public record of directors necessary?: Yes, if a Jersey company
Annual filings: Yes, annual return and fee need to be filed
External audit: No, unless the company’s constitutional documents require