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 LICENSING

 
The Trusts (Regulation of Trust Business) Act 2001 provides for the issue of two types of licence:

An unlimited licence authorises the licensee to carry on trust business and to solicit business from the public generally.

An unlimited licence under the Act may be made by local or exempted companies incorporated under Bermuda’s Companies Act 1981 (“the Companies Act”); and by Overseas (Permit) Companies authorised by the Minister of Finance under the Companies Act to conduct business in Bermuda.

limited licence does not allow the holder to act as sole trustee and restricts the trustee to holding trust assets not exceeding $30 million unless the Authority agrees to a higher aggregate amount. In exercising this discretion, the Authority has regard to the Government’s policy approach in the Act, in particular in seeking to promote the use of a trust company structure where a trustee manages material amounts of assets. Where an applicant for a limited trust licence or an existing holder of such a licence subsequently wishes to seek consent for a larger amount than $30 million of assets to apply to his or her business, an application for a higher figure must be made to the Authority.

In considering such an application, the underlying objective of the Authority is to determine the point at which the nature and scale of the applicant’s business will be such as to indicate that a trust company should instead be established for the conduct of business in question. In assessing applications, the Authority has regard to the interaction of a number of factors including: demonstrable need for limited licensing; the integrity and professional skills appropriate to the nature and scale of trustee activity to be undertaken; absolute amount of the assets to be administered by the trustee; the nature and range of the trust business being carried on; the number of individual trust relationships involved; the variety and complexity of the trust responsibilities which are to be conducted and the resources that the undertaking has at its disposal. Broadly, the more varied and complex the trust responsibilities being conducted, the more restrictive the Authority’s stance in approving limits greater than $30 million.

A limited trust licence may be made by Partnerships formed under the Partnership Act 1902 or the Exempted Partnerships Act 1992; and by Overseas Partnerships Act 1995 permitted by the Minister of Finance to conduct business in Bermuda; and by other unincorporated entities or by individuals conducting trust business, as defined, in or from within Bermuda.

Minimum Criteria

The Authority will not grant a licence unless satisfied that the applicant has met and has the ability to continue to meet minimum licensing criteria as set out in the First Schedule of the Act. It must be stressed that, even when satisfied, the Authority always retains discretion to refuse an application.

 

The minimum licensing criteria is the same for both a limited and an unlimited licence, and consist of the following requirements.

1.  controllers and officers of the undertaking must be fit and proper persons;

2. undertaking shall implement corporate governance policies and processes as the Authority considers appropriate given the nature, size, complexity and risk profile of the undertaking;

3.  the undertakings business must be conducted in a prudent manner. This includes (although is not limited to) maintaining the undertakings:

    1. general strategy and objectives;
    2. planning arrangements;
    3. policies on accounting, collections and bad debt;
    4. ability to maintain adequate liquidity to meet its obligations as they fall due;
    5. recruitment arrangements and training to ensure that the undertaking has adequate numbers of experienced and skilled staff;
    6. occupy premises suitable for the purpose of conducting its business;
    7. capital adequacy (minimum net assets at least $250,000 in the case of an undertaking that is a Company; $25,000 for undertakings other than companies; or such larger amount as the Authority may require);
    8. adequate accounting and record-keeping systems; and
    9. adequate insurance coverage.

4.  consolidated supervision - The position of the undertaking within the structure of any group to which it belongs or its links with any related companies shall be such that it will not obstruct the conduct of effective consolidated supervision; and

5.  the undertakings business must be carried on with integrity and the professional skills appropriate to the nature and scale of its activities.

In determining whether an undertaking is conducting its business in a prudent manner, the Authority shall take into account any failure by the undertaking to comply with the provisions of the Act, other provisions of law, the Code of Practice and international sanctions in forced in Bermuda.

Exempted from Licensing

The Trusts (Regulation of Trust Business) Exemption Order 2002 which came into force on 9 August 2002 provides for a number of exemptions from licensing within the Order.

An exempted company shall certify to the Authority that it qualifies for an exemption within three months of the date coming into force of the Order.  They shall also notify the Authority of any change in the nature and scope of the trust business that has been approved by the Minister as soon as practicable after approval.

The description above is intended to be a brief summary of the Trusts (Regulation of Trust Business) Act 2001 and should be used as a guide only. Interested parties should obtain and read the full text of the legislation for complete information. Texts of Bermuda’s public legislation may be accessed at​ Bermuda Laws.