LAWS OF
MALAYSIA
ACT 554
LABUAN
OFFSHORE TRUSTS ACT 1996
ARRANGEMENT
OF SECTIONS
PART I
PRELIMINARY
1. Short
title and commencement
2. Interpretation
3. Existence
of a trust
4. Charitable
and purpose trusts
5. Spendthrift
or protective trust
6. Proper law
of a trust and power to change proper law
PART II
CREATION
AND RECOGNITION OF OFFSHORE TRUSTS
7. Existence
of offshore trust
8. Creation
of offshore trust
9. Validity
of offshore trust
10. Unenforceability
of foreign claim or judgment
11. Fraudulent
offshore trust or disposition
12. Registration
of offshore trust
13. Registration
of trust instrument
14. Name and
registered office of offshore trust
15. Register
and restriction on disclosure
16. Duration
of offshore trust
17. Variation
and revocation of offshore trust
18. Failure or
lapse of interest
19. Termination
of offshore trust
20.
Redomiciliation of foreign trust in Labuan
21. Migration
of offshore trust from Labuan
PART III
BENEFICIARIES
OF OFFSHORE TRUSTS
22. Beneficiaries
23. Disclaimer
24. Interest
of beneficiary and dealings thereof
25. Class
interest
PART IV
TRUSTEES
OF OFFSHORE TRUSTS
26. Appointment
of trustees
27. Acceptance
of appointment as trustee
28. Resignation
of trustees
29. Vacancy in
a trust
30. Duties of
trustees
31. Duty of
co-trustees
32. Impartiality
of trustees
33. Powers of
trustees
34. Letter or
memorandum of wishes
35. Appointment
of protector
36. Delegation
of powers by trustee
37. Power of attorney
38. Accumulation,
advancement or appropriation of trust property
39. Appointment
or assignment of trust property
40. Remuneration
and expenses
41. Confidentiality
in relation to trusts
42. Liability
for breach of trust
43. Trustee
acting in respect of more than one trust
44. Dealings
with third parties
45. Constructive
trustee
46. Indemnity
of retiring trustee
PART V
MISCELLANEOUS
47. Variation
of terms of trust on behalf of minors, etc.
48. Approval
of particular transactions
49. General
powers of the Court
50. Payment of
costs
51. Protection
of persons dealing with trustees
52. Limitation
of action
53. Money or
other property from illegal activities
54. General
offence and penalty
55. Power to
prosecute
56. Compounding
of offences
57. Regulations
58. Exemption
59. Prohibition
on registration or carrying on of business
60. Procedure
where none laid down
61. Saving in
respect of trusts existing before commencement of this Act
62. Non-application
of certain laws.
LAWS OF
MALAYSIA
ACT 554
LABUAN
OFFSHORE TRUSTS ACT 1996
An Act to provide for the creation and recognition of
offshore trusts, and for matters connected therewith or incidental thereto.
BE IT EANACTED by the Seri Paduka Baginda Yang di-Pertuan
Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in
Parliament assembled, and by the authority of the same as follows:
PART I
PRELIMINARY
Short
title and commencement
1. This Act
may be cited as the Labuan Offshore Trusts Act 1996 and shall come into force
on such date as the Minister may, by notification in the Gazette, appoint.
Interpretation
2.(1) In this
Act, unless the context otherwise requires -
Authority has the meaning assigned thereto by the Labuan
Offshore Financial Services Authority Act 1996;
beneficiary means a person entitled to benefit under a
trust or in whose favour a discretion to distribute property held in trust may
be exercised;
breach of trust means -
(a) any act by a trustee which
is in contravention of the duties imposed;
(b) any act or neglect by a
trustee which is not authorized or excused; or
(c) any neglect or omission on
the part of the trustee to fulfil the duties imposed upon him,
by this Act, the proper law of the trust or the terms of
the trust;
corporation means a body corporate, wherever formed or
incorporated;
Court means the High Court or a judge thereof;
immovable property situated in Malaysia includes shares,
stocks or debentures in or of a company whose assets includes immovable
property situated in Malaysia other than a public company quoted on the
official list of a stock exchange of any country or jurisdiction therein;
Labuan means the Federal Territory of Labuan;
Malaysia means the territories of the Federation of
Malaysia, the territorial waters of Malaysia and the sea-bed and subsoil of the
territorial waters, and includes any area extending beyond the limits of the
territorial waters of Malaysia, and the sea-bed and subsoil of any such area,
which has been or may hereafter be designated under the laws of Malaysia and in
accordance with international law as an area over which Malaysia has sovereign
rights for the purposes of exploring and exploiting the natural resources,
whether living or non-living;
Minister means the Minister for the time being charged
with the responsibility for offshore companies;
minor means a person who has not attained the age of
majority under the proper law of a trust or, where no law has been chosen, the
law of his domicile;
offshore trust has the meaning assigned to it by
subsection 7(1);
person includes a body of persons, corporate or
unincorporate;
prescribed means prescribed by or under this Act or any
regulation made under this Act;
proper law means
(a) the law chosen by the
settlor to be applicable to a trust, the choice being expressed or implied in
the terms of the trust; or
(b) where no law is chosen, the
law with which a trust is most closely connected at the time of its creation;
property means any movable or immovable property, and
includes rights and interests, whether present or future and whether vested or
contingent;
qualified person means a person who is not a resident of
Malaysia;
register includes any kind of record;
registered offshore trust means an offshore trust
registered under subsection 12(4);
resident means any person -
(a) who is a citizen or
permanent resident of Malaysia; or
(b) who has established a place
of business and is operating in Malaysia, other than an offshore company or a
foreign offshore company incorporated or registered under the Offshore
Companies Act 1990,
and includes a person who is declared to be a resident
pursuant to section 43 of the Exchange Control Act 1953;
settlor means a person who makes a trust and includes a
person who provides trust property or makes a testamentary disposition on trust
or to a trust, but does not include a person who contributes to a unit trust;
terms of the trust means the written or oral terms of a
trust or any other terms applicable under its proper law;
trust includes the trust property and the rights,
powers, duties, interests, relationships and obligations under a trust;
trust company means a company registered under section 4
of the Labuan Trust Companies Act 1990 to carry on business as a trust company;
trust instrument means an instrument by which a trust is
created and includes a unilateral declaration of trust and any instrument
varying the terms of the trust;
trust property means the property for the time being
held on trust;
trustee means a person appointed to act as a trustee of
a trust in accordance with the provisions of this Act;
unilateral declaration of trust has the meaning assigned
to it by section 8;
unit trust means any trust established for the purpose,
or having the effect, of providing facilities for the participation by persons
as beneficiaries under the trust in any profits or income arising from the
acquisition, holding, management or disposal of any property.
(2) For the
purpose of the definition of proper law in subsection (1), in ascertaining
the law with which a trust is most closely connected, reference shall be made,
in particular, to -
(a) the place of administration
of the trust designated by the settlor;
(b) the situs of the trust
property;
(c) the place of residence or
business of the trustee; and
(d) the objects of the trust and
the places where they are to be fulfilled.
(3) Any
reference in this Act to this Act shall, unless otherwise expressly stated,
be deemed to include a reference to any regulation, rule, order, notification
or other subsidiary legislation made under this Act.
(4) Words and expressions
used in this Act with reference to any other law shall, so far as necessary to
give effect to this Act and consistently with the provisions thereof, have the
same meaning as they have in the law with reference to which they are used in
this Act.
Existence
of a trust
3. A trust
exists where a person holds or has vested in him or is deemed to hold or have
vested in him property of which he is not the owner in his own right and is
under an obligation as a trustee to deal with that property -
(a) for the benefit of any
beneficiary, whether or not ascertained or in existence;
(b) for any purpose which is not
for the benefit of the trustee; or
(c) for both such benefit and
purpose mentioned in paragraphs (a) and (b).
Charitable
and purpose trusts
4.(1) A trust
shall be regarded as a trust for charitable purpose under this Act where the
trust is made for any one or more of the following purposes and where the
fulfilment of such purpose or purposes is for the benefit of the community or a
substantial section of the community having regard to the type and nature of
the purpose or purposes:
(a) the relief or eradication of
poverty;
(b) the advancement of
education;
(c) the promotion of art,
science and religion;
(d) the protection of the
environment;
(e) the advancement of human
rights and fundamental freedom; or
(f) any other purposes which are
beneficial to the community.
(2) A purpose may be regarded as charitable whether it is to
be carried out in Malaysia or elsewhere and whether it is beneficial to the
community in Malaysia or elsewhere.
(3) Notwithstanding any law to the contrary, a trust may
be created or established for a particular purpose or purposes, whether
charitable or not, but the trust must vest in natural persons within the
perpetuity period applying or expressed to apply to the trust, and any trust so
created or established shall be enforceable by the settlor or his personal
representatives or by the person or persons named in the instrument creating or
establishing the trust as the person or persons appointed to enforce the trust
and the trust shall be enforceable at the instance of the person or persons so
named notwithstanding that such person or persons are not beneficiaries under
the trust.
Spendthrift or protective trust
5.(1) The terms
of a trust may make the interest of a beneficiary in the trust property or in
any income or capital of such property
(a) liable to termination;
(b) subject to a restriction on
alienation or disposal; or
(c) subject to diminution or
termination in the event of the beneficiary becoming insolvent or any of his
property becoming liable to seizure or to sequestration for the benefit of his
creditors.
(2) A trust
under which the interest of a beneficiary is subject to termination,
restriction or diminution under subsection (1) is a spendthrift or protective
trust.
(3) A
provision in the terms of a trust requiring the interest of a beneficiary in
the trust property or in any income or capital of such property to be held upon
a spendthrift or protective trust shall be construed as a requirement that the
interest of the beneficiary be subjected to termination, restriction or
diminution as mentioned in subsection (1).
Proper
law of a trust and power to change proper law
6.(1) Subject to
the provisions of this Act, a trust shall be governed by its proper law and
shall be interpreted and enforced accordingly.
(2) The terms
of a trust may provide for the proper law of the trust to be changed from the
laws of one jurisdiction to the laws of another jurisdiction and vice versa,
subject to the provisions of this Act and to the recognition of such a change
by the relevant laws of the other jurisdiction, in particular as regards the
validity of the trust and the interests of the beneficiaries.
(3) A change
in the proper law shall not affect the legality of, or render any person liable
for, anything done before the change.
PART II
CREATION AND
RECOGNITION OF OFFSHORE TRUSTS
Existence
of offshore trust
7.(1) A trust is
an offshore trust where
(a) the settlor is a qualified
person at the time the trust is created;
(b) the trust property does not
include any immovable property situated in Malaysia, unless otherwise allowed
by the relevant authorities and laws for the time being in force;
(c) subject to subsections (2)
and (3), all the beneficiaries under the trust are qualified persons at the
time the trust is created or at the time any one or more of them otherwise
become entitled to be beneficiaries under the trust; and
(d) at least one of the trustees
is a trust company.
(2) A trust
shall be an offshore trust notwithstanding that a person who is not a qualified
person benefits together with any other persons as members of a class of
persons who are beneficiaries under a trust for charitable purpose.
(3) A trust
shall remain as an offshore trust notwithstanding that one or more of the
beneficiaries who are qualified persons at the time the trust is created
subsequently become resident in Malaysia at the time they otherwise become
entitled to be beneficiaries.
(4) For the
purpose of this section, the expression at the time the trust is created, in
relation to a trust created by a will, means the time at which the will takes
effect.
Creation
of offshore trust
8.(1) An offshore
trust shall not be valid unless it is created by a will or other instrument in
writing, including a unilateral declaration of trust, but a unit trust shall be
created only by a will or other instrument in writing.
(2) A
unilateral declaration of trust is a declaration in writing by a trust company
stating -
(a) that it is the trustee of an
offshore trust;
(b) the name of the trust;
(c) the terms of the trust; and
(d) the names or information
enabling the identification of all the beneficiaries.
(3) A
unilateral declaration of trust need not contain the name of the settlor, but
in such case the declaration shall contain a statement by the trust company
that the settlor is a qualified person on the date of the making of the
declaration.
Validity of offshore trust
9.(1) An offshore
trust, validly created in accordance with or as provided by this Act, whether
in Labuan or abroad, shall be recognised and be enforceable in accordance with
its terms, by the courts in Malaysia situated at Labuan or at such other place
as may be designated by the Chief Justice of the Federal Court notwithstanding
the provisions of any other law.
(2) An
offshore trust shall be invalid and unenforceable in Labuan where -
(a) it requires, purports or
encourages the doing of any act which is an offence under the laws of Malaysia
or which, if carried out in Malaysia, would be such an offence:
Provided that if the act takes place in any country other
than Malaysia, it must also be punishable as a criminal offence under the laws
of the other country or a jurisdiction within the other country in which it
takes place;
(a) it has income accruing to,
or derived by it, which originates from an operation, transaction or other
activity which is or would be such an offence as referred to in paragraph (a);
(b) it comprises property the receipt,
ownership or control of which is or would be such an offence as referred to in
paragraph (a); or
(c) the Court declares that the
object for which it was created has failed or that the terms of the trust are
such that its performance is not possible.
(3) Where an
offshore trust is created for two or more purposes of which some are lawful and
others are unlawful -
(a) the whole trust is invalid
if the unlawful purposes cannot be property separated; or
(b) where the unlawful purposes
can be properly separated, the Court may make a finding that the trust is valid
with respect to the lawful purpose or purposes which do not affect the validity
of trust to the extent and under the conditions as may be determined by it.
(4) Where the
trustee of an offshore trust is of the opinion that the trust is or may be, in
whole or in part, invalid, he shall seek directives from the Court as to the
validity of the trust and as to any matter concerning the trust property and
his obligations in relation to the trust.
(5) A settlor or beneficiary of
an offshore trust may also request for directives from the Court as to matters
referred to in subsection (4).
Unenforceability
of foreign claim or judgment
10.(1) Where an
offshore trust is validly created in accordance with or as provided by this
Act, the Court shall not vary it or set it aside or recognise the validity of
any claim against the trust property pursuant to the law of another
jurisdiction or the order of a court of another jurisdiction in respect of
(a) the personal and proprietary
consequences of marriage or the termination of marriage;
(b) succession rights, whether
testate or intestate, including the fixed shares of spouses or relatives;
(c) any claims or orders of
court with regard to matters referred to in paragraph (a) or (b) in reference
to the personal laws of the settlor or the beneficiaries; or
(d) the claims of creditors in
an insolvency subject to the provisions of section 11.
(2) For the
avoidance of doubt, it is hereby declared that in the event of any
inconsistency between the proper law of a trust and the personal laws of the
settlor or the beneficiaries, the former shall prevail.
Fraudulent
offshore trust or disposition
11.(1) Where it is
proved beyond reasonable doubt, the onus of which is on the claiming creditor,
that an offshore trust created or registered in Labuan, or property disposed of
to such an offshore trust
(a) was so created or registered
or disposed of by or on behalf of the settlor with principal intent to defraud
that creditor of the settlor; and
(b) did, at the time such
creation or registration or disposition took place, render the settlor,
insolvent or without property by which that creditor's claim, if successful,
could have been satisfied,
then such creation, registration or disposition shall not
be void or voidable and the offshore trust shall be liable to satisfy the
creditor's claim out of the property which but for the creation, registration
or disposition would have been available to satisfy the creditor's claim and
such liability shall only be to the extent of the interest that the settlor had
in the property prior to the creation, registration or disposition, and any
accumulation to the property, if any, subsequent thereto.
(2) For the
purpose of subsection (1), in determining whether an offshore trust created or
registered or a disposition has rendered the settlor insolvent or without
property by which a creditor's claim, if successful, may be satisfied, regard shall
be had to the fair market value of the settlor's property (not being property
of or relating to the trust), at the time immediately after such creation,
registration or disposition, and in the event that the fair market value of
such property exceeded the value of the creditor's claim, at that time, after
the creation, registration or disposition, then the offshore trust so created
or registered or the disposition shall for the purposes of this Act be deemed
not to have been so created or registered, or the property disposed of, with
principal intent to defraud the creditor.
(3) An
offshore trust created or registered in Labuan and a disposition of property to
such trust shall not be fraudulent as against a creditor of a settlor -
(a) if its creation or
registration, or the disposition, takes place after the expiration of two years
from the date that creditor's cause of action accrued; or
(b) if its creation or
registration, or the disposition, takes place before the expiration of two
years from the date that creditor's cause of action accrued and that creditor
fails to commence such action before the expiration of one year from the date
of such creation or registration, or disposition.
(4) An
offshore trust created or registered in Labuan and a disposition of property to
such trust shall not be fraudulent as against a creditor of a settlor if the
creation or registration, or the disposition of property, took place before
that creditor's cause of action against the settlor accrued or had arisen.
(5) A settlor
shall not have imputed to him an intent to defraud a creditor solely by reason
that the settlor -
(a) has created or registered an
offshore trust or has disposed of property to such trust within two years from
the date of that creditor's cause of action accruing; or
(b) is a beneficiary.
(6) Where an
offshore trust is liable to satisfy a creditor's claim in the manner provided
for in subsection (1) but is unable to do so by reason of the fact that the property
has been disposed of, other than to a bona fide purchaser for value, then any
such disposition shall be void.
(7) For the
purposes of this section, the date of the cause of action accruing shall be -
(a) the date of that act or
omission which shall be relied upon to either partly or wholly establish the
cause of action; and if there is more than one act or the omission is a
continuing one, the date of the first act or the date on which the omission
first occurred, as the case may be; and
(b) in the case of an action
upon a judgment, the date of that act or omission, or where there is more than
one act or the omission is a continuing one, the date of the first act or the
date on which the omission first occurred, as the case may be, which gave rise
to the judgment itself.
(8) In this
section, the term creditor includes any person who alleges a cause of action.
Registration
of offshore trust
12.(1) Every
offshore trust validly created in accordance with or as provided by this Act,
whether in Labuan or abroad, may be registered with the Authority.
(2) The
trustee of an offshore trust shall be responsible for registering the offshore
trust and any subsequent changes in connection therewith under this Act, if the
offshore trust is registered pursuant to subsection (1).
(3) The
registration of an offshore trust shall be effected by filing with the
Authority the following:
(a) a statement containing -
(i) the name of the offshore
trust;
(ii) the date of its creation;
(iii) the name and address of
the trust company acting as trustee;
(iv) the address of the
registered office of the offshore trust;
(v) the proper law of the
offshore trust; and
(b) a declaration by the trust company
acting as trustee of the offshore trust that the trust satisfies the conditions
of this Act in order that it be an offshore trust.
(4) The
Authority may, on being satisfied that all the requirements of this Act for the
existence of an offshore trust have been complied with and upon payment of the
prescribed fee, register the trust and issue a certificate of registration
accordingly.
(5) Any
subsequent change in the particulars of the registered offshore trust as
referred to in subsection (3) shall be notified to and be registered with the
Authority in the prescribed form within one month of the change and shall not
have effect until it is so registered.
(6) The
trustee of the registered offshore trust shall notify the Authority of the
termination of the trust in the prescribed form within one month of the
termination.
(7) The
trustee of the registered offshore trust shall notify the Authority in the
prescribed form as to whether the trust is still in existence and whether he is
still the trustee thereof not later than one month after every anniversary of
the registration of the trust in Labuan.
(8) Any
trustee who fails to comply with the requirements of this section shall be
guilty of an offence.
Penalty:
Ten thousand ringgit.
(9) For the purpose of subsection (8), if there are two or
more trustees, the requirements of this section shall be deemed to have been
complied with by all the trustees so long as one of them has complied with
them.
Registration
of trust instrument
13. The
trustee of a registered offshore trust may furnish the Authority with a copy of
the trust instrument or any amendment thereto which has been certified by the
trustee and the Authority shall register and file that copy as a true copy.
Name
and registered office of offshore trust
14.(1) Every trust
instrument shall include the name by which the offshore trust is to be known
and registered and such name shall remain unchanged until the termination of
the trust unless the Authority, having regard to the circumstances of the case,
thinks it fit to authorise a change in the name.
(2) The
registered office of an offshore trust shall be the registered office of the
trust company which has been appointed as trustee of the trust and shall be the
address for service of any documents upon the trust.
Register
and restriction on disclosure
15.(1) The
Authority may keep and maintain a register of all offshore trusts registered
under subsection 12(4) and shall enter therein any change in particulars that has
been duly notified to the Authority and any other matters as the Authority
deems appropriate.
(2) At the
request of a trustee of a trust, and on adequate proof being given to the
satisfaction of the Authority, the Authority may issue a certificate stating,
based on the information available to the Authority, that on the date of the
certificate -
(a) the applicant was a trustee
of the trust; or
(b) a copy of the trust
instrument as reproduced and certified has been registered with the Authority
pursuant to section 13.
(3) Subject to
the terms of the trust and to any order of the Court to the contrary, all
documents filed with or kept by the Authority in relation to offshore trusts
shall not be open to the public for inspection, and the Authority shall not
disclose to any person any such documents or any information which may have
come to its knowledge in the performance of its duties under this Act.
Duration
of offshore trust
16. An
offshore trust shall, unless otherwise stated in and subject to the terms of
the trust, continue to exist for a period not exceeding one hundred years; but
it may be terminated at any time in accordance with the provisions of this Act.
Variation
and revocation of offshore trust
17.(1) An offshore
trust may expressly provide -
(a) that its terms are capable
of variation; or
(b) that the trust itself or a
power exercisable under the trust is revocable, either in whole or in part.
(2) Where an offshore
trust provides that the terms of the trust may be varied, such power to vary
shall be without prejudice to the power vested in the Court by this Act for the
variation of the terms of the trust.
(3) No
variation of the terms of an offshore trust or revocation of an offshore trust
or a power exercisable under an offshore trust shall prejudice anything
lawfully done by a trustee in relation to an offshore trust prior to his
receiving notice of such variation or revocation.
(4) Subject to
the terms of the trust, where an offshore trust is revoked, either in whole or
in part, the trustee shall hold the trust property affected by the revocation
for the settlor absolutely or, if the settlor is dead, for the settlor's
personal representative or estate.
Failure
or lapse of interest
18.(1) Subject to
the terms of an offshore trust and to any order of the Court, the trust
property or interest under the trust shall be held by the trustee in trust for
the settlor absolutely or, if the settlor is dead, for the settlor's personal
representative or estate where -
(a) the interest in question
lapses;
(b) the trust property is vested
in a person otherwise than for his sole benefit but the trusts upon which he is
to hold the property are not declared or communicated to him;
(c) there is no beneficiary and
there is no person who can become a beneficiary in accordance with the terms of
the trust; or
(d) the trust terminates
otherwise than in pursuance of section 19.
(2) Where the
trust property or interest under the trust is held by a trustee for a
charitable purpose which has ceased to exist or is no longer applicable, that
property or interest shall be held for such charitable purpose as the Court may
declare to be consistent with the original intention of the settlor or as the
Court may otherwise determine
.
(3) An
application to the Court under this section may be made by any trustee or
beneficiary, as the case may be.
(4) In this
section, settlor means the particular person who provided the trust property
or the interest under the trust referred to in subsection (1).
Termination
of offshore trust
19.(1) Without
prejudice to the powers of the Court under subsection (4) and notwithstanding
the terms of the trust, where all the beneficiaries of an offshore trust are in
existence and have been ascertained and none of them is a minor or a person
under any legal disability, they may require the trustee to terminate the trust
and distribute the trust property among them.
(2) On the termination
of the trust, the trustee shall distribute the trust property to the persons
entitled thereto within a reasonable time and in accordance with the terms of
the trust.
(3) The
trustee may retain sufficient assets to make reasonable provision for
liabilities, whether existing, future, contingent or otherwise, before
distributing the trust property under subsection (2).
(4) The Court
may, on the termination of a trust or at any time thereafter, upon an
application made by the trustee or any beneficiary -
(a) require the trustee to
distribute the trust property;
(b) direct the trustee not to
distribute the trust property; or
(c) make such other order as it
thinks fit.
Redomiciliation
of foreign trust in Labuan
20. Subject to
the provisions of this Act, a trust established or created in accordance with
the laws of any country other than Malaysia, or of any jurisdiction within such
a country, may, if it is so authorised by the laws of that country or
jurisdiction, or the terms of the trust and its proper law, be enforceable,
recognised or registered in Labuan as if it had been created under this Act.
Migration
of offshore trust from Labuan
21.(1) Subject to
the provisions of this Act and the terms of the trust and its proper law, an offshore
trust validly created or recognised under this Act may be transferred to and
become a trust under the laws of another country or of a jurisdiction within
such a country.
(2) An
offshore trust which has been previously transferred to Labuan under the
provisions of section 20 may be transferred to and become a trust under the
laws of another country or of a jurisdiction within such a country in
accordance with this section.
PART III
BENEFICIARIES
OF OFFSHORE TRUSTS
Beneficiaries
22.(1) Subject to
subsection 4(3), a beneficiary shall be -
(a) identifiable by name; or
(b) ascertainable by reference
to a class or to a relationship to some person, whether or not living at the
time which under the terms of the offshore trust is the time by reference to
which members of a class are to be determined.
(2) Where
there are no beneficiaries identifiable or ascertainable in accordance with
subsection (1), the trust shall not be valid unless the purpose is a charitable
purpose.
(3) A settlor
or a trustee of an offshore trust may also be a beneficiary of the trust, but
if he is the sole trustee, he shall not also be a beneficiary thereunder.
(4) The terms
of an offshore trust may provide for -
(a) the addition of a person as
a beneficiary;
(b) the exclusion of a
beneficiary from benefit; or
(c) the imposition on a
beneficiary of an obligation as a condition for benefit.
Disclaimer
23.(1) A
beneficiary may disclaim his whole interest.
(2) A
disclaimer made under subsection (1) shall be in writing and shall be
irrevocable.
(3) Subject to
the terms of the trust, a beneficiary under an offshore trust may disclaim part
of his interest, whether or not he has received some benefit from his interest
.
(4) A disclaimer
made under subsection (3) may, subject to the terms of the trust, be revocable
and it shall be exercisable in the manner and under the circumstances so
expressed.
Interest
of beneficiary and dealings thereof
24.(1) Notwithstanding
that the trust property of an offshore trust may include immovable property,
the interest of a beneficiary of any offshore trust shall consist of movable
property only.
(2) Where the terms of the trust so provided,
a beneficiary may, by instrument in writing, sell, charge, transfer or
otherwise deal with his interest in any manner.
Class
interest
25.(1) Subject to
the terms of the trust, the following shall apply where a trust, or an interest
under a trust, is in favour of a class of persons:
(a) a class closes when it is no
longer possible for any other person to become a member of the class;
(b) a woman who is over the age
of fifty-five years shall be deemed to be no longer capable of bearing a child;
(c) where any class interest
relates to income and for any period there is no member of the class in
existence, the income shall be accumulated, and subject to section 16, shall be
retained until there is a member of the class in existence or the class closes.
(2) In this
section, class interest, means a trust or an interest under a trust which is
in favour of a class of persons.
PART IV
TRUSTEES
OF OFFSHORE TRUSTS
Appointment
of trustees
26.(1) Trustees are
appointed by or as provided in the trust instrument and in such number as may be
provided therein.
(2) There are
no restrictions imposed on the number of trustees that may be provided for in a
trust instrument but -
(a) if there is only one
trustee, the trustee shall be a trust company; and
(b) if there is more than one
trustee, one of such trustees shall be a trust company.
(3) Where
there is no trustee appointed or provided by the trust instrument or there is a
vacancy among the trustees which cannot otherwise be filled, any of the
surviving or continuing trustees, any beneficiary or the last former trustee,
as the circumstances may require, may apply to the Court for the appointment of
a new trustee.
(4) The Court
may make an order appointing a new trustee where -
(a) in a case where an
application under subsection (3) is made by a beneficiary, it is satisfied that
the application made by the beneficiary has been served on the last former
trustee or on at least one of the surviving or continuing trustees, if any;
(b) it has heard the
representations made by the last former trustee, the surviving or continuing
trustees or any beneficiary; and
(c) it has ascertained that the
person indicated in the application or otherwise intended for the appointment
as the new trustee is willing to act.
(5) Subject to
the terms of the trust, a new trustee appointed under this section shall have
the same powers, discretions and duties may in all respects act as if he had
been originally appointed a trustee by the trust instrument.
(6) On the
appointment of a new trustee, anything requisite for vesting the trust property
in, or under the control of, the trustee shall be done.
Acceptance
of appointment as trustee
27.(1) No person
shall be obliged to accept an appointment as trustee but if a trust company
that is appointed as trustee does any act or thing in relation to the trust
property consistent with the status of a trustee of that property, the trust
company shall be deemed to have accepted the appointment as trustee.
(2) A trust
company which has not accepted or which is not deemed to have accepted the
appointment as trustee may disclaim such appointment within a reasonable period
of time after becoming aware of it by giving a notice in writing to the settlor
or to the other trustees
.
(3) If the
settlor is dead or cannot be found or is no longer in existence and there are
no other trustees, the trust company disclaiming the appointment as trustee
under subsection (2) may apply to the Court for relief from the appointment and
the Court may make such order as it thinks fit.
Resignation
of trustees
28.(1) Subject to
subsection (2) and the terms of the trust, a trustee may resign his office by
delivering to
(a) the settlor or, in the
absence of the settlor, at least one beneficiary; and
(b) in the case of a registered
offshore trust, the Authority,
a notice in writing of his intention and the resignation
shall take effect on the delivery of the notice.
(2) A
resignation shall not have effect if -
(a) it is given in order to
facilitate a breach of trust; or
(b) it would result in there
being no trustee, unless, before the resignation takes effect, an application
has been made to the Court for the appointment of a new trustee and a new
trustee has been appointed.
Vacancy
in a trust
29.(1) A trustee
shall cease to be a trustee and his position as trustee shall be considered
vacant upon
(a) his removal as trustee by
the Court;
(b) his resignation taking
effect;
(c) the coming into effect of a provision
in the terms of the trust under which the trustee is removed from office or
otherwise ceases to hold office; or
(d) steps being taken for the
winding up of the trust company acting as trustee.
(2) A person
who ceases to be a trustee under this section shall do everything necessary to
vest the trust property in the new or surviving or continuing trustees.
Duties
of trustees
30.(1) A trustee
shall in the execution of his duties and the exercise of his powers and
discretion act with due diligence as would a prudent person to the best of his
ability and skill, and observe the utmost good faith.
(2) Subject to
the provisions of this Act, a trustee shall carry out and administer a trust
according to the terms of the trust and shall -
(a) ensure that the trust
property is vested in him or is otherwise under his control; and
(b) in so far as it is
reasonable, preserve and enhance the value of the trust property.
(3) Except as
otherwise permitted by this Act or as expressly provided by the terms of the
trust, a trustee shall not -
(a) profit, directly or
indirectly, from his trusteeship;
(b) cause or permit any person,
other than a person properly appointed or delegated by the trustee under this
Act or by the Court or pursuant to the terms of the trust, to profit, directly
or indirectly, from such trusteeship; or
(c) on his own account enter
into any transaction with the other trustees, or relating to the trust
property, which may result in such profit,
without the approval of the Court.
(4) A trustee
shall keep accurate accounts and records of his trusteeship and shall render an
account of such trusteeship as required by the terms of the trust or by an
order of the Court.
(5) A settlor
or any of the beneficiaries may apply to the Court for an order to require the
trustee to render an account of his trusteeship to any of them.
(6) A trustee
shall keep the trust property distinct and separate from his own property and
separately identifiable from any property of which he is a trustee or to which
he is beneficially entitled.
Duty
of co-trustees
31.(1) Subject to
subsection (2) and the terms of the trust, where there is more than one
trustee, all the trustees shall
(a) act jointly in the performance
of their duties and the exercise of their powers;
and
(b) not exercise any power or
discretion unless they are all in agreement.
(2) Where the
terms of the trust empower the trustees to act by a majority -
(a) a trustee who dissents from
a decision of the majority of the trustees shall cause his dissent to be
recorded in writing;
(b) no act, decision, power or
discretion to be done, taken or exercised by the majority of the trustees
shall, notwithstanding anything contained in the terms of the trust, be valid
or have effect if it is done, taken or exercised without the agreement of the
trust company acting as one of the trustees of the trust.
Impartiality
of trustees
32. Subject to
the terms of the trust and without prejudice to the exercise of a discretion
conferred upon a trustee by the terms of the trust, a trustee shall be
impartial and shall not execute the trust for the advantage of a beneficiary or
a charitable purpose at the expense of another beneficiary or charitable
purpose where there is more than one beneficiary or charitable purpose under
the trust, or for the advantage of a beneficiary at the expense of the
charitable purpose or vice versa, where the trust has only one beneficiary and
one charitable purpose.
Powers of
trustees
33.(1) Subject to
the terms of the trust and to the provisions of this Act, a trustee shall have
all the powers of a beneficial owner in relation to the trust property.
(2) A trustee
shall exercise his powers in the interest of the beneficiaries and in
accordance with the terms of the trust.
Letter
or memorandum of wishes
34.(1) The settlor
of a trust may give to the trustee a letter of his wishes or the trustee may
prepare a memorandum of the wishes of the settlor with regard to the exercise
of any functions conferred on the trustee by the terms of the trust.
(2) A
beneficiary of a trust may give to the trustee a letter of his wishes or the
trustee may prepare a memorandum of the wishes of the beneficiary with regard
to the exercise of any functions conferred on the trustee by the terms of the
trust.
(3) Where a
trust is in favour of a class of persons, then a member of that class may give
to the trustee a letter of his wishes, or the trustee may prepare a memorandum
of the wishes of that member with regard to the exercise of any functions
conferred on the trustee by the terms of the trust.
(4) Where a
letter of wishes or a memorandum of wishes is given to or prepared by the trustee
of a trust, then he may have regard to that letter or memorandum in exercising
any functions conferred on him by the terms of the trust but shall not be
accountable in any way for his failure or refusal to have regard to that letter
or memorandum.
(5) No
fiduciary duty or obligation shall be imposed on a trustee merely by the giving
to him of a letter of wishes or the preparation by him of a memorandum of
wishes.
Appointment
of protector
35.(1) The terms of
a trust may expressly provide for the appointment of a protector of the trust
who shall be consulted upon by the trustee in the exercise of all or certain
specified powers as may be provided in the terms of the trust, but if the
protector of the trust cannot be found, the Court may upon an application by
the trustee dispense with the requirement.
(2) Where the
terms of the trust require the trustee to obtain the consent of the protector
before exercising a power or discretion, the protector who so consents shall
not by virtue of so doing be deemed to be a trustee.
(3) Unless
otherwise expressly excluded by the terms of the trust, a protector shall have
the power to remove a trustee or to appoint a new or additional trustee, but if
the protector removes a trust company as trustee, the protector shall appoint
another trust company as a new trustee in its place.
Delegation
of powers by trustee
36.(1) A trustee
shall not delegate his powers unless permitted to do so by this Act or by the
terms of the trust or by the Court.
(2) A trustee
may, unless the terms of the trust specifically provide to the contrary -
(a) appoint or delegate the
management of the trust property to investment managers whom the trustee
reasonably considers competent and qualified to manage the investment of the
trust property;
(b) appoint an agent, whether a
solicitor, banker, stockbroker or any other person, to transact any business or
do any act required to be transacted or done in the execution of the trust or
to hold any of the trust property; and
(c) authorise any such manager
or agent to retain any commission or other payment usually payable for services
of the description rendered.
(3) A trustee
who in good faith and without neglect makes an appointment or a delegation in
accordance with the provisions of this section shall not be liable for any loss
arising to the trust in consequence thereof or from the default of any
appointee or delegate if the trustee has exercised due skill and care in the
selection of the appointee or delegate.
Power of
attorney
37.(1) Unless the
terms of the trust provide to the contrary, a trustee may, by power of
attorney, delegate for a period not exceeding twelve months, the performance of
any trust or function vested in him, either alone or jointly, as trustee except
for the power to give powers of attorney under this section.
(2) A trustee
who delegates a trust or function by a power of attorney under this section
shall be referred to in this section as the donor and the person to whom the
trust or function is delegated is referred to as the donee.
(3) A person
who is the only other co-trustee of the donor shall not be the donee.
(4) The donor
shall, within seven days of giving a power of attorney under this section, give
written notice of such delegation to -
(a) any other person who under
the terms of the trust has power, either alone or jointly, to appoint a new
trustee;
(b) every co-trustee; and
(c) in the case of a registered
trust, the Authority.
(5) The notice under subsection (4) shall state -
(a) the date of commencement and
duration of the power of attorney;
(b) the name and address of the
donee;
(c) the reason for giving the
power of attorney; and
(d) the trust or function
delegated.
(6) Failure of
the donor to comply with subsection (4) or (5) shall not of itself, in favour
of a person dealing with the donee, invalidate anything done by the donee.
(7) The donor
is bound by and liable for all acts or defaults of the donee done or purportedly
done under the power of attorney as if they were his own acts or defaults.
(8) The
provisions of this section shall not apply to a trust company acting as
trustee.
Accumulation,
advancement or appropriation of trust property
38.(1) Where the
terms of the trust direct or authorise the accumulation for a period of all or
part of the income of the trust, the trustee shall distribute the income of the
trust which is not accumulated as directed or authorised by the terms of the
trust.
(2) Subject to
the terms of the trust, and subject to any prior interest or charges affecting
the trust property, where a beneficiary is a minor and whether or not his
interest is a vested interest or an interest which will become vested on
attaining the age of majority or a later age or upon the happening of any
event, the trustee may -
(a) accumulate the income
attributable to the interest of such beneficiary pending the attainment of the age
of majority or such later age or the happening of such an event;
(b) pay to the parent or guardian or otherwise apply such income
or part of it to or for the maintenance, education or other benefit of such
beneficiary; or
(c) advance or appropriate to or for the benefit of any such
beneficiary such income or part of such income.
(3) The
receipt given by a parent or the lawful guardian of a beneficiary who is a
minor shall be sufficient discharge to the trustee for a payment made under
subsection (2).
(4) Subject to
the terms of the trust and to any prior interest or charges affecting the trust
property, the trustee may advance or apply for the benefit of a beneficiary
part of the trust property prior to the date of the happening of the event upon
the happening of which the beneficiary becomes entitled absolutely thereto.
(5) Subject to
the terms of the trust, a trustee may appropriate trust property in or towards
the satisfaction of the interest of a beneficiary in such manner and in accordance
with such valuation as the trustee may think fit.
(6) Subject to
the terms of the trust, any part of the trust property advanced, applied or
appropriated under this section shall be brought into account in determining
from time to time the share of the beneficiary in the trust property.
(7) No part of
the trust property advanced, applied or appropriated as provided in this
section shall exceed the presumptive, contingent or vested share of the
beneficiary in the trust property.
Appointment
or assignment of trust property
39. Where the
terms of the trust confer on the trustee or on any other person power to
appoint or to assign all or any part of the trust property or any interest in
the trust property to, or to trustees for the benefit of, any person, such
power shall, subject to the terms of the trust, have effect whether or not such
person was a beneficiary of the trust immediately prior to such an appointment
or assignment.
Remuneration
and expenses
40.(1) A trustee
shall not be entitled to any remuneration for services rendered unless
authorised -
(a) by the terms of the trust;
(b) by the consent in writing of
all the identifiable or ascertainable beneficiaries; or
(c) by an order of the Court.
