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Financial Services (Trust Company Business (Exemptions Amendment)) (Jersey) Order 2009.

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A decision made (17/07/2009) regarding: Financial Services (Trust Company Business (Exemptions Amendment)) (Jersey) Order 2009.

Decision Reference:  MD-E-2009-0125 

Decision Summary Title :

Financial Services (Trusts Company Business (Exemptions Amendment)) (Jersey) Order 2009

Date of Decision Summary:

15 July 2008

Decision Summary Author:

Finance Industry Development Executive

Decision Summary:

Public or Exempt?

(State clauses from Code of Practice booklet)

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title :

Financial Services (Trusts Company Business (Exemptions Amendment)) (Jersey) Order 200-

Date of Written Report:

15 July 2008

Written Report Author:

Finance Industry Development Executive

Written Report :

Public or Exempt?

(State clauses from Code of Practice booklet)

Public

Subject:    

The making of the Financial Services (Trusts Company Business (Exemptions Amendment)) (Jersey) Order 2009 (“the Order”).

Decision(s):  

The Minister made the Financial Services (Trusts Company Business (Exemptions Amendment)) (Jersey) Order 2009 (“the Order”).

Reason(s) for Decision:

The Foundations (Jersey) Law 2009 (“the Law”) will come into force on 17 July 2009.  The Law amends the categories of trust company business in Article 2(4) of the Financial Services (Jersey) Law 1998 (“the FSL”) to include providing services to a foundation.  The Jersey Financial Services Commission has therefore recommended a number of changes to the various exemption orders made under the FSL.  Industry representatives have been consulted through Jersey Finance Limited and support the making of the Order.

Resource Implications: 

No measurable cost or manpower implications arise for the Commission, the States or industry.

Action required: 

The Minister to approve and sign the Order and the Finance Industry Development Executive to deliver the signed Orders au greffe.

Signature: Senator A.J.H.Maclean 

Position:

Minister for Economic Development

Date Signed: 

Date of Decision (If different from Date Signed): 

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Financial Services (Trust Company Business (Exemptions Amendment)) (Jersey) Order 2009.

MINISTER FOR ECONOMIC DEVELOPMENT

 

FINANCIAL SERVICES (TRUST COMPANY BUSINESS (EXEMPTIONS AMENDMENT)) (JERSEY) ORDER 200- (“THE ORDER”)

  

  1. THE ISSUE AND RECOMMENDATION

 

  1. The Foundations (Jersey) Law 2009 (“the Law”) will come into force on 17 July 2009.  The Law amends the categories of trust company business in Article 2(4) of the Financial Services (Jersey) Law 1998 (“the FSL”) to include providing services to a foundation.  The Jersey Financial Services Commission (“the JFSC”) has therefore recommended a number of changes to the various exemption orders made under the FSL.

 

  1. It is recommended that the Minister for Economic Development (“the Minister”) approves and signs the Orders so that they may come into force on 17 July 2009.

 

  1. BACKGROUND

 

  1. The Law will introduce a new type of wealth-management vehicle, to be known as a “foundation”.  A foundation will be a distinct legal entity like a company, but, unlike a company, it will not have shareholders.  It will have easily recognised liabilities and accountabilities, openly recorded on a public registry in the same way as a company.  It will hold assets in its own name for the purposes set out in its constitutive documents.  For clients and authorities originating in jurisdictions not familiar with the concept of trust, a foundation may be a more acceptable offering.
  2. As well as being used for wealth management and estate planning, foundations may also have applications in more specialised areas, such as long-term charitable aims or securitisations, where it is desirable that property be given to a legal entity and applied for specific purposes.  As with companies and trusts, the use of foundations will be subject to compliance with the JFSC’s policy on sensitive activities.
  3. Under Article 7 of the FSL, a person may not carry out financial services business (including trust company business) without registering with the JFSC for that purpose.  However, Article 7(2) provides for the Minister (on the recommendation of the JFSC) to prescribe exemptions from this requirement.  There are currently seven exemption orders made under this provision, and the Order amends four of them.

 

  1. THE EXEMPTIONS

 

  1. Paragraph 1 of the Order amends the Financial Services (Trust Company Business (Exemptions)) (Jersey) Order 2000 (“the First Exemptions Order”).
  2. Paragraph 4 of the First Exemptions Order covers private trust companies.  This will be amended to reflect the possibility that a private trust company may act both for one or more trusts and also for one or more foundations.  This might occur for instance if somebody wished to establish both a family trust and a family foundation and to have them both managed by the same vehicle.  Alternatively, it is possible that it might be desired to change an existing trust arrangement into a foundation, but keeping the same management structure, with a period of transition.
  3. A new Paragraph 4A will be inserted in the First Exemptions Order covering “Private trust company business in relation to a foundation”.  This is analogous to the existing Paragraph 4 exemption for private trust companies, but in relation to acting as a foundation council member.  As with trusts, it may be that founders wish, for example, family members to have input into the management of a foundation, but without exposing them to the liability which might arise if they sat directly on the council, and a special purpose company may be used for this purpose.  To benefit from the exemption, the company must be adminstered by a person registered with the JFSC.  The exemption does not apply to the qualified member of the council, who must still be registered with the JFSC.
  4. A new Paragraph 19 will be inserted in the First Exemptions Order to ensure that foundation guardians are not accidentally caught by the definition of trusts company business.  It is not intended that guardians should be required to register, but it is possible that some guardian functions could arguably be caught by the requirement.  To avoid any doubt in the mind of a guardian (or potential guardian) as to whether there is any need to register, this exemption makes the position clear.
  5. Paragraph 2 of the Order amends the Financial Services (Trust Company Business (Exemptions No. 3)) (Jersey) Order 2001 (“the Third Exemptions Order”).  It inserts a new Paragraph 1A into the Third Exemptions Order.  This is analogous to the existing private protector company exemption in Paragraph 1 of the Third Exemptions Order, and makes clear that a special purpose company for the purpose of appointing council members need not register.  Since the concept of a “protector” is not applicable to foundations, the language of “appointer” has been used instead.  To benefit from the exemption, the appointer company must be administered by a person registered with the JFSC.
  6. Paragraph 3 makes amendments to several exemption orders and simply reflects the relettering of Article 2(4) of the FSL made by the Law.
  1. RECOMMENDATION

 

  1. It is recommended that the Minister approves and signs the Orders so that they may come into force on 17 July 2009.

 

Finance Industry Development Executive

17 July 2009

 

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