Trusts (Amendment No. 4) Law 200-

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made (13.03.06) to approve the amendment to the Trusts Law 200-

Subject:	Trusts (Amendment No.4) (Jersey) Law 200-
Decision Reference:	MD-E-2006-0038		Exempt clause(s):
Type of Report: (oral or written)	Written		Person Giving Report (if oral):	n/a
Telephone or e-mail Meeting?	n/a		Report File ref:
Written report – Title	Trusts (Amendment No. 4) (Jersey) Law 2006 (the “Amendment”)
Written report – Author (name and job title)	Paul de Gruchy – Director, Finance Industry Development
Decision(s): To approve the Amendment and request that it be lodged au greffe for debate by the States at the earliest opportunity.
Reason(s) for decision: The Amendment will be the first significant update of the Trusts (Jersey) Law since its introduction. It will bring certainty and flexibility, and is likely to be of assistance to a key element of the finance industry. The Amendment has already been the subject of significant consultation, and is widely supported.
Action required: Paul De Gruchy to lodge the Amendment au greffe for debate at the earliest opportunity.
Signature: Connétable Geoffrey Fisher Assistant Minister for Economic Development		Date of Decision:

Trusts (Amendment No. 4) Law 200-

MINISTER FOR ECONOMIC DEVELOPMENT

Trusts (Amendment No. 4) (Jersey) Law 2006 (the “Amendment”)

1. Introduction

1.1 In November 2004, a public consultation paper was issued in relation to proposed changes to the Trusts (Jersey) Law. The results of this consultation were presented in July 2005 to the Economic Development Committee, which approved law drafting instructions in respect of the Amendment. The law drafting process has now been concluded and a copy of the Amendment is attached.

1.2 It is recommended that the Amendment be approved and lodged for debate by the States at the earliest opportunity.

2. Discussion

2.1 Trusts are one of the key products used by the Island’s finance industry. The introduction of the Trusts (Jersey) Law in 1984 was an important moment in the evolution of Jersey as a leading international finance centre, providing an up-to-date legislative framework for this vital sector of the Island’s economy.

2.2 Since 1984, the world of trusts has evolved at a rapid pace. Increasing numbers of jurisdictions have targeted the trusts market: initially Caribbean jurisdictions such as the Cayman Islands and the British Virgin Islands but more recently key competitors such as New Zealand and Singapore. Legislation itself has developed apace, with jurisdictions keen to develop the concept of a trust and offer flexibility and ease of use wherever possible. Finally, the market for trusts itself has changed, with an increasing demand for “private trust companies”, trust companies created to manage the wealth of an individual family only, often with the head of the family being a director of the trust company. It is important to amend the Trusts Law to keep pace with these changes and so maintain and where possible enhance the Island’s attractiveness as a place in which to do funds business.

2.3 The Amendment is the most significant updating of the Trusts Law since it was introduced. The Amendment touches many aspects of the Law with a view to clarifying matters which are uncertain, simplifying areas which had previously required delicate drafting and removing barriers to work coming to the Island.

2.4 The Amendment follows a public consultation and lengthy post-consultation discussions with a working group comprised of leading Jersey trusts lawyers and representatives of Jersey Finance Limited, and numerous additional discussions with the Jersey Financial Services Commission. With the exception of the question concerning Article 56, which has been the subject of a separate ministerial decision (MD-E-2006-0026), the matters set out in the Amendment have the full approval of all of those on the working group. A number of matters that were raised in the public consultation were felt to require further analysis, and these matters will be considered again in the next amendment to the Trusts Law, for which law drafting time in 2006 has been reserved.

Key Changes

2.5 The key changes to the Law proposed by the Amendment are as follows:

2.5.1 Article 9 will be amended to clarify the extent to which matters relating to the validity of a Jersey trust should solely be determined by Jersey Law. This is a key provision to strengthen Jersey trusts and to protect them from attack from foreign courts.

2.5.2 Article 9A sets out a number of powers that can be reserved by the settlor. While it is generally believed that it is possible currently for a settlor to reserve powers in relation to a Jersey trust, many other jurisdictions have confirmed and clarified this matter, and it helpful to the finance industry for this matter to be set out in legislation. Many settlers wish to place shares in a family company in trust and this provision will allow them to do so while retaining an active influence over the management of the company.

2.5.3 There is no longer to be a perpetuity period in relation to Jersey trusts: a Jersey trust may, unless the trust expressly provides to the contrary, last indefinitely.

2.5.4 The minimum number of trustees that a trust requires shall be reduced from two to one, unless the trust provides to the contrary.

2.5.5 The ability of trustees to delegate powers and trusts has been expanded, so as to facilitate the appointment of experts such as investment managers.

2.5.6 A new power has been added to the law allowing the trustees or the Attorney General to apply to the court for a ruling that a charitable or non-charitable purpose trust is no longer an effective use of assets, and that the trust should be varied in a manner consistent with the intention of the settlor. This mirrors an approach adopted in Guernsey and will enable trustees to ensure that the assets in such trusts are used effectively. This is especially important as many charitable trusts were established a long time ago, and the purposes for which they were established may have largely disappeared.

2.5.7 Article 56 has been repealed, for reasons set out in the Ministerial decision referred to earlier.

3. Recommendation

3.1 The Amendment is the most significant updating of the Trusts Law since it was first introduced over 20 years ago. Although trusts have remained a key element of the Island’s finance industry over that time, trusts business has changed beyond recognition in that time. Trusts are no longer the province of private clients: they are frequently encountered in collective investment fund and securitisation structures. Settlors increasingly wish to play an active role in managing trust assets and want the security of knowing that the jurisdiction in which such assets have been placed will robustly defend the integrity of the trust. Perhaps most importantly, there is a real demand for private trust companies, trust companies established solely to manage the wealth of an individual family or institution.

3.2 In order to ensure that the finance industry can continue to prosper, particularly in the high-margin, low-footprint areas that have been highlighted as an important area of potential growth, it is vital to ensure that the Island’s practitioners have flexible, up to date legislation. This Amendment will ensure that Jersey can continue to compete effectively with our key competitors, which are increasingly jurisdictions such as New Zealand and Singapore.

3.3 It is recommended that the Amendment be approved and lodged for debate by the States at the earliest opportunity.

PAUL DE GRUCHY

Director, Finance Industry Development

Attachment

Draft Trusts (Amendment No.4) (Jersey) Law 200-