Source: http://www.inhouselawyer.co.uk/wgd_question/how-is-any-such-structure-constituted-what-are-the-main-rules-that-govern-it-is-there-any-requirement-for-registration-with-or-disclosure-to-any-authority-or-regulator-and-what-information-about-th-2/
Timestamp: 2020-02-19 01:04:28
Document Index: 285823883

Matched Legal Cases: ['§20', '§19', '§19', '§19', '§19', '§19', '§19', '§26', '§19', '§19', '§19', '§19']

How is any such structure constituted, what are the main rules that govern it, is there any requirement for registration with or disclosure to any authority or regulator, and what information about the structure is available to the public? | The In-House Lawyer
Colombian tax residents are subject to income tax based on their worldwide source income. Therefore, any distributions made by a foreign trust/foundation would be subject to income tax in Colombia at a 10% rate. As from FY 2019, life insurance indemnities are taxed as capital gains, only on the amount that exceeds 12.500 Tax Value Units (approx. USD 129.000).
In order to establish an international trust:
•	The settlor must not be a resident of Cyprus in the year preceding the year of the creation of the international trust.
•	No beneficiary, other than a charity, is a resident of Cyprus in the year preceding the year of the creation of the international trust.
•	There must be at least one trustee resident in Cyprus at all times.
As part of maintaining an attractive trust jurisdiction and at the same time remaining compliant with European Law and Anti-Money Laundering (AML) regulations, the Cyprus Parliament has passed laws amending the Law Regulating Companies Providing Administrative Services and Related Matters of 2012 and the International Trusts Law of 1992 to 2012.
Under these amendments the Competent Authorities (a. the Cyprus Bar Association, b. the Institute of Certified Public Accountants of Cyprus, and c. the Cyprus Security and Exchange Commission) are obliged to establish and maintain a Trust Registry as per Article 25A of Law 196(I)/2012, in which the above-mentioned Authorities have access to the information provided. The information is not made publicly available.
In order to comply with the abovementioned obligation, all trusts falling under section 25A(2) of the Law 196(1)/2013 have to be submitted in the Trust Registry kept by the Cyprus Bar Association. The Trust Registry will contain the below information:
•	the name of the trust;
•	the name and full address of every trustee at all relevant times;
•	the date of establishment of the trust;
•	the date of any change in the law governing the trust to or from Cyprus law; and
•	the date of termination of the trust.
The names of the beneficiaries and the trust property or the trust fund are not disclosed. No other information is revealed related to the settlor or the protector (if any) of the trust. The Trusts Registries will not be available to the public but shall be available for inspection by the Competent Authorities. The information will remain in the Trust Register for a term not exceeding 5 years after the termination of the Cyprus International Trust.
Service providers establishing trusts will be required to obtain documentary evidence of identity of the settlor, the trustees, the beneficiaries (or information on the class of beneficiaries including the beneficiaries to whom any distributions have been made pursuant to the trust) and others associated with the trust, as well as information on the activities of the trust, and keep this information available for inspection by the relevant Competent Authority on request.
For Mexican legal purposes, the fideicomiso is a contract through which the trustor conveys to a fiduciary institution the ownership of one or more assets or rights, as the case may be, to be used for lawful and determined purposes, entrusting the execution of said purposes to the fiduciary institution itself.
As a general rule, there are three different parties in the fideicomiso:
Settlor: Is the one who constitutes the fideicomiso and transmits ownership of the assets to the trustee. Anyone with the capacity to transmit ownership of the assets or rights subject to the fideicomiso can be settlors.
Trustee: Is the person ordered by the settlor to carry out the purpose of the fideicomiso. He becomes the owner of the assets destined to the realization of such purpose. In accordance with the General Law of Credit Institutions, only institutions that are expressly authorized to do so may be trustees (including credit institutions, insurance institutions, surety institutions, brokerage firms, etc.).
Beneficiary: Is the one in whose favor the administration of the assets is exercised. People who have the necessary capacity to receive the benefit that the fideicomiso implies can be beneficiaries. The Settlor can designate more than one beneficiary or even substitute beneficiaries.
It is important to mention that it is possible to create a fideicomiso without an initial beneficiary, as long as the purpose is legal and determined and the fiduciary institution accepts the assignment.
All kinds of assets and rights can be object of a fideicomiso, except those that are strictly personal in accordance to the law. The assets that are given in fideicomiso can only be used for its purpose, so the Trustee cannot exercise rights and actions that are not related with such purpose.
Finally, it is important to mention that the constitution of the fideicomiso shall always be in writing and if the settlor provides any real state the contract shall be granted before a notary public.
The steps for its constitution are the following: (i) determine what is the purpose to be done and select the goods to be disposed of to achieve it (the purpose must be legal and determined); (ii) select who will be the beneficiary; (iii) choose a fiduciary institution to be in charge of the administration and agree with it the conditions of the administration; (iv) define the duration period (taking into account the limitations that will be analyzed later); and (v) sign the contract with the fiduciary institution.
Regarding the main rules governing its operation, we can enlist the following:
The fideicomiso constituted in fraud of third parties, can at all times be attacked for nullity by the interested parties.
The fideicomiso whose purpose is real estate shall be registered before the Property Section of the Public Registry of the place where the assets are located. The fideicomiso will take effect against a third party from the date of registration in the Registry.
The fideicomiso whose purpose is movable property, will take effect against third parties from the date of its registration in the Sole Section of the Sole Registry of Secured Transactions of the Public Registry of Commerce.
The beneficiary has, in addition to the rights granted to him by virtue of the constitutive act of the fideicomiso, that of enforcing compliance with the fiduciary institution; and that of attacking the validity of the acts that it commits in its detriment, in bad faith or in excess of the faculties that by virtue of the constitutive act or of the law corresponds to it.
The fiduciary institution will have all the rights and actions that are required for the fulfillment of the fideicomiso, except for the limitations established when it is constituted. Among the main obligations, it is obliged to fulfill the fideicomiso according to the constitutive act; it cannot excuse or renounce his assignment except for serious reasons in the judgment of a judge, and is always responsible for the losses or impairments that the goods suffer because of it.
The fiduciary institution shall register the assets or rights attached to the fideicomiso in a special account and keep them separately from their freely available assets.
Secret fideicomiso and those in which the benefit is granted to successive persons who must be replaced by death of the previous one are prohibited, except in the case that the substitution is made in favor of people who are alive or conceived already, at the death of the trustor.
Fideicomisos with duration of 50 or more years are prohibited, although some exceptions may apply.
It is important to mention that the fiduciary institutions have their own regulation issued by the Bank of Mexico through general circulars, which indicate their powers, prohibitions, transparency measures and the obligations they shall comply with before the Mexican authorities.
With respect to the information that the trustees are obliged to share, in accordance with the general rules issued by the Bank of Mexico, they shall provide the information on the fideicomisos that they celebrate or administer in the form and terms set forth by the special regulations.
Notwithstanding the foregoing, as a general rule, the information related to a fideicomiso agreement has the character of confidentiality under the fiduciary secret regulated in the Mexican Credit Institutions Act, according to which, the information and documentation related to the fideicomiso operations will be confidential, so that the credit institutions, in protection of the right to privacy of their clients and users, in no case may give news or information of these operations or services, but the beneficiaries, their legal representatives or those who have granted power to intervene in the operation or service.
A private trust is constituted under the Indian Trusts Act, 1882 (“Trusts Act”). The general rule under Indian trust law is that a person can play any two of the three roles involved in a trust i.e. the roles of settlor, trustee or beneficiary. The trust is primarily governed by the terms of the trust deed and Trusts Act. In addition to the Trusts Act applicable real estate, tax, and securities law and exchange control regulations govern the settlement and operations of a trust.
Trusts made in accordance with Law n°214 can only be created by nationals from countries where trusts legislation exists. Under this Law, testamentary trusts must respect the formalities set out for wills by notary deed or mystic wills (see Question 16 above) whereas inter-vivos trusts must respect the formalities of lifetime gifts. Also, a certificate of compliance with the substantive foreign law under which the trust was created must be provided by a practitioner approved by the Court of appeal of Monaco.
Only corporations listed by the Court of appeal of Monaco can act as trustees. Individuals can act as co-trustee or as local representative but also need to be on this list. Trustees not established in the Principality must designate a local representative. Exceptionally, the co-trustee can be freely chosen provided that he or she only acts for a single trust.
The trustee has to be in possession of and must communicate information related to the identity of: the settlors, the trustee(s), the protector, the beneficiaries or the categories of beneficiaries, any individual with effective control over the trust. This information is only available to specific authorities listed by law (tax, judiciary and financial).
Trusts must also prepare annual accounting statements.
Single family offices must be incorporated as a “Société Anonyme Monégasque” (SAM) under Monegasque government policy. It is also possible to manage and invest personal assets through a “Société à Responsabilité Limitée” (SARL) or a “Société Civile Particulière” (SCP) but these types of companies do not allow to offer all the services usually provided by family offices.
Multi-family offices must take the form of a SAM. They are subject to prior authorization by ministerial order and approval by the Financial Activities Supervisory Commission (CCAF). This kind of company is subject to a duty of confidentiality, the violation of which is punished by criminal sanctions.
A SAM requires a minimum share capital of EUR 150,000.00 euros and only general corporate information is publicly available, the identity of the families is kept confidential.
It is generally considered that only families owning assets of at least EUR 100 million have an interest in creating a single family office. Whereas a multi-family office generally attracts families owning more than EUR 20 million each.
The beneficial owners of companies must be registered. This information is accessible to authorities listed by law (tax, judiciary and financial). Attorneys, notaries, and bailiffs can also access it in the context of their reporting obligations regarding money laundering, financing of terrorism, and corruption.
Please see point 18 above.
The Civil Code provides the main rules to establish and govern the inheritance fund. The establishment of the fund is subject to the notary public registration, as it is made in the form of the will. The provisions of the wills are not publicly available. The notary public only discloses it to the relevant individuals after the death of the testator. In general, the practice of creation of inheritance funds is evolving at the moment with state regulations and court decisions on the matter being expected shortly.
An endowment is created as a legal person without members. It can be established by way of an establishment deed or a contract (in case of more than one founder). It can be also created by a Will, and in such case the judge who has jurisdiction for the inheritance proceedings will appoint an executor of the Will if the testator has not appointed one already. If an endowment is established by way of a Will, its aims may not be contrary to the provisions of the Succession Act setting out the prohibited clauses of a Will.
An endowment can be formed with an initial contribution of assets, rights and/or cash with the value of minimum EUR 30,000.
If an endowment is established by a Will with a private purpose (not charitable or public benefit) the transfer of testator's assets and rights to the endowment has no legal effect to his estate (i.e. the assets and rights so transferred remain to be in his estate). Such effect is only possible in case of an endowment the purpose of which is charity or other public benefit.
An endowment is subject to registration with the public registry of endowments and foundations and must file an annual financial statement with the public registry of financial statements.
It is also subject to an obligation to register its beneficial owners to the Central Registry of Beneficial Owners.
Swiss vehicles, including corporations and foundations, need to be established through a formal procedure and registered with the commercial register. The name, address, purpose and board members of the entity, and the capital structure for corporations, are recorded.
The registration and documents submitted to the commercial register are publicly accessible.
Domestic trust structures, including trusts with a charitable component, are created pursuant to the governing law of a state or other jurisdiction of the US. The various states compete against each other to provide favourable trust law (including the extension or repeal of the rule against perpetuities, the limiting of beneficiaries’ rights to receive information on trust assets, and the creation of favourable laws relating to trustees and protectors) and tax law to attract trust business. Generally, the creation of a domestic trust does not require the filing of the trust instrument with any governing authority or regulator, and the trust may remain private. If a US gift tax return is filed to report a gift or sale to a trust, it is common to include a copy of the trust instrument with the return. US gift tax returns are confidential and not subject to public examination. US income tax returns that may be required for domestic trusts are likewise confidential.
As in the case of trusts, domestic private foundations, FLPs and FLLCs are created pursuant to the governing law of a state or other jurisdiction of the US; and the various states compete against each other to provide favourable partnership and corporate law applicable to these entities. Private foundations may be formed as a trust or as a corporation (the latter provides additional flexibility and less court oversight), and in general, the creation of a private foundation or FLP or FLLC requires the filing of a certificate of incorporation or of limited partnership with the office of the Secretary of State of the chosen state. Annual tax reporting must be made to the IRS and, depending upon the chosen state, may be required to be made to the state. Annual information returns filed by a private foundation with the IRS are public documents. Annual income tax returns of FLPs and FLLCs are confidential.
Whereas companies ought to register with the Israeli Companies Register and to submit annual returns, there is currently no trusts’ registry in Israel. Both companies and trusts must register and report to the Israeli Tax Authorities. Nonetheless, only the Israeli Companies registry is available to the public, who can access general information such as the family company’s address, share capital, directors and shareholders’ identities, applicable liens and terms of the article of associations.
In order to be efficient, any structure of ownership should be carefully designed and taking into consideration the family members’ personal situation, the importance of the wealth, the nature and location of the assets as well as the objectives of the family.
As already explained, all trusts and companies used in the ownership structure should be properly set up and managed. They should also have another reason than reducing or avoiding taxes.
As a general rule, any trusts, private foundations, French companies involved in the structure of ownership having a connection with France should be disclosed.
The disclosure regime of trusts (which also include foundations and any similar arrangement) illustrates the French tax authorities’ appetite for receiving information.
As from January 1, 2012, if the settlor or one of the beneficiaries is resident in France or if the trust fund contains French assets, the trustee must disclose to the French tax authorities the formation of the trust, any variation of its terms and its termination as well as the market value of the trust assets on the 1st January of each year.
The French Constitutional Court, in a decision dated March 16, 2017, held that the proportional penalties of 5% and 12.5% of the trust’s assets value due in case of absence of reporting were unconstitutional, as disproportionate in regards to the infringement they sought to sanction. As a consequence, as from December 31, 2016, failing to comply with the above reporting requirements triggers the application of a fixed penalty amounting to € 20,000 per missing return (€ 10,000 before December 8, 2013).
In addition, failing to report may also give rise to an additional 80% surcharge (with a minimum of € 20,000) applying to all French tax consequences bearing on the trustee(s), the settlor(s) or the beneficiarie(s) – income tax, wealth tax (ISF and/or IFI), inheritance/gift tax, trustees’ specific 1.5% levy – which may be due in respect of the trust assets and distributions or reportable modifications which may have occurred.
The French Constitutional Court, in a decision dated 21 October 2016 held that the register of trusts cannot be available to the public on the ground that it would allow anyone, in violation to the fundamental right of privacy, to collect information in relation to the settlors and beneficiaries of French connected trusts, as well as in relation to the trust itself. The register is now only accessible to certain authorities such as the French tax authorities, the judicial authorities or the customs.
Corporations provide limited liability, as shareholders are not liable for the corporation’s debts. A corporation must be registered in the German trade register, which generally provides a list of the shareholders. The register also contains information about the share capital and the directors.
There are various ways in which a partnership can be set up. Most kinds of partnerships need to be registered in the trade register as well. Further, in certain constellations partners must also be listed as ultimate beneficial owners in the transparency register.
Private foundations have no shareholders but endowment property. They are represented by a board. A private foundation can be voluntarily listed in the index of German foundations. Registration in the transparency register along with their beneficial owners is compulsory, as long as the foundation’s registered office is within Germany. As of 2020, the transparency register will be visible to the public.
19.1 A family investment company, like any other company, may be established under English law by incorporation, which in broad terms involves one or more intended members choosing a name and registered office for the company, adopting constitutional documents, deciding whether to own shares in, or provide a guarantee to, the company and in either case in what amount, appointing one or more directors, and registering certain information and documents with the registrar of companies (§20.1).
19.2 A trust is established when specified property is transferred by one person (called the settlor) to other persons (called the trustees), or else comes to be held by the settlor himself as trustee, for the benefit of specified persons or a defined class of persons (called the beneficiaries), so that the trustees are legally obliged to hold and administer those assets for the benefit of the beneficiaries.
19.3 A trust (§19.2) under which a beneficiary (§19.2) is entitled to income as it arises to the trustees is called a life interest trust, and a trust under which beneficiaries have no fixed entitlement but may benefit at the discretion of the trustees (§19.2) is generally called a discretionary trust. A trust under which the trustees hold assets as mere nominees for a beneficiary or beneficiaries, who (if adult) can call for those assets to be transferred to them at any time, is generally called a bare trust.
19.4 Normally, the terms of a trust (§19.2) are set out in a trust document, but English legislation will (so far as it applies to a trust) generally give the trustees (§19.2) a range of standard administrative and other powers if these are not set out in that document. All interests of beneficiaries (§19.2) under a trust (other than a charitable trust (§26.1)) governed by English law must vest within 125 years of the creation of the trust.
19.5 Trusts (§19.2) do not have separate legal personality and can be created without any registration process. However, trustees (§19.2) with UK tax liabilities are generally required to disclose to HMRC certain details, including details of the settlor (§19.2), beneficiaries (§19.2) and assets of the trust, and HMRC may in turn provide those details to other UK public authorities and non UK tax authorities with which the UK has reciprocal arrangements. In addition, should a UK domiciled individual create a non-UK resident trust during their lifetime, anyone who is involved in a professional capacity has an obligation to inform HMRC of the creation.