Company Formation Using a Discretionary Trust

As well as a Company, the client may form a Discretionary Trust with our trust company, Trustees International Limited (TIL), being the Trustee. Our Nominee Companies still hold the shares in the Company but, in this case, they issue Declarations of Trust in favour of TIL, as Trustee of the Discretionary Trust:

This structure enables the Company to issue a Power of Attorney to the beneficial owner for specific purposes.

Trusts

A Discretionary Trust can be formed to hold shares in a Company, as detailed above, or to hold assets directly.  For many clients, who are interested only in passive, low-risk investment, e.g. funds or share investments, a simple trust structure can suffice.

Clients normally use us to act as Trustee.  Distribution of the income and assets of a Discretionary Trust remain at the discretion of the Trustee.

The current Trust Law in Vanuatu is governed primarily by UK common law and statutes in existence as at 1 January 1976.  There has been a new suite of trust legislation drafted but not as yet laid before Parliament.  This includes an International Trusts Act which contains specific asset protection, creditor protection and forced heirship clauses for “international trusts”.

A Trust is not subject to reporting requirements and hence confidentiality of financial information is enhanced.  The only information we require to set up a Trust is the proposed Trust name, the client's address, details of assets to be held and details as to how the client wishes the assets and income of the trust to be dealt with, both during his (her) lifetime and after his (her) death. We also require an indemnity for actions taken by the Trustee.

Please note that a trust cannot issue a power of attorney to the client to act on its behalf, and accordingly any documents to be signed must be forwarded to Vanuatu for signature by the trustee.  This is one of the factors to consider in determining whether to use a trust or company to utilise the tax haven features of Vanuatu.

Funds management & Investment

Barrett & Partners can also help you deploy investments and profits via various mechanisms through Vanuatu. The most popular are short-term deposits, stocks and shares, loans to overseas companies and back-to-back loans. Some countries impose restrictions or reporting requirements on funds transferred in and out; however, Barrett & Partners can help you with advice regarding legally repatriating your funds to your home country.