Secrecy of information is governed by the Confidential Relationship Act 1985. This act prohibits the disclosure of any information obtained in the course of business, and applies to banks, and professionals as well as Government officials. The act provides prison sentences for violation of secrecy provisions and insures complete confidentiality where foreign authorities seek private banking and financial records. Nevis has not entered into any exchange of information agreements.
Nevis Disclosure of Information
Secrecy of Information
Banking Secrecy
Banking secrecy is governed by the Nevis Offshore Banking Ordinance 1996.
Disclosure in Company Formation and Trust Settlement
Disclosure of beneficial ownership is not required on incorporation of a company. Confidentiality is governed by the Confidential Relationship Act 1985.Companies are not required to be audited, but they must have a local registered office. The name and address of the person or entity forming the company must be kept at the local office.A trustee is not required to register the beneficiaries of a trust. Moreover, a company or trustee wishing to open a bank account need not disclose the beneficial owner or beneficiaries. This provision applies to limited partnerships as well.
Establishing Trust in Nevis
Analysis of Trust Laws Nevis International
Exempt Trust Ordinance, 1994
The use of international trusts has rapidly expanded as both corporations and individuals apply this mechanism to fuel and facilitate a wide range of activities. Their use has become increasingly imaginative and prolific and remains an integral element in estate planning and asset protection. In recognition of this trend, and of the contribution that international trusts would make to the international financial services sector, the Nevis International Exempt Trust Ordinance was passed by the Nevis Island Assembly in 1994.
The Ordinance governs the establishment and operation of international trusts and is an amalgamation of the progressive international trust legislation of various jurisdictions combined with innovative provisions to form a totally unique product. When combined with an NBCO, users can create powerful asset protection vehicles.
The Trust Ordinance provides for the creation of charitable, spend-thrift and protective trusts. It also includes special provisions tailored to make Nevis a preferred jurisdiction for the establishment of asset protection trusts (APTs).
Nevis Duration of Trusts
The rule against perpetuities does not apply. A Nevis international trust may continue for one-hundred years from the date of commencement of its existence and forced heirship rules cannot invalidate the trust.
Nevis Creation, Establishment and Administration of Trusts
To qualify as an international trust under the Nevis International Exempt Trust Ordinance, the following criteria must be met:
1) at least one trustee must be either a trust company doing business in Nevis or a company incorporated under the NBCO;
2) the settler and beneficiaries must at all times be non-residents of Nevis; and:
3) the trust property must not include any land situated in Nevis or its sister island, St. Kitts.
Other features of the trust are that the trust assets and income deriving from the corpus of an international trust are exempt from all exchange controls and estate, corporate, gift, income, inheritance, withholding, succession and stamp taxes in Nevis.
Under the Nevis International Exempt Trust Ordinance, the international trust can be created with only one trustee and the Settlor or trustee of the trust may also be named as a beneficiary.
Nevis Trust Proper Law
The proper law of the trust is the Law of the jurisdiction expressed by the terms of the trust as proper law, with which the trust at the time it was created had the closest connection; or failing either, the proper law of the international trust shall be the law of Nevis.
Nevis Trusts Asset Protection Provisions
An Important feature of the Ordinance relates to fraudulent dispositions. A creditor seeking to set aside a transfer to an International Trust is required to establish beyond reasonable doubt that the transfer constituted a fraudulent disposition. The Nevis Ordinance expressly states that “a trust settled or established and a disposition to such trust shall not be fraudulent as against a creditor of a Settlor:
(a) If settled, established or the disposition takes place after the expiration of two yeas from the date that such creditor’s cause of action accrued; or
(b) Where settled, established or the disposition takes place before the expiration of two years from the date that the creditor’s cause of action accrued, and that creditor fails to commence such action before the expiration of one year from the date such settlement, establishment or disposition took place.
Furthermore, every creditor, before bringing any action or proceeding against any trust property shall first post and pay a bond with the court as a security deposit.
The Protector
The Ordinance specifically provides for the appointment of a Protector. The role of the Protector is to monitor the major acts of the trustee. The Protector is not a Trustee but rather the “watchdog” of the Trust. This provision gives an added protection feature in that the Protector has a fiduciary duty to the beneficiaries of the trust or to the purpose for which the trust was created. This provides an additional safety mechanism within the framework and workings of the trust.
Trusts in Nevis Taxes and Other Exemptions
The assets and earnings of a Nevis International Exempt Trust are exempt from all exchange controls and all forms of taxation and stamp duty in Nevis.
Confidentiality
The confidentiality and the privacy of international trusts are ensured by legislation. Though a trust register is maintained, it only records the name of the trust and the date of settlement and is not a public document available for inspection. The only exception is where a trustee of a specific trust gives written authorization to a person allowing the inspection of the entry of that trust on the register. The Ordinance provides that all non-criminal judicial proceedings relating to the trust shall be heard in private and that no details may be published without leave of the court.
The Nevis Exempt Trust Amendment Ordinance 2000
The Nevis International Exempt Trust Ordinance is widely admired by persons wishing to structure offshore trusts, whether for asset protection purposes or for estate planning purposes. However, as always, Nevis has undertaken dynamic action and improved on its trust law by enacting amendments to its Ordinance. These amendments enacted on 15 September, 2000 further enhance the attractiveness of the Nevis trust law. The changes cover three areas, namely:
Clarifies the registration requirements, including the introduction of the new concept of the qualified foreign trust;Strengthens and clarifies the fraudulent conveyance provisions;
Affirmatively prohibits the use of international trusts to further criminal activity.
Registration of Nevis Trusts and Foreign Trusts
The first change addresses the misinterpretation of some users that registration of a trust may be delayed for many years after formation until a cause of action arises, or that trusts formed under English common law may obtain the benefits of the Ordinance notwithstanding the failure to register. The amendment makes it clear that trusts formed under the Ordinance may claim the benefits of the Ordinance only if they are properly registered under the Ordinance within 45 days of the creation. Such a provision would preclude trusts formed under the statutes of another jurisdiction from ever migration or fleeing to Nevis. By definition, these trusts are not Nevis trusts and could not be expected to be registered in Nevis as a Nevis trust until it migrated in long after creation.
To address this issue, the Amendment provides that a foreign trust for which future migration might be a possibility should register with the Nevis registrar as a foreign trust, thereby becoming a “qualified foreign trust’ (QFT). In so doing, it preserves the trust’s ability to make such a move in the future if and when the need arises.A trust formed to be Nevis trust is a trust that is registered with the registrar and for which the law of Nevis is the proper law of all or any aspects of the trust under section 4 of the Ordinance. This trust must be registered with the registrar within 45 days of the date in which the trust is created, settled or established. The application must be in the form specified by the registrar and shall be accompanied by the prescribed fee, a notice of the name and registered office of the trust, and a certificate from a trustee company licensed in Nevis or a barrister or solicitor licensed to practice in Nevis. This certificate must certify that:
The trust will be an international trust as defined in the Ordinance; and
The date the trust was created, settled or established, as applicable.
As long as these requirements are met and the annual renewal fees are paid no later than 90 days after the current registration, the trust will be governed by the provisions of the Ordinance.
As with the Nevis trust, the QFT application must be in the form specified by the registrar and shall be accompanied by the appropriate fee, a notice of the name of the registered office of the trust and a certificate from the trustee company licensed in Nevis or a barrister or solicitor licensed to practice in Nevis. However, in this case, the certificate must certify:
That the trust will be a qualified foreign trust s defined in the Ordinance;The date the trust was created, settled or established in the foreign jurisdiction; and The law under which the trust was settled.
In some cases, where good reasons are established by a trustee company, barrister or solicitor for delays beyond the 45 day registration period, the registrar has the discretion to extend such periods as needed. In effect, the amendments to the Nevis International Exempt Trust require timely registration of:
A Nevis trust in order to qualify as a Nevis International Exempt Trust; A foreign trust to qualify as a QFT in order to preserve its ability to become a Nevis trust at some future date; and A QFT that is in the process of migrating to Nevis.
Changes to the Fraudulent Conveyance Provisions
The new amendment to the fraudulent conveyance provisions as set out in Section 24 of the Ordinance accomplishes the following:
Limits the claims of a creditor alleging fraudulent conveyance to the property transferred in an alleged fraudulent transfer.
Defines a cause of action for purposes of starting the limitations time period as the earliest cause of action capable of assertion by the creditor against the Settlor.
Requires the creditor who wishes to allege fraudulent conveyance in the Nevis judicial proceeding to make all possible claims against all possible parties, including possibly the trust beneficiaries, at the time when the claims are first made, or risk being unable to raise such claims in future proceedings involving any such parties with a material interest.
Expands the definition of creditor for these purposes to include not only those persons who allege a cause of action, but also any judgment creditor or assignee of a creditor.
Prohibition of Using Nevis Trusts To Further Criminal Activity
To prevent the use of Nevis trusts by those involved in criminal activities, this Amendment provides that the trust shall be invalid and unenforceable if any part of the trust assets are the proceeds of a crime for which the settler is convicted.
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COI ´s services are subject to its Terms and Conditions.The information provided by COI is intended as informative material and should not be relied solely upon in decision-making, especially if it concerns international tax planning and financial structuring as these areas are subject to frequent changes, although its efforts to keep all information on its website regularly updated.
COI strongly recommends that each potential user of its services seek tax and legal advice before deciding on implementing a solution employing international financial structures. COI will not be liable for any damages, costs and expenses resulting from or incurred as a result of any action taken or omitted based upon any such information provided by COI.