Trust Companies Act 19191

"licence" means a licence provided for in sections 5 to 7; and "license" has a corresponding meaning;

"the Minister" means the Minister of Finance;

"officer", in relation to a body (whether corporate or unincorpo rate), includes director, manager or secretary of the body;

"trust" has the meaning given to it by section 2 of the Trusts (Special Provisions) Act 1989 [title 26 item 50];

"trust business" means the undertaking, executing and admin istering of trusts, as a business, trade, profession or vocation carried on or practised in the service of the public generally;

"trust company" has the meaning given to it by section 3(1).

Restriction on carrying on trust business without a licence

3 (1) Subject to subsection (2), a person shall not carry on trust business in or from within Bermuda unless that person is a company which at the time holds a licence which is in force for the purpose (in this Act called a "trust company").

(2) The prohibition in subsection (1) does not extend to an in dividual or a partnership.

Restriction on use of certain words

4 (1) Subject to subsection (3), none of the words "Trust", "trust", "Trustee" and "trustee", and no grammatical variation of any of those words, shall be used in a name designating a business unless the business is that of a licensed trust company.

(2) Subject to subsection (3), if a person, being an officer, employee or agent of a business, uses any of the words "Trust", "trust", "Trustee" or "trustee", or any grammatical variation of any of those words, in a name designating the business when he knows that the business is not that of a licensed trust company, he commits an offence against this Act.

(3) Notwithstanding subsections (1) and (2), it is lawful for a company which is not a licensed trust company to use the word "Trust", "trust", "Trustee" or "trustee", or a grammatical variation of such a word, in the name of the company, or in a name designating its business, if the company simultaneously uses the word "Private" or the word "private" or the abbreviation "(Pvt.)" in that name; and a person who in referring to a business refers to it by a name which it would be lawful for the company carrying on that business to use by virtue of this subsection in relation to that business is not guilty of an offence under subsection (2).

[section 4 replaced by 1993:13 effective 1 April 1993]

Applications for licences

5 (1) A person with an interest to do so may make an application to the Minister for a licence for a company to carry on trust business in or from within Bermuda.

(2) An application—

(a) shall be accompanied by—

(i) a statement setting out the nature and scale of the trust business which is to be carried on by the company, and particulars of the arrange ments proposed for the operation of that busi ness; and

(ii) such other information and documents as the Minister may require for the purpose of consid ering the application; and

(iii) an application fee of $170 or such higher amount as may be prescribed under the Gov ernment Fees Act 1965 [title 15 item 18]; and

(b) shall otherwise be made in such manner as the Minister may direct.

(2A) The applicant shall, not less than seven days prior to an application for a licence under subsection (1), advertise in an appointed newspaper, as defined in the Companies Act 1981 [title 17 item 5], the applicant's intention to apply for a licence.

(3) At any time after receiving an application and before de termining it the Minister may in writing require the applicant to provide additional information or documents.

(4) Requirements or directions made or given under subsec tion (2) or (3) may differ as between different applications.

(5) Any statement or information to be provided to the Minister under this section shall be in such form as the Minister may specify; and the Minister may in writing require the applicant to provide a report by an accountant or other person approved by the Minister on such as pects of any such statement or information as the Minister may specify.

(6) An application may be withdrawn by notice in writing to the Minister at any time before he has determined the application.

[section 5 amended by 1998 : 35 effective by notice in Official Gazette]

Power to grant licences

6 (1) The Minister may grant or reject an application.

(2) The Minister shall not grant an application unless he is satisfied that the criteria set forth in the First Schedule are or will be fulfilled with respect to the company to which the application relates.

(3) Notwithstanding subsection (2), the Minister shall reject an application if he determines that it is not in the public interest that the application should be granted.

(4) In deciding whether to grant or reject an application, the Minister shall take into account, among other things—

(a) the economic situation in Bermuda;

(b) any advantage or disadvantage that may result for Ber muda from the application being granted; and

(c) where the proposed trust company is a company al ready in being, the nature and previous conduct of the company and the character and previous conduct of any individual or body having an interest (whether as an officer, shareholder or otherwise) in the company.

(5) The Minister need not give any reason for granting or re jecting an application.

Conditions to licences

7 (1) A licence may be granted subject to such conditions as the Minister sees fit to specify in the licence.

(2) The power given by subsection (1) to impose conditions in cludes, subject to the limitations specified in subsections (4) and (5), power to impose conditions whereby—

(a) the transfer of a voting share in a company; or

(b) the appointment of a top executive in a company,

may be prevented by the Minister or an authority chosen by him.

(3) The expression "top executive" in this section means, in relation to a company, a person who is to perform functions of any of the following offices in the company, namely—

(a) a director;

(b) the chief executive officer;

(d) the company secretary,

by whatever name called.

(4) The limitation referred to in subsection (2), in relation to a proposed transfer of a voting share, is that the Minister (or, as the case may be, the chosen authority) is entitled to consider the following, and

no other, question, namely, whether, in light of—

(a) the character and previous conduct of the person to whom the share is to be transferred; and also

(b) the likely impact, in the opinion of the Minister, or, as the case may be, the chosen authority, of the transfer on the future conduct of the company's affairs,

the public interest will be prejudiced by the transfer being made.

(5) The limitation referred to in subsection (2), in relation to a proposed appointment of a top executive, is that the Minister (or, as the case may be, the chosen authority) is entitled to consider the following, and no other, question, namely, whether, in light of—

(a) the character and previous conduct of the proposed ap pointee; and

(b) the proposed appointee's knowledge of, and skill and experience in, trust business,

the public interest will be prejudiced by the appointment being made.

Other provisions concerning licences

8 (1) A licence shall be in such form as the Minister thinks fit, and different licences may be in different forms.

(2) A company which holds a licence shall at all times keep the licence on display at the company's registered office in Bermuda in a place where the public can see the licence.

from paying has in fact been paid, the liquidator may recover the fee from the Government.

(4) An unpaid licence fee may be sued for by the Government by action as a civil debt and—

(a) the Government may (whether in such an action or not) require; and

(b) where judgment is given for the Government in such an action, the court may order,

for late payment of the fee payment of a penalty in an amount equal to the amount of the fee.

[section 9 amended by 1993 : 13 effective 1 April 1993]

Functions of the Bermuda Monetary Authority under this Act

10 (1) The Authority has, in addition to its other functions—

(a) the duty to supervise trust companies in accordance with this Act; and

(b) in and for the discharge of that duty, the functions conferred on the Authority by this Act.

(2) The Authority shall, to such extent as is necessary for giv ing effect to any arrangements made between the Minister and the Authority for the purpose, make to the Minister periodic or other reports about matters coming to the Authority's knowledge pursuant to section 12 or 16; and for that purpose or for the purpose of consultation with the Minister under section 22(2), the Authority may dis close to the Minister any information in the Authority's possession, be ing informa tion relevant to the making of such a report or the conduct of such con sultation, notwithstanding that the information is information which, but for this subsection, the Authority would be forbidden by some pro vision of law so to disclose.

(3) Neither the Authority nor any officer or employee of the Authority is liable in damages for anything done or omitted in the dis charge or purported discharge of the Authority's functions under this Act unless the act or omission was in bad faith.

Segregation of trust accounts

11 In the records of account that a trust company is required by section 83 of the Companies Act [title 17 item 5] to cause to be kept, the transactions and balances of the company shall be kept segregated from the trans actions and balances of the trusts which the company admin isters.

Duty to file financial and other information

12 (1) Every trust company shall, within the statutory period after the last day of each financial year, deliver to the Authority a copy of—

(a) the company's financial statements;

(b) the company's certificate of management; and

relating to that financial year.

(2) The following provisions have effect in relation to a com pany's certificate of management—

(a) the certificate shall be in the form, and (subject to para graph (b)) contain the information, and be executed in the manner, prescribed in the specimen certificate set forth in the Second Schedule;

(b) where a statement or opinion that is required to be made or expressed in the certificate cannot be so made or expressed, then—

(i) the wording of the statement or opinion shall be modified appropriately; and

(ii) a statement of the reason for, and, where ap propriate, of the action that will be taken to cor rect, the deficiency shall be made either in the certificate itself or in an attachment to it.

(3) The expression "statutory period" in subsection (1) means one hundred and twenty days or, where the Authority thinks fit in cir cumstances explained to the Authority affecting a particular financial year, any longer period approved by the Authority.

Duty to prepare financial statements

13 (1) In the case of a trust company, the financial statements described in section 84(1)(a) of the Companies Act [title 17 item 5] shall, notwithstanding anything to the contrary in that section, be prepared in respect of each financial year.

(2) In relation to a trust company, to the extent that section 88 of the Companies Act [title 17 item 5] conflicts with a requirement of this section or of section 14 or of any other provision of this Act, that re quirement pre vails.

Audit

14 (1) A trust company's financial statements shall be audited annually by the company's approved auditor.

(2) In this Act the expression "approved auditor", in relation to a trust company, means an accountant who has been approved by the Minister as that company's approved auditor.

(3) The approved auditor shall conduct the above audit, and prepare his report on that audit, in accordance with generally accepted auditing standards.

(4) In addition to the above report, the approved auditor shall prepare annually a report in the form, and containing the information, prescribed in the specimen report set forth in the Third Schedule.

(5) The requirements of this section are in addition to, and do not derogate from, the requirements of section 90 of the Companies Act [title 17 item 5].

Investigation of affairs of a trust company

15 (1) The Minister may appoint a person appearing to him to be a suitable person as an inspector to investigate and make to him a re port on the affairs, or any part of the affairs, of a trust company if the Minister is satisfied that such an investigation is required in the public interest.

(2) Subject to section 17, it is the duty of any trust company in relation to whose affairs an inspector has been appointed under sub section (1) (hereinafter called a "company under investigation"), and of any past or present officer, employee or agent of such a company, to produce to the inspector on request all books, records and documents relating to the company under investigation which are in its or his pos session, custody or power, and otherwise to give to the inspector all in formation and assistance in connection with the investigation which it or he is reasonably able to give.

(3) Subject to section 17, an inspector may—

(a) examine on oath any past or present officer, employee or agent of the company under investigation in relation to its business, and may administer an oath accord ingly;

(b) if he thinks it necessary for the purposes of his investi gation that a person whom he has no power to examine on oath should be so examined, make application to the Supreme Court, and that Court may, if it thinks fit, or der that person to attend and be examined on oath be fore the Court on any matter relevant to the investiga tion.

(4) The expenses of an investigation of a company under this section shall be borne by the company unless the Minister directs oth erwise.

Power of Authority to obtain information

16 (1) Subject to section 17, the Authority may in writing direct any person to whom this section applies to produce to the Authority any document or information relating to any matter or thing connected with trust business which is in that person's possession, custody or power and which the Authority reasonably requires for the purpose of verifying or supplementing information otherwise provided to the Authority or the Minister under this Act; and any such person shall comply with any lawful direction so given.

(2) The expression "person to whom this section applies" in subsection (1) means any person who has at any time been an officer, employee or agent of a trust company.

Provisions supplementary to sections 15 and 16

17 (1) Where it is desired that material relating to the affairs of a particular trust (as distinct from material relating to the affairs of a trust company or those of the trusts generally that such a company adminis ters) shall be examined or produced pursuant to the provisions of sec tion 15 or 16, those provisions have effect subject to subsections (2) to (5).

(2) In a case described in subsection (1), an inspector or, as the case may be, an officer of the Authority duly authorised for the pur pose may apply ex parte to the Supreme Court for an order under sub section (3) in relation to particular material or material of a particular description; but such an application may not be made unless the mate rial in question is material that is, or contains, or is likely to be, or to contain, evidence implicating some person in—

(a) [Repealed by 1997 : 34]

(b) stealing, or other dishonesty affecting, trust property; or

(c) a contravention of a prohibition or restriction imposed by law in pursuance of a resolution or other decision of an international body, being a resolution or decision binding on Bermuda.

(3) [Repealed by 1997 : 34]

(4) If on such an application the Court is satisfied—

(a) that access to the material in question is necessary for the purposes stated by the inspector or the officer of the Authority making the application; and also

(b) that it is in the public interest that that access should be given,

then the Court may make an order that the person who appears to the Court to be in possession of the material shall—

(aa) produce it to the inspector or an officer of the Authority for him to take away; or

(bb) otherwise give him access to it,

within such period as is specified in the order.

(5) The period to be specified in an order under subsection (3) is seven days unless it appears to the Court that a longer or shorter period would be appropriate in the circumstances.

(6) Where the Court makes an order under paragraph (bb) of subsection (4) in relation to material on any premises, it may, on the application of an inspector or officer of the Authority, order any person who appears to the Court to be entitled to grant entry to the premises to allow the inspector or an officer of the Authority to enter the premises to obtain access to the material.

(7) Where material which is sought under section 15 or 16 or this section is contained in a computer—

(a) an obligation under any of those sections to give access to the material has effect as an obligation to give access to it in a form in which it is visible and legible; and

(b) an obligation under any of those sections to produce the material has effect as an obligation to produce it in a form in which it is visible and legible and can be taken away.

(8) Any right that an inspector or the Authority or an officer of the Authority has, or may be given, under section 15 or 16 or this sec tion—

(a) does not include any right to access to, or production of, items subject to legal privilege;

(b) has effect notwithstanding, and overrides, any obliga tion as to secrecy or other restriction upon the disclo sure of information, being an obligation or restriction imposed by statute or otherwise.

(9) In subsection (8), "items subject to legal privilege" means—

(a) communications between a professional legal adviser and his client made in connection with the giving of le gal advice to the client; and

(b) communications between a professional legal adviser and his client or between such an adviser and any other person made in connection with or in contemplation of legal proceedings and for the purpose of such proceed ings,

when they are in possession of a person who is entitled to possession of them.

(10) Items held with the intention of furthering a criminal pur pose are not items subject to legal privilege.

[section 17 amended by 1997 : 34 effective 19 January 1998]

Company may be wound up in certain cases

18 (1) After receipt of a report from the Authority under section 10(2) or from an inspector under sec tion 15(1), the Minister may, if he considers that a trust company or any of its officers, employees or agents has or have knowingly or wilfully done anything in contraven tion of this Act or of a requirement of, or a condi tion attached to, the company's licence, direct the Authority to petition the Supreme Court for the winding up of the company.

(2) A copy of any petition made under subsection (1) shall be served on the company not less than seven clear days before the day set by the Court for the hearing of the petition.

(3) If the Court, on the hearing of any such petition, is satisfied that any of the allegations in the petition are well founded, then the Court may do all or any of the following—

(a) make an order for the winding up of the company;

(b) impose a fine not exceeding $2,000 on the company;

(c) impose a fine not exceeding $2,000 on any officer, em ployee or agent of the company whom the Court deter mines to be culpable,

as the circumstances in the Court's opinion warrant.

(4) The Court may, after hearing representations from the Authority or the liquidator or any other person appearing to the Court to be affected, include in a winding-up order made under subsection (3)(a) provision that all or any of the trusts which the company was adminis tering before the making of the winding-up order shall, notwithstanding anything to the contrary in any such trust, be trans ferred to a new trustee for administration by him; and, where such pro vision is made, the Court may make or give such supplemental or inci dental orders or directions as the Court deems necessary or expedient to be made or given for giving effect to any such transfer.

(5) Where the Court makes an order for the winding up of a company under subsection (3)(a), the company shall be wound up in the same manner and by the same procedure as if the cir cumstances leading to the making of the order were the same as those leading to the making of a winding-up order under section 161 of the Companies Act [title 17 item 5].

Other measures against a company

19 (1) After receipt of a report from the Authority under section 10(2) or from an inspector under sec tion 15(1), the Minister may, if he considers that a trust company or any of its officers, employees or agents has or have been or is or are carrying on the company's affairs in a manner detrimental to one or more of the company's creditors or members or to the public interest, subject to subsection (2) of this sec tion by notice in writing require the company to take such measures as the Minister considers necessary to be taken in relation to those affairs.

(2) Where any requirement made by the Minister under sub section (1) will, in the opinion of the company of which the requirement has been made, involve modifying any disposition or arrangement made or called for by a trust that the company is administering, then the company need not comply with that requirement unless the Supreme Court has sanctioned the modification; and that Court has jurisdiction to give such sanction, and in the exercise of that jurisdiction to make or give such supplemental or incidental orders or directions as the Court may deem necessary or expedient upon application being made to the Court for the purpose either by the Authority or by the company in question.

(3) Any cost or expense consequential on, or incidental to, a modification by the Court under subsection (2), and the costs of pro ceedings taken on an application made by the Authority or the company under that subsection, shall be borne by the company unless the Court orders otherwise.

Cancellation of licences

20 The Minister may, subject to the provisions of this section and sections 22 and 23, in writing cancel the licence of a trust company—

(a) at the request of the company; or

(b) upon any one or more of the following grounds, namely—

(i) that the company has ceased to carry on trust business;

(ii) that the company has contravened a require ment of, or a condition attached to, its licence, or a requirement made of it by or under this Act;

(iii) that the company is insolvent;

(iv) that the company is carrying on business in a manner detrimental to one or more of the com pany's creditors or members or to the public interest.

Variation of licences

21 The Minister may, subject to the provisions of this section and sections 22 and 23, in writing vary the licence of a trust company—

(a) at the request of the company; or

(b) upon any one or more of the following grounds, namely—

(i) that the company has contravened a require ment of, or a condition attached to, its licence, or a requirement made of the company by or under this Act;

(ii) that the company is insolvent;

(iii) that the company is carrying on business in a manner detrimental to one or more of the com pany's creditors or members or to the public interest.

Preconditions to cancelling or varying a licence

22 (1) The Minister shall, before he cancels a licence under para graph (b) of section 20 or varies a licence under paragraph (b) of sec tion 21—

(a) give the company notice in writing of the ground or grounds on which he intends to do so;

(b) afford the company an opportunity to make objection in writing within the period of thirty days after receipt of the notice; and

and, if the Minister decides to cancel or vary a licence, he shall cause the instrument cancelling or varying the licence to be served on the company.

(2) The Minister shall not cancel or vary a licence without first consulting the Authority about the cancellation or variation.

(3) Before the Minister cancels a licence under paragraph (a) or (b) of section 20, he shall also consider whether there is a case in the public interest for all or any of the trusts that the company has been administering to be transferred, notwithstanding anything to the con trary in any such trust, to a new trustee for administration by him, and, if the Minister so determines, he shall direct the Authority to petition the Supreme Court for that purpose; and in such a case the Court, after hearing representations from the Authority or any other person appear ing to the Court to be affected, has the same power to order a transfer of any such trust, and in that connection to make or give supplemental or incidental orders or directions, as the Court has under section 18(4) in the case of a winding-up under section 18.

(4) Subject to section 23, the cancellation or variation of a company's licence takes effect on the expiration of the period of twenty-one days beginning on the date of service on the company of the in strument cancelling or varying the licence.

Appeals

23 (1) An existing company may appeal to the Supreme Court if the Minister—

(a) in the exercise of his powers under sections 5 and 6 refuses to grant the company a licence; or

(b) in the exercise of his powers under section 7 grants the company a licence subject to conditions.

(2) A trust company may appeal to the Supreme Court against the cancellation of its licence under paragraph (b) of section 20 or against the variation of its licence under paragraph (b) of section 21.

(3) The bringing of an appeal under subsection (2) of this sec tion suspends the cancellation or variation appealed against pending the determination or abandonment of the appeal.

(4) An appeal under this section must be brought—

(a) where it is brought under subsection (1), within twenty-one days of the day provided for in section 30(2);

(b) where it is brought under subsection (2), within twenty-one days of the date on which the instrument cancelling or varying the company's licence was served on the company.

(5) On an appeal under this section, the Supreme Court may confirm, vary or reverse the decision of the Minister and exercise any power that he could have exercised under this Act in the matter under appeal.

Publication of certain information

24 (1) The Minister shall publish information as follows.

(2) He shall publish in the Gazette, in such form and at such times as he thinks fit, notice of the grant, cancellation and variation of licences.

(3) On or before 1st June 1993, and on or before 1st April annually thereafter, he shall publish in the Gazette a list of the trust companies holding licences which are in force on the date of publication.

[section 24 replaced by 1993:13 effective 1 April 1993]

False documents or information

25 (1) Any person who, for any purposes of this Act—

(a) issues a document, or supplies information, which is false or misleading in a material respect; or

(b) signs a document which is false or misleading in a ma terial respect; or

(c) takes part in the preparation or issue of a document, or the supplying of information, which is false in a material respect,

commits an offence against this Act unless he proves—

(aa) if an individual, that he had no knowl edge of the falsity or misleading charac ter of the document or information, and took every reasonable precaution to en sure its accuracy; and

(bb) if not an individual, that every person acting on his behalf had no such knowledge, and took every such rea sonable precaution, as aforesaid.

Offences

26 (1) A person who fails to comply with a duty or prohibition im posed upon him by or under a provision to which this section applies commits an offence against this Act.

(2) The provisions to which this section applies are those of: section 3; section 12(1); section 15(2); section 16(1); and section 19.

Punishment of offences

27 A person who commits an offence against this Act is liable—

(a) on summary conviction, to a fine not exceeding $5,000 or to imprisonment for a period not exceeding twelve months, or to both such fine and imprisonment;

(b) on conviction on indictment, to a fine not exceeding $15,000 or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.

Offences by corporations

28 Where a body corporate is guilty of an offence against this Act and the offence is proved to have been committed with the consent or connivance of, or to be attributable to neglect on the part of, a director, manager, secretary or other similar functionary of the body corporate, or a person who was purporting to act in any such capacity, he, as well as the body corporate, shall be guilty of that offence and liable to be proceeded against and punished accordingly.

Amendment of other laws

29 [omitted]

Commencement, transitional and saving

30 (1) Subject to this section, this Act commences on such day as the Minister may appoint by notice published in the Gazette.

(2) Subject to subsection (3), in relation to existing companies this Act commences on the expiration of one year beginning on com mencement day.

(3) Section 4 does not apply to, or in relation to, a business that was using the word "Trust" or "trust" or "Trustee" or "trustee", or any grammatical variation of any of those words, in its name immedi ately before the day on which this Act was passed.

[This Act was brought into operation on 6 September 1991 by BR 42/1991]

FIRST SCHEDULE (Section 6(2))

MINIMUM CRITERIA FOR A LICENCE

1 The company's objects and powers encompass the carrying on of—

(a) trust business; and

(b) all activities necessary for, or necessarily incidental to, the carrying on of trust business.

2 The company has a paid-up share capital of $250,000.

3 The company has adequate insurance.

4 The company has premises adequate for the company's busi ness.

5 The company has available to it (whether directly employed or available through other arrangements) sufficient personnel with ade quate knowledge, skill and experience necessary for the conduct of the company's business.

6 The company has an approved auditor.

SECOND SCHEDULE (Section 12(2)(a))

TRUST COMPANY CERTIFICATE OF MANAGEMENT

THE TRUST COMPANIES ACT 1991

To: The General Manager

The Bermuda Monetary Authority

As Chief Executive Officer and Director of [name of trust com pany] ("the Company"), we certify, in respect of the financial year ended [date], as follows—

1 This Certificate is given pursuant to section 12 of the Trust Companies Act 1991.

2 The Company complied with every condition and re quirement of its licence.

3 The Company at all times kept property and records relating to the trusts of which it was trustee duly sepa rate from property and records not so relating.

4 The Company at all times had in place procedures for ensuring that all persons involved in the carrying on of its trust business had adequate training and experi ence, and were adequately supervised.

5 The Company caused proper records to be kept for each trust of which it was trustee.

6 The affairs of each trust of which the Company was trustee were conducted lawfully.

Chief Executive _______________
Officer (signature)

___________________________________ _______________
(typed name) (date)

_______________
Director (signature)

________________ _______________
(typed name) (date)

THIRD SCHEDULE (Section 14(4))

APPROVED AUDITOR'S REPORT

THE TRUST COMPANIES ACT 1991

To: The General Manager

The Bermuda Monetary Authority

1 This Report is made pursuant to section 14(4) of the Trust Companies Act 1991 ("the Act") in respect of the [name of trust company] ("the Company").

2 In the course of the audit of the financial statements of the Company for the financial year ended [date] that I conducted pursuant to section 14(1) of the Act, nothing came to my attention that caused me to conclude that any statement in the certificate of management given on behalf of the Company in respect of that year is inaccu rate or unreasonable in any material respect.^*

_______________
(signature)

___________________________________ _______________
(typed name) (date)

Approved Auditor

^*This statement should be modified, and particulars given in a schedule to this Report, as may be necessary.

[Amended by:
1993 : 13
1997 : 34
1998 : 35]

Bermuda Consolidated Legislation

Trust Companies Act 19191