PURPOSE TRUSTS ACT, 2004 |
Arrangement of Clauses |
Short title and commencement. |
|
Authorized purpose trusts. |
Allocations among purpose. |
|
|
|
|
|
General law regarding trusts to
apply. |
Saving for ordinary trusts. |
|
No. 17 of 2004 |
AN ACT TO PROVIDE FOR THE CREATION
OF |
PURPOSE TRUSTS ; |
AND FOR CONNECTED PURPOSES |
[Date of Assent — 17th August,
2004] |
Enacted by The Parliament of The
Bahamas. |
1.(1) This Act may be cited as the
Purpose Trusts Act, 2004. | Short title and commencement. |
(2) This Act shall come into
operation on such day as the Minister may, by notice published in the Gazette,
appoint. | Interpretation. |
|
“authorised applicant” means a person who is for
the time being an authorised applicant for the purposes of section 6; |
“authorised purpose trust”, “authorised purpose”
and “authorised purposes” have the meanings assigned by subsection (2) of
section 3; |
“charitable purpose” means an exclusively
charitable purpose and “non-charitable purpose” means a purpose that is not
charitable or is not exclusively charitable; |
“Court” means the Supreme Court or a Judge
thereof; “Minister” means the Minister responsible for the administration
of this Act; |
“ordinary trust” means a trust that is not an
authorised purpose trust; |
“property” means property of any kind, real or
personal, movable or immovable, and includes any thing in action and any
interest (including an undivided share) in any kind of property; |
“trust instrument” means the written testamentary
or other instrument by or on the terms of which a trust is settled or declared. |
(2) For the purposes of this Act,
“trust instrument” includes such an instrument executed before or after the
commencement of this Act which has been amended pursuant to the provisions of
the instrument after the commencement of this Act. |
3.(1) A trust may be declared by
trust instrument for a non-charitable purpose, including, exclusively or
otherwise, the purpose of holding, or investing in shares in a company or any
other assets constituting the trust property if - | Authorised purpose trusts. |
(a) the purpose is possible and
sufficiently certain to allow the trust to be carried out; |
(b) the purpose is not contrary to
public policy or unlawful under the laws of The Bahamas; |
(c) the trust instrument specifies
the event upon the happening of which the trust terminates and provides for the
disposition of surplus assets of the trust upon its termination. |
(2) In this Act, a trust
satisfying the conditions in subsection (1) is referred to as “an authorised
purpose trust”, the purpose of an authorised purpose trust is referred to as
“an authorised purpose” and “authorised purposes” is to be construed
accordingly. |
(3) The trust instrument may
create - |
(a) an authorised purpose trust of
capital or income of any property; or |
(b) discretionary trusts of, or
discretionary dispositive powers over, capital or income of any property, |
requiring or permitting it to be disposed of
for different authorised purposes, or among one or more authorised purposes and
one or more individuals, corporations and charitable purposes, however
identified, described or ascertained. |
(4) The rule against perpetuities
(also known as the rule against remoteness of vesting) shall not apply to an
authorised purpose trust. |
(5) A trust may not be regarded as
a charitable trust, or an ordinary trust if it complies with this Act and is
specified in the trust instrument to be an authorised purpose trust. |
(6) No land nor any interest in
land in The Bahamas shall be subject, directly or indirectly, to an authorised
purpose trust, but an authorised purpose trust may lease office premises for
the purposes of its business. |
(7) Nothing in this Act affects
the creation, termination or validity of any trust created under any other law,
but save as aforesaid, purpose trusts which do not comply with this Act are
invalid. |
4.(1) If the trust instrument of an
authorised purpose trust has more than one purpose, and if and so far as a
contrary intention not expressed in the trust instrument, and subject to the
terms of that instrument, the trustees of an authorised purpose trust shall
have power in their absolute discretion - | Allocation among purpose. |
(a) to allocate capital and income
among the different purposes of the trust; and |
(b) to devise and determine the
methods to be used to pursue the purposes of the trust. |
(2) If the trust instrument of an
authorised purpose trust has more than one purpose and if the trust instrument
does not allocate capital or income among the different purposes of the trust
and the trustees do not do so, the Court may make such allocations as in its
opinion best fulfill the intent of the trust instrument. |
5.(1) Subject to subsection (3), an
authorised purpose trust is not rendered void by uncertainty as to the
administration of trust. | Uncertainty. |
(2) The trust instrument of an
authorised purpose trust may empower the trustee or any other person to resolve
an uncertainty as to the administration of the trust. |
(3) If an uncertainty as to the
administration of an authorised purpose trust arises and either the trust
instrument does not empower the trustee or any other person to resolve it, or
the trust instrument does, but the trustee or other person (as the case may be)
fails to resolve it, the Court may - |
(a) resolve the uncertainty by
reforming the trust, by settling a plan for its administration or in any other
way which the Court deems appropriate, in each case which, in its opinion, best
fulfill the intent of the trust instrument in relation to that purpose, as can
be ascertained from admissible evidence; or |
(b) if and to the extent the intent of
the trust instrument in relation to that purpose cannot be found from
admissible evidence, declare the trust void for that purpose. |
6.(1) The authorised applicants
specified in subsection (2) shall have in relation to an authorised purpose
trust - | Authorised applicants. |
(a) standing to make application by
originating summons to the Court under subsection (2) of section 4, subsection
(3) of section 5 and subsection (2) of section 8; |
(b) the same rights as beneficiaries
of an ordinary trust to bring and prosecute for the benefit of the trust - |
(i) administration proceedings, |
(ii) proceedings for breach of
trust, |
(iii) proceedings for the recovery of trust
property, and |
(iv) other proceedings, against the
trustees and other persons; |
(c) the right in any proceedings
under this section to such accounts and inquiries and such other personal and
proprietary remedies and relief, in each case for the benefit of the trust, as
could be obtained by a beneficiary of an ordinary trust; |
(d) standing to make any application
to the Court for an opinion, advice or direction or otherwise in connection
with the trust; |
(e) in connection with any
application or proceedings authorised by this section, the same rights as a
trustee of an ordinary trust to protection and indemnity and to make application
to the Court for relief from personal liability; |
(f) in addition to any documents,
information or other rights specifically provided for in the trust instrument,
the right, whether or not any litigation is contemplated or in progress, to
inspect and make copies of - |
(i) the instruments, registers and
documents of the trust kept by the trustees pursuant to subsection (2) of
section 7; |
(ii) all other records and documents
of the trust; and |
(iii) opinions and legal advice of counsel
and attorneys received by the trustees in the general administration of the
trust, save those opinions or advice received by the trustee in his personal
capacity in contemplation of a lawsuit; |
(g) all such other rights except
those, if any, that may be expressly excluded by the settlor in the trust
instrument in respect of a named beneficiary, to information and access to
documents as the authorised applicant would have under section 83 of the
Trustee Act, if the authorised applicant were a beneficiary with a vested
interest under the trust; and | Ch. 176. |
(h) an indemnity against all costs and
expenses properly incurred as an authorised applicant, but the authorised
applicant is under no duty to enforce the trust either before or after
appointment. |
(2) Subject to subsection (3), the
following are authorised applicants in relation to an authorised purpose trust
for the purpose of subsection (1) - |
(a) any person appointed by or under
the trust instrument of the trust or under paragraph (b) of subsection (4) to
be an authorised applicant for the purposes of this section; |
(b) the settlor of the trust, unless
the trust instrument provides otherwise; |
(c) any other person whom the Court
declares (on an application being made for such a declaration) to have a pecuniary
or non-pecuniary interest in advancing the purpose or purposes of the trust
such as to make it appropriate in the opinion of the Court for that person to
make applications and take proceedings under subsection (1) regarding the
trust. |
(3) A trustee of an authorised
purpose trust and any person or class of persons specified in the trust
instrument to be prohibited from acting as an authorised applicant shall not be
eligible to be declared an authorised applicant of that authorised purpose
trust under paragraph (c) of subsection (2) or appointed an authorised person
of that authorised purpose trust under paragraph (b) of subsection (4). |
(4) If the Attorney-General
certifies in writing that an application or proceedings under subsection (1) is
requisite in respect of an authorised purpose trust and that the
Attorney-General is not aware of any person within subsection (2) who is able
and willing to pursue such an application or proceedings then the
Attorney-General - |
(a) shall be empowered to make an application
or take proceedings for the purposes of subsection (1); and |
(b) may also apply to the Court for
the appointment of an authorised applicant in relation to the trust and the
Court may by order appoint a person who is able and willing to act as an
authorised applicant for the purposes of this section in relation to the trust
and authorise such newly authorised applicant to charge such remuneration
payable from the trust property or its income as the Court may think fit. |
(5) If the Court is satisfied that
there is no such person as is specified under subsection (2) who is able and
willing to make an application under that section and it is impossible or
impracticable to appoint a new authorised applicant, who is willing and able to
do so, then the Court shall declare that the trust has terminated and dispose
of the surplus assets, if any, as it deems fit unless provided otherwise in the
trust instrument. An application for such a declaration may be made by the
Attorney General or a trustee of the authorised purpose trust or an authorised
applicant of the authorised purpose trust. |
(6) The Court may make such orders
as it considers just for the payment out of the capital or income of the trust
property of all or any costs (including but not limited to fees, charges,
disbursements and remuneration) of or incidental to any application or
proceedings authorised by this section that may be paid or incurred by - |
|
|
(c) any authorised applicant;
or |
(d) any applicant for a declaration
under paragraph (c) of subsection (2). |
7.(1) A trustee that administers an
authorised purpose trust for profit or reward shall be- | Trustees. |
(a) a bank or trust company licensed
under the Banks and Trust Companies Regulation Act; | Ch. 316. |
(b) a counsel and attorney admitted to
practise under the Legal Profession Act; | Ch. 64. |
(c) an accountant registered and
licensed under the Public Accountants Act; or | Ch. 364. |
(d) such other person as the Minister
may by order designate. |
(2) The trustees that administer
an authorised purpose trust shall keep in The Bahamas- |
(a) a copy of the trust instrument
which created or evidenced each authorised purpose trust of which he is a
trustee, copies of amending and supplemental instruments and all other written
instruments executed pursuant to any of them; |
(b) a register of each such trust
specifying in respect of each trust, the name of the person who created the
trust, a summary of the purpose or purposes of the trust and the name and
address of any authorised applicants named as such in the trust
instrument; and |
(c) such documents as are sufficient
to show the true financial position of each such trust at the end of the
trust's financial year together with details of all applications of principal
and income during that financial year. |
(3) A trustee that administers an
authorised purpose trust shall permit the Attorney General in the exercise of
his powers under subsection (4) or (5) of section 6 of this Act to make copies
of the instruments, registers and documents referred to in subsection (2). |
(4) Subsections (2) and (3) do not
create an obligation to make the instruments, registers and documents referred
to in subsection (2) available for public inspection. |
(5) A person who, in The Bahamas
or elsewhere, knowingly administers an authorised purpose trust while there is
a breach of subsection (1) (apart from actions intended to bring the trust in
compliance with subsection (1) as soon as possible and actions intended to preserve
the trust property pending compliance with subsection (1)) is guilty of an
offence and is liable on summary conviction to a fine not exceeding $5,000. |
|
(a) fails to comply with any of the
provisions of subsection (2), he is guilty of an offence and is liable on
summary conviction to a fine not exceeding $5,000; |
(b) makes or authorizes the making of
an untrue statement in an instrument, register or document referred to in
subsection (2), he is guilty of an offence and is liable on summary conviction
to a fine not exceeding $5,000; |
(c) refuses to permit a person
mentioned in subsection (3) to inspect and take copies of an instrument,
register or document referred to in subsection (2), the trustee is guilty of an
offence and is liable on summary conviction to a fine not. exceeding $5,000 and
to a further fine of $100.00 for every day on which the refusal continues. |
(7) In proceedings against a
trustee for an offence under paragraphs (a) and (b) of subsection (6) it shall be
a defence for him to satisfy the Court that he took all reasonable steps and
exercised all due diligence to avoid committing the offence. A person shall not
be entitled to rely on this defence by reason of his reliance on information
given by another person unless he shows that it was reasonable in all the
circumstances for him to have relied on the information, having regard in
particular to the steps which he took and which might reasonably have been
taken, for the purpose of verifying the information, and to whether he had any
reason to disbelieve the information. |
(8) Where an offence under
subsections (5) and (6) committed by a body corporate is proved to have been
committed with the consent and connivance of, or to be attributable to willful
default or gross negligence on the part of, a director, manager, secretary or
other similar officer of the body corporate or a person purporting to act in
such a capacity, he, as well as t= |
(9) The body corporate, is guilty of
the offence and liable to be prosecuted and punished accordingly. Where the
affairs of the body corporate are managed by its members, this subsection will
also apply in relation to the acts and default of a member in connection with
his functions of management as if he were a director of the body corporate. |
(9) The trustees that administer
an authorised purpose trust shall have in relation to that trust - |
(a) standing to make application by
originating summons to the Court under subsection (2) of section 4, subsection
(3) of section 5, subsection (5) of section 6 and subsection (2) of section
8; |
(b) standing to make any application
to the Court for an opinion, advice or direction or otherwise in connection
with the trust; and |
(c) in connection with any
application authorised by this section, the same rights as a trustee of an
ordinary trust to protection and indemnity and to make application to the Court
for relief from personal liability. |
8.(1) The trust instrument of an
authorised purpose trust may empower the trustees or any other person to reform
the trust in the event that it becomes in whole or in part - | Reformation cy-pres. |
(a) impossible or
impracticable; |
(b) unlawful or contrary to public
policy; or |
(c) obsolete in that, by reason of
changed circumstances it fails to achieve the general intent of the trust. |
(2) If the execution of an
authorised purpose trust in accordance with its terms is or becomes (otherwise
than by the fulfillment of any purpose) in whole or in part - |
(a) impossible or
impracticable; |
(b) unlawful or contrary to public
policy; or |
(c) obsolete in that, by reason of
changed circumstances it fails to achieve the general intent of the trust, |
the trustees of the trust shall, and any
authorised applicant may, unless the trust is reformed pursuant to its own
terms ; apply to the Court to reform the trust cy-pres. |
(3) On such an application the
Court may reform the trust in accordance with the general intent of its trust
instrument or insofar as the Court finds that the trust cannot be so reformed
then the Court shall declare that the trust has terminated and dispose of the
surplus assets, if any, as it deems fit unless provided otherwise in the trust
instrument. |
9. Upon the Court declaring
under subsection (5) of section 6 or subsection (3) of section 8 that an
authorised purpose trust has terminated - | Termination. |
(a) if the trust instrument provides
for further trusts to take effect subject to, or on the termination of, the
authorised purpose trust then such further trusts shall take effect
accordingly; or |
(b) otherwise the trust property and
its income shall be dealt with in accordance with the provisions of the trust
instrument regarding surplus assets. |
10. Save as otherwise provided by
this Act, the law relating to authorised purpose trusts is the same in every
respect as the law relating to ordinary trusts from time to time and for this
purpose the law relating to ordinary trusts includes (without limitation) the
Trustee Act. | General law regarding trusts to
apply. Ch. 176. |
11. Nothing in this Act shall
prejudice (whether directly or by implication) the validity of any ordinary
trust. | Saving for ordinary trusts. |