Purpose Trusts Bill 2015 Ministers speech

Purpose Trusts Bill 2015 Minister for Financial Services and Gaming (Hon. A J Isola): Mr Speaker, I have the honour to move that the Purpose Trusts Bill 2015 be read a second time.

Mr Speaker, ordinarily a trust will contain identified or identifiable beneficiaries and the duties imposed upon trustees are owed to those beneficiaries. Charitable trusts established for one or more charitable purposes are a long held exception to this principle. With regard to non-charitable purposes however, the law has been slow to recognise that trusts have a role to play.

A number of finance centres therefore have taken steps in their legislation permitting the creation and enforcement of trusts, whereby the trustees hold property on trust to carry out specific purposes which do not qualify as charitable and this type of trust is usually referred to simply as a purpose trust. The Bill before Parliament will add Gibraltar to that list of jurisdictions, which includes Jersey, Guernsey and the Cayman Islands.

Mr Speaker, there are a number of purposes for which a purpose trust can be useful, which include to fill the charity gap. That is to say, to label purposes which cannot strictly be said to be charitable, but which equally do not require beneficiaries –for example, a request that a trust fund be used for the promotion of peaceful relations between nations.

To maintain control over family assets, such as when there is an aim to benefit family, but also to ensure the continuance of a business. A purpose trust might make certain that the benefit of the business is retained without interference from the beneficiaries and the beneficiaries could still receive dividends from the business without right to interfere.

Mr Speaker, you will see that the Bill has been carefully designed so as to ensure that, among other things, a purpose trust established in Gibraltar has purposes that are capable of being carried out and are sufficiently certain to be capable of being carried out. We have also made certain that at least one trustee of a purpose trust must be a licensed trustee.

This Bill also sets out particular powers that a trustee will need in the context of a purpose trust, such as, for example the discretion to formulate the means by which to give effect to the purpose of the trust.

Finally, the Bill also provides applications to Court by the trustees and other authorised parties, disapplies the rule against perpetuities in common with other jurisdictions that have adopted purpose trust legislation and also creates various offences for breaching various provisions of the Act. Mr Speaker, this Bill is another example of how Government is ensuring the continued growth and success, not just of the trust industry and the financial services industry. As with the Trusts’ firewall legislation and the Private Trust Companies legislation, I want to record my gratitude to the Private Sector Committee and those personally involved in the drafting this legislation for their work in bringing this to the House.