A UK company is owned by two nominee shareholders (which are two BVI companies) that are managed by an accountancy firm.
These 2 BVI companies have both executed declarations of trust in favour of the client. As such, the client is the 100% beneficial owner of the UK company.
I think that technically speaking the client is not the ‘shareholder’ but they can say that they are the 100 % beneficial owner of the company.
The question is where would probate (if any) be required if the client dies. Country the BVI or country the UK.
The client’s ownership rights are set out in the contract with the BVI companies who are acting as nominee shareholders on the client’s behalf.
Upon the client’s death, it will be the nominee shareholders who need to see evidence of his personal representatives’ title to exercise the client’s rights under the contract. Accordingly, the client’s PRs will need to comply with the BVI requirements (unless both nominees agree to waive them).
Plenty of food for thought here, I’ll need to see what the provisions of the contract are.
In the absence of a particular reference to the PR’s title to exercise the clients rights in the contract is the beneficial interest transferable by way of a Will?
Whilst I appreciate that Will Writers are being asked for the sake of expense to draft English law wills concerning overseas assets, has the client actually given any thought to the issue of how the English will will be treated in the BVI jurisdiction?
Ther will be no probate over there as the registered ownership of the shares will not change, and will only change if the nominees were to change.
It is more usual, if not customary, for a separate offshore will to be drafted and signed over such offshore assets by a lawyer competent in the jurisdiction concerned, with of course IHT being paid by the English estate, so as to permit a quick and seamless “beneficial” administration there.
Whilst some consider this to be excessive, in most cases it is actually the most efficient way of proceeding, as most BVI lawyers and trust companies, as elsewhere, see this as mere administration, and are very good at it.
What is more they will be more than up to date with the rules as to beneficial ownership disclosures which may crop up in the very near future.
Is it a good idea to charge a client for a learning curve in a foreign jurisdiction with which you appear to be unfamiliar, and in which you may not be able to guarantee a seamless execution?
As Peter Harris has identified, the death of the client will not change the legal ownership of the shares – that will continue in the names of the nominees.
The essential question is what authority the nominees will require to either accept instructions other than from the (then deceased) client, or to account for their dealings with the shares (and any dividends or other distributions arising from them).
Under English Law, the contract with the nominees will normally terminate upon the client’s death. If BVI Law is the same then, until someone presents a BVI grant, or other authority acceptable to the nominees, any dealings with the underlying shares (or the fruit of them) will be frozen.
Even if a will directs that the nominees can accept instructions from a third party, until that will is probated in the BVI, or “proved” to the nominees in a manner acceptable to them, dealings will remain frozen.
It is possible for the client to gift the beneficial interest by will and this could be by way if a gift, perhaps in the form of “my shares in ? which, for the purpose of identification only, are currently held by X and Y as nominees for me”. Until the rights to the shares are assented to the beneficiary(s), the executors may be able to exercise the rights although, before doing so, could be required by the nominees’ regulators to enter into fresh agreements with the nominees.
Whilst Paul Saunders’s 2nd e-mail is correct, surely it will be much better to ask the accountancy firm in the BVI (I am assuming the accountancy firm is based in the BVI) as to what requirements they will need to transfer the shares held by the nominees to the Executors or the deceased’s beneficiaries (or there may be new Delegations of Trust). Once those requirements have been made known, then the proper planning can be put into place instead of as at the moment a lot of theoretical chit chat getting nowhere fast, and not really dealing with your problem.
I agree that a BVI grant would be required to prove title to the nominees in the BVI but there must also be an argument that as the beneficial interest in the shares is a property right in English property, the executors could prove their interest with an English grant.
Absent some form of jurisdiction clause in the declaration of trust, I would expect that the executors could make a claim in the English courts for legal title to the shares to be transferred to them and an English grant of probate would be sufficient evidence of their standing. I’m not suggesting that they actually threaten or bring a claim but that must be a pretty persuasive argument when discussing arrangements with the nominees.
I note Andrew Goodman’s suggestion and wonder, if his firm held , say, Jersey shares as nominee for a Jersey client, it might routinely accept a Jersey grant to release them after the client’s death?
My experience is that a Jersey nominee would require a Jersey grant to release UK shares held as nominee for a UK client, as would a Manx nominee.
Peter Double has suggested “let’s ask the nominees what they will need”, which I had also alluded to in my second posting, however, I am not sure it is as sound as one might wish unless the client’s death is imminent. If the nominees will accept a “simplified procedure”, this is not necessarily binding upon them for any length of time. All that needs to happen is for the firms to tighten up on their risk management, or for local law or regulations to change, and the adoption of any “simplified procedure” may be seen as a “red flag” raising suspicions of money laundering, or some other nefarious activity.
OK, this may sound extreme but, a few years ago, some of the issues embedded in our daily life were thought to be beyond the pale.