We are dealing with the registration of an offshore company on the ROE.
The offshore company is 100% owned by the Trustees of a Jersey discretionary Trust. The Jersey Trust has a Jersey corporate trustee.
There is no protector.
The corporate trustee is the only entity / individual meeting the beneficial ownership test, ie
holds, directly or indirectly, more than 25% of the shares in the entity
holds, directly or indirectly, more than 25% of the voting rights in the entity
holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the entity
has the right to exercise, or actually exercises, significant influence or control over the entity.
The settlor is dead. The right to appoint new trustees lies with the existing trustees.
The question we have is that there is confusion as to whether there is a requirement to also register the beneficiaries of the trust as registrable beneficial owners on the ROE. The discretionary trust deed names potential beneficiaries and classes of beneficiaries.
Can anyone give any categoric advice on this? Any input greatly appreciated. Many thanks
The Jersey Trust is not itself a legal person despite the fact that the trustee is. But the trustee is a “person” so Conditions 1-4 can be met and are. Therefore the trustee is a “beneficial owner” of the company as defined (though not in common parlance or for trust law) in its own right. It is the only entity that is, so as it seems there are no companies above it in a corporate structure holding shares indirectly in the offshore company which might qualify too if not exempt under paras 8,9 and 18 Sch2 ECTEA.
It will be a “registrable beneficial owner” if it is also (A) not exempt and (B) “subject to its own disclosure requirements”. It is not exempt because it holds shares directly in the company: para 8(2). Unless it just happens to be itself registered, it can only come within (B) by falling within reg 14 of SI 870/2022. It plainly provides “trust services” as defined so the key issue is whether it is regulated in Jersey by a “supervisory authority”. Not defined, in the typical lamentable and cavalier fashion, and I do not know the answer (though the Financial Services (Jersey) Law 1998 indicates that it is). If it is, it must provide the para 5 information about itself and, since this must state that it is a trustee, including under para 4(3) details of each “beneficiary” as if each was a registrable beneficial owner.
We are not afforded the apparent unnecessary luxury of a definition of “beneficiary”. Within a system that can impose fines of £2500 per day and imprisonment this is oppressive. A judge would be very likely to give the term its technical meaning in trust law and to turn first to the trust instrument. This invariably attempts (at least) to define exhaustively who is and who is not a beneficiary, for non-tax and non-regulatory reasons, but usually builds in some flexibility within the bounds of the certainty of objects rule (that a trustee must at least be able to ascertain whether a given person is at any given time a beneficiary). The ECTEA and guidance from BEIS and Companies House is silent on classes and potential beneficiaries.
It is not permissible to read across to the TRS system but interesting these persons are explicitly dealt with in it at reg 6 (1)(d) of SI 692/2017, though corporate beneficiaries are seemingly and strangely omitted and “beneficiaries” in (1)(c) are not defined but would seem to include them generally. Regs 44, 45(8) and (10F) and 45ZA(3)(b) also refer to them. In my view they are “beneficiaries” for ROE if they can be identified at any relevant time as a current member of an eligible class. It is possible then for for trustees to take “reasonable steps” to obtain information from them and a UK-regulated agent to verify it whereas that would be impossible for an unborn or otherwise yet unqualifying member of a class or a person who could be added under a power but has not been yet. There is no justification for searching for them in a normal non-binding letter of wishes (compare reg 44(5)(b) of TRS).
As regards s4(2) non-identifiable potential or future class members or objects of a power are not persons who “have not been identified”; they are simply not “beneficiaries” at all. It follows that updating under s7 will be required if the class has expanded or contracted or a beneficiary added or removed during the updating period. I hope I won’t go to gaol over this.