Cayman Islands – Private Trust Companies

11 September 2024

A Private Trust Company (PTC) is an entity that is established with the sole purpose of acting as a corporate trustee to a trust or a number of trusts, provided those trusts are "connected". The term "Connected trust business" means trust business where the settlors of funds to the trusts are all "connected persons" in relation to each other. PTCs afford high net worth individuals a greater control over their assets and have become extremely attractive for families seeking to manage their wealth effectively.

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The regulatory basis for the operation of trust companies in the Cayman Islands is found in the Banks and Trust Companies Act (2021 Revision) as amended (BTCA) and the Private Trust Companies Regulations (2020 Revision) as amended (PTCR). These regulations provide for the establishment of PTCs which do not require a licence to carry on connected trust business.

PTCs - requirements

The PTC is founded under the provisions of the PTCR. The main requirements for the PTC include:

i)    It must maintain a registered office at the office of a company that holds an unrestricted Trust licence granted by the Cayman Islands Monetary Authority (CIMA) provided for under the BTCA;

ii)    It must allow CIMA, at any given time, to inspect all its documents and records or that should be held at the registered office;

iii)    It must keep at its registered office and make available for inspection at its registered office, in relation to each relevant trust, adequate, accurate and up to date copies of the trust deed or other documents containing or recording the terms of the trust, names and addresses of the settlor, protector, enforcer, contributor to the trust, any beneficiary to whom a distribution is made from the trust, any deed or other document varying the terms of the trust and all financial transactional records of the PTC and its connected trust business;

iv)    It must file an annual declaration with CIMA every year declaring the name of the PTC, the name and addresses of the directors, shareholders (if any), the name of the holder of the Trust licence providing the registered office of the PTC, that the Company is a PTC which does not require a licence to carry on connected trust business and that the PTC is in compliance with the requirements of the PTCR;

v)    It must file with CIMA, the identification of the directors and shareholders of the PTC;

vi)    The PTCR prescribes that a natural person must be appointed as a director for the PTC;

vii)    The PTC must include the word “Private Trust Company” or the letters “PTC” in the name by which the company is registered under the Cayman Islands’ Companies Act;

viii)    It must not solicit or receive contributions in respect of trusts of which it is trustee from the public or persons other than those who are, in relation to each other, connected persons.

Private Trust Companies (PTCs) vs. Restricted Trust Licence Companies (RTLCs)

i.    Fees
The initial registration fee for a PTC is US$4,268.29 (CI$3500) and thereafter an annual registration fee of the same amount is applied to be paid before the 31st day of January every year. The application fee for an RTLC is US$2,439.02 (CI$2000) and the fee paid on the grant of a licence and subsequently every year is US$8,536.59 (CI$7,000).

ii.    Net worth Requirements
The PTCR does not prescribe a minimum net worth requirement for the PTC. The RTLC, on the other hand, is required to have a minimum net worth of US$25,000 (CI$20,000).

iii.    Audit
There is no requirement for the PTC to file audited accounts with CIMA. The RTLC is under an obligation to file its audited accounts annually with CIMA by an auditor approved by CIMA.

iv.    Directors
A PTC is required to have a natural person appointed as director, but the PTCR is silent on the minimum number of directors. CIMA however recommends a minimum of two individual directors. It is a mandatory requirement for an RTLC to have at least two natural persons appointed as directors on its Board. There is no requirement for the directors to be approved by CIMA.

v.    Timing
A PTC can be up and running within three to four business days from the day the application for registration has been submitted to CIMA. The turnaround for processing an application for an RTLC is six to eight weeks from the date the application was submitted to CIMA.
PTCs have gained more popularity in the Cayman Islands as CIMA has noted a steady increase in the number of PTCs seeking to be registered over the past eight (8) years based on the table below which has been published on the CIMA website.

Shareholders of a PTC

The shares of a PTC are commonly held by one or more individuals, or by a company limited by guarantee or in a STAR Trust. It is advisable to use a corporate entity as opposed to an individual because in the event of death, the devolution of shares may take a long time owing to the probate process.

Benefits of using PTCS

PTCs are regularly used by high net worth families in their wealth structuring for a number of reasons:

1.    they protect confidentiality and are lightly regulated when compared to using a large and highly regulated international financial institutions as trustee;

2.    they provide a comprehensive framework under which family members and advisors can be involved in decision making (by being on the board of Directors of the PTC) which gives room for flexibility as families can tailor the PTC based on their personal needs and objectives;

3.    they can avoid the complications of succession when used in conjunction with a STAR Trust (i.e. a STAR Trust can be used to hold all the shares of the PTC).

4.    The speed at which a PTC can be established (i.e. 3-4 days), and the relatively low cost of operation have made PTCs extremely attractive to HNW families and their advisors.

Further Assistance

This publication is not intended to be a substitute for specific legal advice or a legal opinion. If you require further advice relating to the formation of a Cayman Islands Private Trust Companies, establishing family offices or protecting private wealth generally, please contact us.  We would be delighted to assist.

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