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Walkers is a leading international law firm. We advise on the laws of Bermuda*, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey.
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Admissions April2019

Walkers Announces Admissions of 50th and 51st Caymanian Attorneys-at-Law

We are pleased to announce that Articled Clerks Gemma Cowan and Sophie Dibb have completed their legal training, both being called to the Cayman Islands Bar. 

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Mistake in Jersey trust law - sometimes ignorance is bliss

In giving its reasons for setting aside transfers into a Jersey trust on grounds of mistake, the Royal Court of Jersey has provided a helpful distinction between the law of mistake as it is applies in Jersey as against its English law counterpart such that it is now expressly clear that in Jersey, relief can be granted for a mistake made out of mere “causative ignorance”. The Court also confirmed that it has a real discretion when deciding whether or not it is just to make a declaration that a transaction be set aside on grounds of mistake.

Background to the Application
In the Matter of the G Trust [2019] JRC 056 concerned a Jersey law discretionary trust which had been established by the Representors for the benefit of themselves, their three adult children and their four grandchildren with provision for future issue. Over the years, various transfers were made into trust; however, between November 2008 and January 2014 the Representors made four transfers to two BVI companies solely owned by the trustee, from two different UK bank accounts (maintained by a banking arm of the trustee entity) which was held in the Representors’ joint names (the Transfers). The evidence before the Court was that the Representors did not contemplate that the Transfers would expose them to a UK tax liability; neither of the Representors were British citizens, nor were they resident, ordinarily resident or domiciled in the UK. Further, neither the Trustee nor the bank had given them any warning as to the potential tax consequences of the Transfers. Indeed, the evidence was clear that had the Representors been aware of the tax exposure, expert advice would have been sought and the Transfers structured so that monies came from non-UK accounts. Accordingly, the Representors applied to the Royal Court, seeking orders that the Transfers were made by mistake and should be set aside. HMRC was notified of the application and the Attorney General was convened; however, neither participated.

 

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Beneficial Ownership of Corporates - Establishment of Central Register

Executive Summary
The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (S.I. 110 of 2019) (the “2019 Regulations”) have substantially come into force as of 22 March 2019. Part 3 of the 2019 Regulations (“Part 3”), which relates to the establishment and operation of a central register of beneficial ownership of corporate entities (the “Central Register”), will enter into force on 22 June 2019.

An Irish incorporated company or other legal entity (a “Relevant Entity”), incorporated prior to the entry into force of Part 3, will be required to submit relevant information to the Central Register within five months of the introduction of the 2019 Regulations (i.e. by 22 November 2019). A Relevant Entity incorporated after 22 June 2019 shall commence providing information to the Central Register within five months of its incorporation.

The 2019 Regulations transpose the provisions of the Fourth Anti-Money Laundering Directive (the “4MLD”) (as amended by the Fifth Anti- Money Laundering Directive (the “5MLD”)) and repeal the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (the “2016 Regulations”).

The introduction of the 2019 Regulations, which expand on the legal framework introduced by the 2016 Regulations (see our previous briefings relating to the 2016 Regulations here and here), are part of a suite of EU and global initiatives that have been introduced in order to improve corporate transparency.

In addition to the 2019 Regulations, regulations imposing a requirement on trusts to maintain a register of beneficial ownership have recently come into force in Ireland, as part of the transposition of 4MLD. A central register of beneficial ownership of trusts, once introduced, will be maintained by the Revenue Commissioners (for further detail please see our separate briefing). Our understanding is that separate regulations will be published providing for the establishment of a register of beneficial ownership of ICAVs, which will be maintained by the Central Bank of Ireland.

 

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A solution to an unusual predicament

The Company had attempted to continue out of the BVI as a company incorporated under the laws of Cyprus. However, the procedures required by the laws of Cyprus to secure its incorporation there were not completed with the consequence that the Company was not incorporated in Cyprus. In the meantime, as she was entitled to do, the BVI Registrar of Corporate Affairs, relying on a Temporary Certificate of Continuation issued by the Cyprus Registrar, issued a certificate of discontinuance in the BVI and struck the name of the Company from the BVI Register of Companies. In the result, at the time of the application to the Court, the Company was not incorporated or treated as incorporated anywhere.

The BVI Commercial Court (Mr Justice Michael Green QC (Ag.)) held that the scheme of the Business Companies Act ("the Act") was to require three conditions to be satisfied before a company discontinuing under the Act ceased to be a company incorporated in the BVI. The first of these conditions is that the laws of the jurisdiction outside the Virgin Islands permit the continuation and the company has complied with those laws. He also held that the opening words of s.184 of the Act which contains those conditions imply a fourth condition: that the company is actually continuing in another jurisdiction. The Judge found that the conditions in subparagraphs (a) to (c) of s. 184(2) are cumulative and that they must all be satisfied, together with the preliminary condition, before a company will cease to be incorporated under the Act. In the circumstances, therefore, the Judge found that Company had not ceased to be incorporated in the BVI.

The Judge went on to consider whether the Act provided a mechanism whereby a company struck off in the course of a discontinuance might be restored to the Register of Companies. He was persuaded that section 217 does give power to the Court and to the Registrar to restore a company in such a case and, accordingly, made an Order rescinding and declaring void the Company's discontinuance and restoring the Company to the Register.

Walkers (Rosalind Nicholson (Partner) and Rhonda Brown (Associate)) appeared for the successful Applicants

Click to view judgment - Nikolay Artemenko v The Registrar of Corporate Affairs BVIHC (COM) 0213/2018, Judgment 20 March 2019

Saunders v Vautier in the Channel Islands - Guidance from Guernsey

Can the beneficiaries of a discretionary trust require the trustees to terminate the trust and distribute the trust property, in circumstances where a power to add further beneficiaries exists? In Rusnano Capital AG (in liquidation) v Molard International (PTC) Limited and Pullborough International Corp [2019] GRC 011 (the “Judgment”) the Guernsey Royal Court has held that in Guernsey they can. In doing so, the court also provided a welcome clarification of the relationship between section 53 of the Trusts (Guernsey) Law, 2007 (the “Trusts Law”) and the so-called ‘rule’ in Saunders v Vautier.

 

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Ireland - Cross-Border Distribution of Collective Investment Schemes

On 12 March, 2018 the European Commission presented its original proposals for a Directive and accompanying Regulation on the crossborder distribution of collective investment schemes with the objective of addressing regulatory barriers which it had identified as a significant disincentive to EU cross-border distribution.

Following a period of negotiation and technical finalisation between the European Commission, the European Parliament and the Council of the EU, the Council on 22 February, 2019 published an “I” item note setting out the final compromise texts of the:

  • Proposed Directive amending the UCITS Directive and AIFMD with regard to the cross-border distribution of collective investment funds (the “Directive”); and
  • Proposed Regulation on facilitating cross-border distribution of collective investment funds (the “Regulation”).
The Directive and Regulation aim to ‘coordinate the conditions for fund managers operating in the internal market and facilitate cross-border distribution of the funds they manage’ by filling in the regulatory gaps, aligning the notification procedure to the competent authorities, authorising ESMA to develop new technical standards, improving the transparency of national requirements and ensuring national authorities can control AIFM’s pre-marketing arrangements, while all the while safeguarding investor protection.

 

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