International Law

TRUST COMPANIES IN THE DUTCH CARIBBEAN

By Karel.Frielink

A license is required

In many international group structures, one or more Netherlands Antilles legal entities or companies (offshore companies) are inserted. This is mainly done for tax reasons. Another reason for using a Netherlands Antilles company may be to have a company with a seat in a respected jurisdiction with a well functioning legal and court system. The ?ultimate beneficial owner? of these companies will generally, directly or indirectly, put the board of these Netherlands Antilles legal entities and the administration of these companies in the hands of company service providers a.k.a. trust companies.

Netherlands Antilles company law grants the management boards of companies, NVs (which are public limited liability companies) or BVs (private limited liability companies), the authority to set their own policy. However, the management board may be bound (in fact) to act upon the instruction of another company or person. This is common practice for subsidiary companies within a group structure. There is a factual power of instruction of the (grand) parent company (an unwilling board member may be suspended or dismissed by the general meeting of shareholders). This is also common practice for (offshore) companies whose board member is a trust director.

Supervision of trust companies is dealt with in the National Ordinance on the Supervision of Trust Service Providers 2003 (?Landsverordening toezicht trustwezen?, the ?NOST?). Supervision of trust companies (a.k.a. fiduciary service providers) falls in the category integrity supervision and not in the category prudential supervision. The supervisor is the Central Bank of the Netherlands Antilles. The ordinance prohibits anyone from rendering fiduciary or trust services without a license.

Karel Frielink
Attorney (Lawyer) / Partner

Full post as published by Karel's Legal Blog on February 15, 2008 (boomark / email).