Brunei: Types of Company
Brunei has very comprehensive international trust legislation, which will appeal both to private clients as well as major corporations. For the private clients, provision is made for asset protection trust as well as special trust regimes. Under this regime, it is not the beneficiary who enforces a trust but an independent Enforcer. This addresses certain tax and security issues.
For the major corporations, commercial purpose trusts may be created whereby it is not necessary to have an individual beneficiary. Such trusts are widely used for special purpose vehicles (SPV) and planning, varying from project finance to securitization and segregation. The legislation also provides a more modern definition of inquired charities. This enables charitable trusts to be established to protect the environment and historic buildings, for example.
Under the International Trust Order, 2000 ('ITO'), an IT must be in writing, settled by a non-resident of Brunei, declared in its terms to be an international trusts (on creation or migration to Brunei), and at least one trustee must be a licensed under RATLO or an authorised wholly-owned subsidiary of a licensee. Generally, only non-residents may be beneficiaries when an IT is first established. Purpose and Special trusts are provided for, whether charitable or non-charitable.
At least one trustee must be licensed under The Registered Agents and Trustees Licensing Order, 2000 (RATLO) or an authorised wholly-owned subsidiary of a licensee. Generally, only non-residents may be beneficiaries when an IT is first established. The retention of certain powers (specified in the ITO) by the settlor will not invalidate an IT. Such powers are not, however, deemed to exist in the absence of specific provision in the Trust instrument.
There are wide powers of investment, with an ability for trustees to seek "proper advice" as defined. Having done so, a trustee will not be liable for acts taken pursuant to such advice.
There are powers to appoint agents and to delegate. Trustees may charge, and similar provisions appear for enforcers and protectors. Powers of maintenance and advancement are wide, spendthrift and protective trusts are recognized.
Arrangements for appointment or change of trustees follow generally accepted lines. The Court is given wide powers to interpret, assist and amend. Hearings may be held in camera. Trustees may pay funds into Court for determination of matters arising in the course of administering the fund, and there is power to apply to the Court for an opinion, advice or a direction relating to trust assets.
Purpose Trusts are provided for, whether charitable or non-charitable. Without prejudice to the generality, a trust for the purpose of holding securities or other assets is by statute deemed a purpose trust. The purposes must be reasonable, practicable, not immoral nor contrary to public policy. The trust instrument must state that the trust is to be an authorized purpose trust at creation or on migration to Brunei. Provision must be made for the disposal of surplus assets (although no perpetuity period applies), and an enforcer is required. On completion or impossibility of achieving purposes, further trusts may be activated.