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Grounds Keeper Willy

Public beneficial ownership register to be introduced

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You will have real answers to real questions.  I still do not understand your point. 

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Posted (edited)

Trust (A) owns company (B).

Trust (A) has as its ultimate beneficial owner, person (C) who is a 3 yr old orphan.

Settlor (D) is deceased but left Trust (A) in the hands of corporate trustees (E) and (F).

Who owns company (B)? 

Is your basis for saying (C) is not the owner, based on the idea that corporate trustees (E) and (F) are somehow, theoretically or technically, not legally obligated to give benefit to (C)?

From what I'm getting from your responses, you are saying the ownership is simply with (E) and (F)?

Edited by Rushen Spy

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1 hour ago, Rushen Spy said:

Yes, the actual owner is the legal owner, which is not the CSP administrator or intermediary but the real ultimate beneficial owner. It seems like some of you are already preparing to fill out the "beneficial ownership register" in a way that precludes declaration of the REAL owners. I mean, good for you, but don't expect me to go along with it.

 

59 minutes ago, Gladys said:

In your first sentence you have displayed the lack of understanding.  The legal owner is the trustee, that is a fact. Who is the REAL owner? In your example, the 3 year old, or in mine, the old lady?

The register is completed  in accordance with the rules where in law, there is no bo, that is my point. 

This shouts obfuscation. Plainly, Rushen is saying quite correctly that, on the face of it, the legal set up of the discretionary trust and the definition of beneficial ownership, whether by accident or design, conceals the ultimate intended destination of the asset. The fact that the trustee is the legal owner for the time being is in reality neither here nor there; a mere fig leaf. The trustee does not have the "benefit" of the asset to himself in any tangible definition of the word. He can't go out and buy himself a Learjet with the booty, ergo, it must belong to somebody/somebodies as set out in the trust. Listing the name of the trustee means nothing in the quest to know for whom the asset has been granted and reserved to some point in the future. Clearly, the law is an ass; presumably an ass in the ownership of some people who like to keep a low profile with a lot of assets and a trust!

If the proposal is for the projected public register to name only trustees then obviously this frustrates the entire purpose of a public register and there is no point in doing it, because nothing useful can be gleaned from it. I make no pronouncement on whether this is a good or a bad thing, but surely it cannot be denied?

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Posted (edited)

You see  you fall down at the first assumption  that the trust is something separate and that c is the bo.  They may be a named beneficiary,  but that does not necessarily mean they own the trust. It depends on the trust terms. It is an arrangement  between e  f and d.  It is irrelevant  that d has died as when d settled the trust,  he had already alienated himself from the assets  settled.

Assuming you mean that d had settled the shares in b then e and f are the owners of the the trust fund which includes, probably the shares.   That is a key point. 

 

Edited by Gladys

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20 minutes ago, woolley said:

 

This shouts obfuscation. Plainly, Rushen is saying quite correctly that, on the face of it, the legal set up of the discretionary trust and the definition of beneficial ownership, whether by accident or design, conceals the ultimate intended destination of the asset. The fact that the trustee is the legal owner for the time being is in reality neither here nor there; a mere fig leaf. The trustee does not have the "benefit" of the asset to himself in any tangible definition of the word. He can't go out and buy himself a Learjet with the booty, ergo, it must belong to somebody/somebodies as set out in the trust. Listing the name of the trustee means nothing in the quest to know for whom the asset has been granted and reserved to some point in the future. Clearly, the law is an ass; presumably an ass in the ownership of some people who like to keep a low profile with a lot of assets and a trust!

If the proposal is for the projected public register to name only trustees then obviously this frustrates the entire purpose of a public register and there is no point in doing it, because nothing useful can be gleaned from it. I make no pronouncement on whether this is a good or a bad thing, but surely it cannot be denied?

Woolley, I have a great deal  of respect for you, but it is not obfuscation  just a summary of the facts.  I have already said that  I do not agree with how a trust is reported, but there you go. 

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OK, Gladys. I draw my own conclusions from what you say there. For the record, I understood what both yourself and Rushen were saying.

Perhaps all of the potential beneficiaries and the terms of the trust would also have to be disclosed to make the register meaningful. I'm not advocating it, just following the logic. Surely a public register wants to know who has what, not who is minding it in the interim while having no unrestricted rights to do as they please with it. Somehow, I don't think that the name of some bloke working out of an office in Hill Street is what Murphy et al are seeking here.

 

 

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On 6/19/2019 at 11:14 PM, alpha-acid said:

Constitutionally the Uk can not make us part of the UK it would cause uproar. Of course whether it is desirable or not is a different matter

It would cause uproar?

....of about 40,000 people. Can hardly see that being even a blip on the radar.

They can ultimately do what they want with us. And the rest of the crown dependencies.

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9 hours ago, Rushen Spy said:

A good question. How exactly did the whole Kaupthing Singer & Friedlander fiasco happen when the FSA (or then FSC?) was supposed to be regulating these companies? I suppose lessons learned, commercial confidentiality, onward and forward, and all the other usual Isle of Man Where You Can buzz words will apply........

Wasn't the KSF thing (from an IOM perspective) down to the fact that many millions of IOM money was in London at the time of the ‘collapse’ and the UK Govt wouldn’t repatriate it?

or something like that?

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11 hours ago, Rushen Spy said:

Trust (A) owns company (B).

Trust (A) has as its ultimate beneficial owner, person (C) who is a 3 yr old orphan.

Settlor (D) is deceased but left Trust (A) in the hands of corporate trustees (E) and (F).

Who owns company (B)? 

Is your basis for saying (C) is not the owner, based on the idea that corporate trustees (E) and (F) are somehow, theoretically or technically, not legally obligated to give benefit to (C)?

From what I'm getting from your responses, you are saying the ownership is simply with (E) and (F)?

There is a lot of barking up non-existent trees here.

A trust is not an entity, it cannot be owned and the trust itself cannot own assets. A trust is an arrangement where a person (trustee) or some people (trustees) have legal ownership of an asset(s) but that ownership is subject to a duty to hold that asset for the benefit of some other person or persons or purpose.

Not only does "Beneficial Owner" not have any widely accepted meaning but even if it did, to answer questions like those above you would need to know the terms of the trust.

To cope with these uncertainties many jurisdictions have introduced artificial rules to treat someone, other than the trustee, as the "owner" of trust assets. In the cases that I can think of, where there is no deemed owner, the trustees are accepted/acknowledged as the owner. I can think of several different regimes that try to treat someone as the owner of trust assets, in IOM and elsewhere, and they do not all produce the same result.

This is a long way round to saying that some artificial rules will be needed to determine who is treated as UBO of trust assets for the new beefed-up, linked-up, available to the public registers. There are rules for the current IOM register but they are not perfect and I expect that if we really do get to the position of registers linked up internationally, then we will need to ensure everyone applies similar artificial rules or there will be some assets with no owners and some with multiple owners.

In summary, messy and the result will offend purists, but it could be done with a lot of effort and clear thinking. [That's not to say it is a good thing, which is a whole different ball game]

 

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21 minutes ago, Phillip Dearden said:

There is a lot of barking up non-existent trees here.

A trust is not an entity, it cannot be owned and the trust itself cannot own assets. A trust is an arrangement where a person (trustee) or some people (trustees) have legal ownership of an asset(s) but that ownership is subject to a duty to hold that asset for the benefit of some other person or persons or purpose.

Not only does "Beneficial Owner" not have any widely accepted meaning but even if it did, to answer questions like those above you would need to know the terms of the trust.

To cope with these uncertainties many jurisdictions have introduced artificial rules to treat someone, other than the trustee, as the "owner" of trust assets. In the cases that I can think of, where there is no deemed owner, the trustees are accepted/acknowledged as the owner. I can think of several different regimes that try to treat someone as the owner of trust assets, in IOM and elsewhere, and they do not all produce the same result.

This is a long way round to saying that some artificial rules will be needed to determine who is treated as UBO of trust assets for the new beefed-up, linked-up, available to the public registers. There are rules for the current IOM register but they are not perfect and I expect that if we really do get to the position of registers linked up internationally, then we will need to ensure everyone applies similar artificial rules or there will be some assets with no owners and some with multiple owners.

In summary, messy and the result will offend purists, but it could be done with a lot of effort and clear thinking. [That's not to say it is a good thing, which is a whole different ball game]

 

If a Trust is not an entity then it can't have either residency or domicile, correct?

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No.  The trustee has the residency or domicile. 

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31 minutes ago, Gladys said:

No.  The trustee has the residency or domicile. 

But for accounting purposes (and by extension tax liability) the Trustee is responsible to the beneficiaries, at least according to pages 3 & 4 of the IOMFSA publication "GUIDELINES ON EXPECTED PRACTICE FOR TRUST SERVICE PROVIDERS" ??

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17 hours ago, Rushen Spy said:

I'm fairly sure they do if they're FSA-registered.

Depends what is meant by ‘filing’.  Regulated entities must lodge their audited accounts with the IOMFSA, if that’s what you mean.  Also, class 1(1) licenceholders - ie banks - are supposed to make available their financial statements across the counter on demand, or on their website, and some banks have also lodged them at the companies registry.  All IOM companies need to file accounts with Income Tax, and it’s possible (not sure) that PLCs have further obligations for the filing of financial statements, but other than those, IOMFSA regulated entities have no additional obligations to file accounts at the companies registry or indeed in any other public fora.  

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1 hour ago, Andy Onchan said:

But for accounting purposes (and by extension tax liability) the Trustee is responsible to the beneficiaries, at least according to pages 3 & 4 of the IOMFSA publication "GUIDELINES ON EXPECTED PRACTICE FOR TRUST SERVICE PROVIDERS" ??

I think you might be confusing two things - the domicile of the trust is typically determined by the domicile of the trustee(s): hence where an IOM trust company is trustee of a trust, that trust will (normally) be resident in the IOM for tax purposes.  However, the assets of the trust, and the beneficiaries, could be located outside the Isle of Man.  Say for example the beneficiaries are UK residents, then making a loan or a distribution to such beneficiaries could have material tax consequences for them in the UK.  Indeed, in some instances the location of the assets could have adverse consequences or, for very long standing trusts, changing the shape of the assets could be detrimental.  What the IOMFSA is getting at is the trustee should be awake to the tax impact of its actions for the trust assets and for the beneficiaries ; this is different, i believe, to the tax residency of the trust itself. 

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