A Comparison of Structuring Vehicles - Companies, Foundations and Trusts
A Presentation to STEP Guernsey
Presented by
J. Alison MacKrill
Senior Associate
Wednesday 26 April 2017
Biographical Details
• Alison MacKrill is a Senior Associate in the trusts and private wealth team of Carey Olsen. Formerly a partner
with a Scottish law firm and managing director of a Guernsey trust company, she is an English solicitor and
was called to the Bermuda bar in 2000.
• Alison has extensive experience in trust and fiduciary law and specialises in private client and trustee advisory
work. Alison also assists fiduciaries in relation to their regulatory obligations.
• Alison regularly writes for legal publications and was the Guernsey contributor for the STEP publication A
Practical Guide to the Transfer of Trusteeships. Alison makes presentations both in Guernsey and
internationally and is a past chairman of the Guernsey Branch of STEP. Alison has been named as a leader in
her field by Citywealth since 2006 and in the IFC Power Women Top 200 List since 2014. She has been listed in
the International Who's Who of Private Client Lawyers since 2013. She was also awarded the STEP Founder's
Award for Outstanding Achievement in 2014 and named Private Client Lawyer of the Year - Guernsey in the
2015 Corporate LiveWire Legal Awards
A Comparison of Structuring Vehicles
• Acting together with a view to profit: the corporation
• A legal structure for the not-for-profit: the foundation
• The law of equity and the beneficial owner: the trust
• The Constitution
• The Parties
• Similarities
• Differences
• Uses
Acting together with a view to profit
• The mercantile corporation - partnerships, guilds, livery companies
• Royal Charter or Act of Parliament – all about trade in foreign lands
• It’s all about risk - or is it about size?
• The South Sea Bubble
• The end of the company - or was it?
“
All undertakings…presuming to act as a corporate body…raising transferable stock…transferring…shares in
such stock…either by Act of Parliament or any charter from the Crown…and acting under any charter…for raising
a capital stock…not intended…by such charter…and all acting…under any obsolete charter…for ever be deemed
illegal and void. ”
The “Bubble” Act 1720
Acting together with a view to profit - cont.
• Royal Exchange Assurance Corporation and the London Assurance Corporation - marine insurance
• The only English joint stock companies until 1824
• They each offered £300,000 towards the king’s Civil List debts
• Competition remained but insurance underwriters were private individuals at Lloyd’s of London
“
The directors of such companies, however, being the managers rather of other people’s money than of their
own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the
partners in a private copartnery frequently watch over their own…. Negligence and profusion, therefore, must
always prevail, more or less, in the management of the affairs of such a company. It is upon this account, that
joint-stock companies for foreign trade have seldom been able to maintain the competition against private
adventurers. ”
Adam Smith The Wealth of Nations 1776
Acting together with a view to profit - cont.
• The Industrial Revolution
• The Joint Stock Companies Act 1844
• Limited Liability Act 1855
• The Joint Stock Companies Act 1856 - a simple registration procedure and limited liability
• Series of Companies Acts in England until 2006
• Reform of companies law in 20th Century, particularly regarding rights of shareholders
• Loi relative aux Sociétés Anonymes ou à Responsabilité Limitée [1883] / Law relating to Joint Stock Companies
or Companies with Limited Liability [1883]
• The Companies (Guernsey) Law, 2008
A legal structure for the not-for-profit
• The foundation, howsoever called
• Civil law genesis
• Diversity of forms and structures
• Legal personality
• No shareholders / no owner
• The Council
• Purposes and / or beneficiaries
• Not for commercial purposes
The law of equity and the beneficial owner
• The Romans - the fideicommissum
• The Middle Ages – looking after the property of the Crusaders
• Holding assets for the benefit of another
• The Statute of Uses
• The trust was used to circumvent the rule on holding companies
• The modern law of trusts - statute
• Charitable and non charitable purposes
The Constitution
The Company
• Memorandum and Articles of Incorporation
• Incorporation upon registration
The Foundation
• Charter and Rules
• Establishment upon registration
The Trust
• The Trust Instrument (with a Letter of Wishes)
• Establishment with the trust corpus (the three certainties)
The Parties
The Company
• The directors
• The members
The Foundation
• The founder
• The councillors
• The beneficiaries/the purpose
• The guardian
The Trust
• The settlor
• The trustee
• The beneficiaries/the purpose
• The enforcer
• The protector
Similarities
• Separation of assets
• Perpetual existence
• Duties
• Portability (subject to jurisdiction / subject to the terms of the trust)
• Indemnity of officials (n. b. what about protectors?)
• Liability to third parties
• Rights to information (n. b. disenfranchised beneficiaries)
• Fiduciary obligations of directors/councillors/trustee (n. b. to whom owed?)
• Cy près doctrine (foundations and trusts)
Differences
• Registration
• Annual validation
• Legal personality / Title to assets
• Registered office / Resident agent
• Commercial activities
• Amendment of objects / amendment of purpose (subject to the terms of the foundation or trust)
• Number of officials : directors (1 – subject to the Articles) / councillors (2 – subject to the Constitution) /
trustees (1 or 2 – subject to the terms of the trust)
• Recission / void ab initio (and other principles of equity)
Differences
• Impartiality (subject to the terms of the foundation or trust)
• Delegation (subject to the terms of the foundation or trust)
• Acting by majority (subject to the terms of the foundation or trust)
• Charitable objects
• Tax
• Winding up / revocation
• Indemnity
• Liability to third parties
• Insolvency
Uses
• Horses for courses
• Private trust companies v Private trust foundations
• Foundations for use by those who understand civil law foundations – not exclusively
• Segregation of legal and beneficial title
• Range of corporate entities – LBGs, PCCs and ICCs
• Think also about partnerships
Speaker
Alison MacKrill
Senior Associate
D +44(0)1481 741500
E [email protected]
This presentation is intended for educational purposes only, is not for circulation and does not constitute legal advice.
Legal advice should be sought for specific queries or circumstances. © Copyright 2017