The New International Trust Law – New solid investment opportunities in Cyprus.
After much debate the House of Representatives finally voted
into law the new Cyprus International Trust Law. The bill that was enacted on the 9th of
March 2012 aims to modernise the framework of international trusts and have
positive impact on investment.
The Cyprus International Trust Law replaces the 1992 law and
introduces new innovating provisions taking into account the shortcomings of
previous legislation.
Key changes are:
Residency.
Under the new Cyprus International Trust Law a settlor may
not be a Cyprus resident in the year preceding the year of creation of the
trust which means that now settlors can be Cyprus residents.
The same principle applies for Beneficiaries.
Settlor Powers.
Another new provision is the power given to a settlor to
revoke and modify the terms of the trust or deal with the trust property in any
matter he sees fit. The settlor has also the power to appoint or remove a
trustee, a beneficiary or a director of any of the companies that belong to the
trust.
Duration.
Following section 5 of the law, a trust may have perpetual succession.
Charitable Institutions.
Following section 7 of the new law International trusts are
considered as charitable institutions where the trust has the main objective of
achieving one or more of the following purposes:
- Prevent or alleviate
poverty;
- Promote education;
- The promotion of religion;
- Promoting health or
salvation of life;
- Promote the development of
citizens and of the community;
- Promoting art, culture,
heritage or science;
- The promotion of amateur
sports;
- Promoting human rights,
dispute settlement or reconciliation or the promotion of religious or
national harmony or equality and individuality;
- Promote the protection or
development of the environment;
- Relief needs arising from
young or advanced age, ill health, disability, economic hardship or other
disadvantage;
- Promote the welfare and
protection of animals; and
- For any other reason for
the benefit of the general public or which is consistent with paragraphs
(a) - (k) above.
Powers of Trustees.
The powers of trustees are defined and clarified by virtue
of section 8 of the law.
The trustee may now hold, maintain or invest in movable
property in Cyprus and abroad, including shares in companies formed in Cyprus
and in real estate located in Cyprus or abroad.
Conclusion.
The new International Trust Law offers a robust and highly
attractive trust law framework that rectifies the shortcomings of the previous
legislation. It is expected that it will channel new investment in Cyprus and
further enhance its position as a international business center.
