Kinds of Trusts
Considering setting up a trust in the Republic of Cyprus? If you are, then you should know that there’s two primary kinds of trusts in this country - international & domestic ones. Registering domestic trusts in the Republic of Cyprus requires having a Cypriot citizenship, while creating international trusts is regulated by international trust legislation.
Those interested in registering a Cypriot trust should be mindful of the fact that they’re divided into three main kinds:
- express (established purposefully by trustees or settlors);
- resulting (not set up purposefully by settlors);
- constructive (created to meet legal requirements & regardless of settlors/trustees’ intention).
Based on their purpose, they can be further divided into charitable (aka purpose) & fixed (aka discretionary) ones.
Other Kinds of Trusts
Setting up charitable trusts in the Republic of Cyprus
- created on the basis of any document (must be registered by trustees if they want to obtain a legal personality status for their trusts), providing they’re established for charitable activities.
Establishing fixed trusts in the Republic of Cyprus
- these are entities in which settlors determine beneficiaries’ share; this share may not be changed.
Establishing discretionary trusts in the Republic of Cyprus
- these are entities in which trustees determine ownership as per requirements contained in trust agreements.
Cyprus: Establishing Express Trusts
Transferring property to trustees requires settlors to be properly qualified, which means that they must be mentally fit & of age. It is required that Information about beneficiaries be provided on request; founders & trustees must sign fiduciary agreements determining conditions for transferring property. Opening bank accounts must be done in trustees’ names.
Administration of trusts in the Republic of Cyprus requires compliance with certain rules & involves obtaining a trust manager license in the Republic of Cyprus. This can be done by either registered lawyers or accountants.
There’s several trust registries established & maintained by the Cypriot Lawyer Association, Institute of Certified Bookkeepers & Securities Commission. All of them provide information about trusts set up in any given jurisdiction.
The following information is required for registering trusts in the Republic of Cyprus:
- trusts’ names;
- trustees’ names & addresses;
- date of creation;
- amendments to applicable legislation;
- trust’s termination date.
Trustees must refrain from divulging any information or documents pertaining to the setting up of international trusts in the Republic of Cyprus to unauthorized persons. It can only be done in a court order which:
- discloses identities of beneficiaries/founders;
- specifies how trustees exercised their discretionary powers & met requirements established by law.
Disclosure orders can also be issued by courts if they have made sure that they’re vital to the rectification of violations of trust agreements in Cyprus.
Disclosing Beneficiary-Related Data
All companies registered in the Republic of Cyprus must provide unrestricted access to information about their ultimate beneficiaries. Hence, trustees must enter into a public register all data pertaining to their beneficial owners. Only organizations or individuals legitimately interested in trusts (e.g. owners or holders of controlling stakes in non-EU companies) can have access to such information.
If you’re considering obtaining a license of international trust manager & looking for a suitable jurisdiction to establish a trust in, you should definitely have a look at the Republic of Cyprus. However, doing so requires knowledge of the local rules & regulations, which can be problematic, unless, of course, you’re a professional lawyer. Therefore, enlisting services of reputable & trustworthy legal advisors may well be a viable option for you.
IQ Decision UK is ready to provide you with an individual consultation on trust activities in Cyprus & advise you on drafting a trust deed as per Cypriot law. Our legal advisors will also be happy to give you a hand with any other legal issue that you’re likely to encounter in this regard.