Fiduciary services refer to the management of assets on behalf of another individual or a corporation. Those that provide these services are bound by a fiduciary agreement and observe the standards of performance in regards to the best interest of the beneficiary for whom the assets are managed. Private trust services, as well as private banking or wealth management services, are included in this category. While these types of services can target high net worth individuals, investors in the Cayman Islands will find that appointing a fiduciary can also be useful in the management of an offshore company.
Our team of Cayman Islands incorporation agents provides a wide range of fiduciary services that meet the needs of international investors. Starting with company management, and trust administration, our agents are able to handle matters to the best interest of our clients.
The Cayman Islands are a favorable location to open a trust as well as engage in different offshore activities. The lack of local taxes as well as the easy company and trust formation principles make it convenient for many foreign entrepreneurs to incorporate here.
When doing business in the Cayman Islands, investors are however required to observe the Companies Law. When taking over the business activities or the management of a trust on behalf of a client under a fiduciary duty, our Cayman Islands company formation specialists do so with careful consideration about the laws in force and by observing all of the mandatory requirements that apply to particular cases.
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Types of fiduciary services in the Cayman Islands
Fiduciary duties arise in a number of commonly used business services. Our Cayman Islands incorporation agents list some of these below. Please keep in mind that these are general examples of a fiduciary service and they can be tailored to the needs of the client in the Cayman Islands.
- Company management: an individual or a corporation who is entrusted under a fiduciary agreement to handle the management of an offshore company in the Cayman Islands; this service can be provided by our local team;
- Trust administration: a trust includes a beneficiary and the fiduciary trustee, the party entitled to manage the trust’s assets in the best interest of the beneficiary;
- Nominee director/shareholder: investors who request these two services when setting up a Cayman Islands company will effectively enter into a fiduciary relationship between the appointed nominee and the beneficial owner;
- Investment fiduciary: an individual or a corporation that is appointed to handle the management of another’s money and/or assets; examples include a banker or professional financial services provider, along with others.
Other examples of fiduciary relationships are between an executor and a legatee in specific cases such as special transactions like the transfer of property rights. The same relationship also exists between the legal guardian and the minor for whom he undertakes legal guardianship.
Main fiduciary duties
As seen above, the fiduciary relationship is based on the transfer of power from one party to another, for the purpose of a specific act or for a longer period and for different purposes. It is thus important to note that any fiduciary services in the Cayman Islands need to be based on the optimal performance of the trustee. The beneficiary needs to trust the appointed agent that he will engage in his duties accordingly and without prejudice. The situation in which the trustee may not have the beneficiary’s best interest in mind is often referred to as fiduciary risk. This is the reason why it is recommended to only entrust parties or companies that have been previously checked. Our team that offers services for Cayman Islands company formation along with different fiduciary services can insure that the fiduciaries work accordingly.
The main duties of a fiduciary can be summarized in the following way:
- Duty of care: this refers to the fiduciary’s attention to decision making as well as his obligation to ensure the well-being of the company or of the other party, as applicable;
- Acting in good faith: choosing the option that, in his opinion and expertise, will bring the most benefit to the party he represents;
- Loyalty: putting the interests of the beneficial owner above his own; refraining from personal dealings while serving as fiduciary;
- Compliance: in his dealings, the fiduciary will comply with all of the laws in force, as required.
Breach of fiduciary duty can represent the grounds for liability in front of an adequate court. One of our Cayman Islands incorporation agents can provide more details on liability.
Statistics about fiduciary services providers in the Cayman Islands
The Cayman Islands Monetary Authority provides us with details about the number of companies that are licensed under the Fiduciary Services Division. According to their data, in 2019 there were 143 trust companies. In other years, the number of licensed companies was the following:
- there were 142 trust companies in the fourth quarter of 2018;
- 131 registered private trust companies activated at the end of 2018;
- at the end of 2017, there were 147 trust companies and 25 licensed corporate service providers.
Contact us for more information on setting up a Cayman Islands company as well as details about the fiduciary services we are able to provide.