While the trust has always been regarded as one of the best ‘succession vehicles’, its use to cater for the succession of shares in companies has historically been impeded in the British Virgin Islands (BVI) by a rule of English trust law that was intended to help preserve the value of trust investments.
The ‘prudent man of business rule’ obliges trustees to monitor the conduct of the directors, to exploit the shareholding to maximum financial advantage and look for opportunities to spread financial risk by diversification. These obligations can conflict with the wishes of the typical owner of a family business. There is an inherent conflict between the prudence required of trustees and the entrepreneurial flair and quick decision-making needed to run a successful business.
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