Samoa’s international finance industry, administered and supervised by Samoa International Finance Authority (SIFA), was established in 2005 to provide international financial services in an innovative and meaningful manner, in order to ensure that the greatest consideration is afforded to clients seeking a jurisdiction that provides the most sensible, accessible, modern, optimum and appropriate wealth management solutions. This article provides an insight into Samoa’s offshore solutions, particularly its newly-enacted Trustee Companies Act 2014 as well as its Trusts Act 2014 and Foundations Act 2016. Its compliance culture — through active participation in the work of the Organization for Economic Cooperation and Development (OECD) and the Asia Pacific Group on Anti-Money Laundering (APG), and the incorporation of relevant requirements into our laws — demonstrates Samoa’s commitment to a transparent world of international finance.
Samoa has been an international financial center since 1988. However, the principal law that governs the work of trustee companies or service providers was only recently updated, with its modern, cutting-edge new Samoan Trustee Companies Act 2017 offering users of our center the vastest array of options to conduct international financial services business from within Samoa.
Trustee Companies Act: A new perspective
While Samoa’s focus has historically been on international companies (ICs), the development of the Samoan Trustee Companies Act 2017 (“the TCA”) provides an attractive platform for clients seeking flexible options for establishing offices in order to conduct business from within Samoa efficiently. The new law outlines substantive requirements setting out customer identification, verification of beneficial ownership and accounting information, as well as record-keeping in line with the most recent OECD and FATF international standards to solidify Samoa’s adherence and continuing commitment to moving with the times. More importantly, the TCA is Samoa’s response to the commercial needs of global professionals, demonstrated through the different types of trustee licenses available.
The TCA offers three types of trustee company licenses with competitive capital requirements and capitalization, set according to the level of business carried out. The provision of professional protection is through the introduction of insurance requirements in place to ensure that clients’ interests, and those of the service providers, are safeguarded.
The first type of license is a Financial Services Licence, which enables the holder of said license to conduct incorporation services. The second type of license is a Trust License, which enables the holder of said license to provide Trust services. The third type of license is a Composite Licence, enabling the holder of such a license to provide both financial services and Trust services.
For persons or trustee companies who do not wish to set up an office in Samoa, a managing license option is available under the TCA, where a type of license may be issued and managed by one of the local Samoan law or accountancy firms. Samoa has about twenty-seven law firms and fifteen accountancy firms. This option is ideal for persons or trustee companies wishing to set up a Trust business in Samoa at a reasonable administrative cost, with the added benefit of efficiency and ease of doing business. The managing license option is also convenient for firms who want a new home for their business and thus may easily link with one of our local professionals to manage said license.
The TCA provides for the establishment of Private Trust Companies which are exempt from regulation, provided that they meet the appropriate conditions.
The Samoan TCA is the first piece of legislation to adopt the GIFCS Standard of Best Practice through the Samoan Trustee Companies Act 2017. The adoption of the GIFCs Standard of Best Practice ensures that our Trust industry does not only strive to provide the most up-to-date solutions for client needs but also embraces international standards.
Samoan Trusts: A comparative analysis
Samoa has provided Trust solutions since 1988. The reinvention of its Trust Act 2014, which repealed the old Trustee Companies Act 1988, is another recent move by Samoa to revise and provide up-to-date Trust solutions for clients seeking alternative jurisdictions.
Under the Samoan Trusts Act 2014, trusts can be either a Charitable Trust or a Purpose Trust, and even more exciting is the concept of a SISTA (Samoa International Special Trust Arrangement) which will be dealt with in the latter part of this article.
A unique aspect of Samoa’s Trust Law is that it can be in any language, provided that there is a proper English translation. The Samoan Trust Law provides sufficient protection against foreign succession rules or claims in foreign matrimonial proceedings, which are as good as in any other jurisdiction. Asset protection has a three-year rule so that if the creation of the Trust and any disposition to the Trust took place more than three years after a creditor’s cause of action arose against the Settlor (the creator of the Trust), the Trust and the assets transferred to it are protected from the creditor’s claim. The duration of a Samoan Trust is very flexible as it can continue indefinitely or it can last for a fixed period. If it lasts for a fixed period, then this period can be made longer or shorter, or the Trust can be changed so that it continues indefinitely. If the Trust continues indefinitely, then it can be changed to last for a fixed period. With a Samoan Trust, income can be accumulated throughout the continuation of the Trust. The provisions for both a Protector and an Enforcer of a Purpose Trust are as good as in any other jurisdiction. Trustees’ powers have a statutory duty of care to be observed in their exercise of certain powers. The statutory duty of care for trustees is included in the Trust Deed and is particularly helpful and reassuring for beneficiaries as it demonstrates the standard of care that trustees must exercise. For a Samoan Trust, these provisions follow those in the UK and Singapore, as well as specific and detailed powers concerning investment, delegation, the use of nominees and custodians, insurance, and the remuneration of trustees. Wide reservation of powers is available under the Samoan Trust Act 2014 which compares well with what is provided by the jurisdictions of the Cayman Islands, Dubai, Jersey, and Labuan. There is also provision for “prescribed directions”, which is what a settlor can give to a trustee when the settlor has reserved powers. The Trustee is protected if it complies with such directions, and this is a unique feature of Trust Law to Samoa.
To ensure continuing control by a settlor and others sustained under a Samoan Trust, there are other ways to obtain this continuing control, even though there is a Trust. This can be in the form of a Reserved Power Trust or, alternatively, the Trustees must hold the Trust property for the Beneficiaries and exercise proper control over it.
Another method is the use of a Private Trust Company (PTC) which may be owned, for example, by members of the settlor’s family, by a Purpose Trust, or by a company limited by guarantee, or by a Special Purpose International Company (SPIC), which is unique to Samoa. The SPIC provisions and requirements are similar to those of Singapore and are as good as those of any other jurisdiction.
The Samoa International Special Trust Arrangement (SISTA) is similar to the Virgin Islands Special Trusts Act (VISTA), and the Labuan Special Trust (LST). The objective of a SISTA is to permit a Samoan Trust to hold and not diversify the shares of a Samoan company and let others besides the trustees act as directors of the company, without the trustees being at risk for that reason.
There is also a structure combining a Trust with a Limited Partnership. This enables a Samoan Trust to hold as an asset the interest of a Limited Partner in a Limited Partnership and permits the General Partner, who is required by Limited Partnership Law to control day to day operations (as well as hold the assets for the partners of the Limited Partnership in the ratio in which they share the capital of the Limited Partnership) to do that, without the trustees being at risk. Samoa is unique in having legislated for this. This solution does not confine the structure to one jurisdiction (like SISTA) but rather the Limited Partnership and any companies involved can be formed in any jurisdiction. Also, since the Trustees do not hold the actual assets but merely an indirect interest in them, they cannot misappropriate anything.
Samoan Foundations: A new innovation
Additional to the Trusts platform that has been reinvented in the last three years, Samoa also provides Foundations through the Samoan Foundations Act 2016. Commonly known as a civil law concept, Samoa introduced Foundations to cater for the growing needs of different clients seeking new jurisdictions that provide modern Foundations, as well as to widen its target market — not just to common law jurisdictions, but those in civil law jurisdictions.
A Samoan Foundation is a registered legal entity that owns its own assets. The Charter and Rules of a Samoan Foundation and other documents relating to the Foundation can be in any language, so long as there is a proper English translation, similar to the requirements for Trusts.
There must be a Founder who gives the initial assets to the Foundation, and its Charter can reserve powers and rights to the Founder who can assign their benefit. Any assignee of the said powers and rights can assign them onwards. A mandatory requirement for a Samoan Foundation is its “Purpose”, which can include the benefit of persons who are beneficiaries. There is a wide scope of who can be beneficiaries, with Notifiable Beneficiaries and Non-Notifiable Beneficiaries. The former can obtain information about the Foundation and the latter cannot. In this regard, there is sometimes a Guardian to protect the interests of Non-Notifiable Beneficiaries.
Synonymous to Trusts, a Samoan Foundation has similar asset protection provisions. In this regard, the claim of a creditor of the Founder whose cause of action against the Founder arises more than two years after the creation of the Foundation by the Founder — or the transfer of assets to it by the Founder — cannot extend to the assets of the Foundation. There is also protection against foreign rules of succession for giving complete protection for the assets of the Foundation.
Conclusion
It is Samoa’s vision to continue to revise our solutions to ensure that we continue to provide relevant options to the changing client needs, as well as to adhere and comply with international standards. Invest Samoa strives to be a sensible, appropriate, modern, optimum, and accessible jurisdiction.
The development of the TCA, as well as continuous revision of our international finance laws, demonstrates the Samoan Government’s support of Invest Samoa’s assured future vision in that we continue to provide the highest quality of offshore solutions to those seeking security in IFC’s, through legitimate international finance solutions such as the Samoan International Company and Samoan Trustee Companies.
