STEP MAURITIUS CONFERENCE 2019 TRUST PTROTECTOR - A ROLE FOR THE PROFESSIONALS Shalinee Dreepaul Halkhoree Partner – Barrister 5 April 2019

Powers and Duties of the Protector Why a Protector Who is a Protector Powers and Duties of the Protector © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 Why a trust protector The concept of “protector” developed in offshore jurisdictions where settlors were concerned about appointing a trustee in a small distant country as sole trustee of an offshore trust which is to hold a great deal of the settlor’s wealth. The protector would thus appoint someone the he knows well, he trusts and who is available when he is needed. Under Mauritian Law, the number of trustees of a trust shall not exceed 4 of whom, at any one time, at least one shall be a qualified trustee. A qualified trustee is a management company or any such person resident in Mauritius as may be authorized by the FSC to provide trusteeship services. . © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 The concept of “Protector” exists and is used in many jurisdictions, though may be called differently. The term “Protector” was first used in 1989 when the Cook Islands expressly provided for trust “protectors” in its trust legislation. The Belize Trusts Act provides for the office of a Protector. In Guernsey Trusts Law, it is possible to appoint a “trust official” who will be a person having a function or holding an office in respect of the trust, other than a settlor, trustee, enforcer or beneficiary. In Jersey Trusts Law , it is provided that: “The terms of a trust may require a trustee to obtain the consent of some other person before exercising a power or a discretion”…such person who consents shall not by virtue of so doing be deemed to be a trustee. © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 New Zealand Trust Law, the concept of “protector” is not known and rather that of an “advisory trustee”. The trustee may elect to consult the advisory trustee” but is not obliged to act on the direction of the advisory trustee. In English trusts law the term “protector” has no technical meaning and yet, protectors are used frequently. © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 Who is the Protector Section 24 (1) of the Mauritian Trusts Act 2001 provides that the terms of the trust may provide for the office of protector of the trust, whose functions shall be to advise the trustee of the trust. A protector can be: a natural person ( of full age and of sound mind); a body corporate (a company, societe or an association wherever incorporated); any firm; a partnership; a group of persons, whether incorporate or unincorporated There can be more than one protector of a trust. When this is the case, any function conferred on the protectors may be exercised , subject to the terms of the trust, by a majority of the number of protectors. © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 Protector Settlor Beneficiary Trustee © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 Distinction has to be made between a Protector and an Enforcer An enforcer: -Is appointed only in relation to a purpose trust; -An enforcer cannot be a trustee at the same time; -The duty of the enforcer is to enforce the trust in accordance with its terms and purposes; In the case of a purpose trust created by a Mauritian national, the appointment needs to approved by the Commission. © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

Powers and Duties of the Protector According to section 24 (3) of the Trusts Act 2001, the protector has the following powers, unless otherwise provided in the terms of the trust: to remove a trustee and to appoint a new or additional trustee; To determine the law of which jurisdiction shall be the proper law of the trust; To change the forum of administration of the trust; To withhold consent from specified actions of the trustees either conditionally or unconditionally. The terms of the trust may provide for such powers as may be conferred; that the exercise by the trustees of any of their powers and discretions shall be subject to the prior consent of the protector © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 Fiduciary Duties Section 37 of our Trusts Acts entitled “Fiduciary Duties” and provides that a trustee shall execute and administer the trusts and exercise his functions in accordance with the terms of the trust and only in the interest of the beneficiaries or in fulfilment of the purpose of the trust. There is no such provision as regards in our law as to whether the protector are subject to fiduciary duties. However, a number of reported decisions have concluded that trust protectors cannot use their powers for their own benefit but must only act for the benefit of the trust beneficiaries Protector, just like the trustees owe fiduciary duties to the beneficiary. © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 Case of Mezhpriom v Pugachev EWHC 2426 (CH) © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com

© COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 Shalinee Dreepaul-Halkhoree Partner-Barrister sdreepaul@juristconsult.com © COPYRIGHT: JURISTCONSULT CHAMBERS – APRIL 2019 www.juristconsult.com