SEARCH

Congratulations to members of the Rawlinson & Hunter team who were recently promoted across business and support teams for outstanding service, performance and technical ability within their respective fields. They are: - Valerie Akow - Senior Manager with our Accounting Services Team - Jonathan Walmsley - Senior Accountant with our Accounting Services Team - Gerardo Rodriguez-Pomare - Senior Software Developer with our IT Team - Abigail Stoddart – Assistant Manager with our Internal Finance Team Alan Milgate, Senior Partner of Rawlinson & Hunter Cayman Islands, commented, “We are proud to recognise and reward the professional development of these individuals as well as their important and increasing contributions towards the success of their teams and the firm, which further enhances the services we are able to provide our clients as part of our best-in-class offerings.” There are other group promotions that will be announced across our affiliates.

As we continue the yearlong celebration of our 50th anniversary in the Cayman Islands, we recognise and extend a special thanks to another group of our long-service employees. Their dedication and work at Rawlinson & Hunter LLP Cayman Islands is appreciated and celebrated. For being with the firm we say a special thanks to – Kayla Shibli – Senior Manager, Human Resources (15 years), Cassandra Powell - Managing Director of The Harbour Trust Co. Ltd. & Director of HTC Fiduciary Services Limited (16 years), Philip Dickie - Managing Director of The Harbour Trust Co. Ltd. & Director of HTC Fiduciary Services Limited (16 years) and Frances Ebanks - Senior Administrator The Harbour Trust Co. Ltd. (18 years).

As we celebrate our 50th anniversary in the Cayman Islands, we continue to recognise and extend a special thank you to our long-service employees. Their dedication and work at Rawlinson & Hunter LLP Cayman Islands is appreciated and celebrated. For being with the firm we say a special thanks to - Leanne Golding - Director of HTC Fiduciary Services Limited and Officer of The Harbour Trust Co. Ltd. (14 years ), Sophia Campbell - Senior Administrator of The Harbour Trust Co. Ltd. (13 years), Darcia Tatum – Administrator of The R&H Trust Co. Ltd. (13 years) and Lucy Comacchio - Director, Trust Services of The R&H Trust Co. Ltd. (12 years).

As part of our 50th anniversary celebration we are taking the opportunity to say “thank you” to the dynamic and innovative employees who have provided professionalism, commitment to excellence and diligence throughout the years. For being with the firm for 10 years we say a special thanks to Philippa Stokes (Partner of Rawlinson & Hunter and R&H Trust & Corporate), Vivian Morahan (Associate Director, R&H Trust & Corporate), Tom Elliot (Associate Director, Information Technology Applications). Kevin Huys (Senior Vice President of R&H Services Ltd.) and Daniel McGrath (Senior Manager, R&H Restructuring).

As professional trustees, we pride ourselves on being able to make difficult decisions in an efficient manner to best serve our beneficiaries. Notwithstanding this effective use of judgement, there are certain times that a competent trustee should consider if it is appropriate to seek the Court’s advice and direction. Section 48 of the Cayman Islands Trusts Law provides trustees with the right to access the Cayman Islands’ judiciary, in addition to the protection of being able to rely on a statutory indemnity provided the trustee has applied in good faith. These type of applications to the Court are known as Cooper applications following the English case of Public Trustee v. Cooper. A brief summary of the case In Public Trustee v. Cooper [2001] W.T.L.R. 901 (Ch D) (“the Coopers Case”), the trustee of an Employee Benefit Trust held 73% of the shares in a holding company, which owned a brewery for the benefit of past and present employees of the brewery. The trustee received an offer to buy the underlying business. The current brewery employees were concerned that they would lose their jobs as a result of a sale and suggested they may take legal action against the trustee if it sold its shares. The other shareholders wished to sell their shares to a larger brewery. The trustee received professional advice. It was determined that the capital benefit to the beneficiaries would exceed the value of the distributions that they could reasonably expect if the business remained within the Trust. In addition, the potential purchaser had provided reassurances that it would not reduce the workforce. The trustee, after much deliberation, concluded that a sale was the appropriate course of action. For such a major decision, the Trustee applied to the Court to seek its blessing for the proposed action i.e. before the shares were actually sold – The blessing was granted. The judge that heard the Coopers case relied on an earlier judgment in an unreported 1995 case, which held that trustees may seek direction from a Court in four categories. Cooper Applications The four categories upon which the trustee may seek the Court’s blessing are; · Category 1 The trustee seeks the Court’s confirmation as to whether some proposed action is within the trustees' powers. · Category 2 The trustee seeks the opinion of the Court on whether the trustees’ proposed course of action is a proper exercise of the trustees’ powers in circumstances where there is no real doubt as to the nature of the trustees’ powers but the decision is of particular significance (“particularly momentous”). This will provide protection for the trustee from any claims that may arise by beneficiaries in the future for taking those decisions. · Category 3 The trustee seeks surrender of its discretion. The Court will only accept this application for a good reason – for example where the trustee is deadlocked (so much so that the matter cannot be resolved by removing one trustee rather than another) or disabled due to conflict of interest. · Category 4 The trustee seeks the Court’s retrospective blessing where the trustee has already taken action and that action is attacked as being either outside their powers or an improper exercise of their powers i.e. breach of trust. Preparation for the Court A trustee should be well prepared and they must provide all relevant facts to the Court in support their application. The level of information to be provided to the Court will of course vary depending on the particular case under review. In certain circumstances, the Court may even send the trustee away to produce more evidence if necessary. For example, in a Category 2 (“a momentous decision”) the Court will seek to determine if; the trustee has the power to enter into the proposed action the trustee has genuinely formed the view that the proposed transaction is in the interests of the Trust and its beneficiaries a reasonable trustee could properly have arrived at this decision the trustee has any conflict of interest, and if so, does this conflict prevent the Court from approving the trustee’s decision In formulating its decision, the Court will act as a reasonable trustee could be expected to act having regard to all the available material circumstances. It is important to remember that the Court has no greater powers than the trustee has under the trust instrument and/or under the applicable law. Confidentiality The hearing of trust matters are often very sensitive and should be dealt with in a discreet manner. This can of course be quite the challenge when litigation and the Courts are involved. It is very reassuring to know that a trustee, when making its Cooper’s application to the Cayman Court, may also apply for certain confidentiality orders. If granted, the Court hearing may be held in a private setting rather than public, ensuring that privacy of clients’ affairs are maintained. Conclusion A trustee should carefully consider whether their particular circumstances warrant an application to the court for its approval. A trustee must always exercise its discretion independently, taking into account all relevant factors, in order to reach a fair conclusion.It is paramount that a trustee demonstrates a high level of record keeping, the significance of which is especially brought to light when it comes to making informed decisions. Furthermore, a trustee should ensure that comprehensive minutes are prepared setting out the deliberations, as well as all the pertinent factors taken into account in the decision-making process, together with a full suite of supporting documentation. The better prepared the trustee is, the easier the Court may find it to grant its blessing in favour of the momentous decision. Author: Lauretta Bennett, TEP Lauretta.Bennett@rawlinson-hunter.com.ky Senior Trust Manager R&H Trust & Corporate

In the Greek tradition, the word philanthropy comes from the words “philos” meaning “love” and “anthropos” meaning “man” or “humanity” - The love of humanity. A Philanthropist is someone who donates their money, time and/or talent to a cause that aims to improve lives and better the community. We may often think of a philanthropist as an ultra wealthy individual who has millions of dollars to donate (Bill Gates, Oprah Winfrey and Jeff Bezos spring to mind). But anyone can be a philanthropist, regardless of status or net worth. Great fulfillment comes from these selfless acts of kindness. Generational Giving Every generation has their own approach towards philanthropy and the causes they choose to support. This is because our attitudes are influenced by our experiences. Each generation has lived through some major events that have shaped them. Understanding generational dynamics can help us understand generational trends in giving. The GI Generation “Greatest Generation” born 1901-1924 This generation lived through the Great Depression and fought in WWII. They were greatly impacted by economic turmoil. They valued trustworthiness and relied on one another. One job or one marriage often lasted an entire lifetime. This great generation were more likely to give to religious causes. The Silent Generation “The Silents” born 1925-1945 This generation was molded by World War II, the Great Depression and the Atomic Bomb. The "Silents" focused on their careers, valued hard work and dedication. They had great respect for authority and rules and grew up believing that ‘children should be seen and not heard’. This generation are big supporters of emergency relief, troops and veterans and religious causes. Baby Boomers born 1946-1963 The Boomers (due to the rise in post-WWII birth rate) are a generation of workaholics. They value teamwork, growth and success. They are independent and self-reliant. Due to their belief in hierarchal structure, they may find it difficult to adjust to modern workplace flexibility trends. This generation heavily supports traditional institutions like colleges, libraries and religious organisations. Generation X born 1964-1981 This generation grew up with minimal adult supervision and thus learned the value of independence and work-life balance. They were the first generation to grow up with computers and witnessed the birth of cell phones and the Internet. Gen-Xers were the first gamers. They have a strong desire to make the community better. They are more likely to give to nonprofits that focus on research and public policy, international affairs, and community development. Generation Y / “The Millennials” born 1982-1994 Also known as the Digital Natives, this generation has grown up with digital services so they naturally align themselves with technology for communication, shopping, education, etc. They collaborate with each other and have a positive mindset. The Millennials are strong supporters of international causes and human rights. Generation Z / “The Zoomers” born 1995-2012 Gen Z has been exposed to terrorism, economic instability, climate change and different humanitarian challenges around the world. As a result, Gen Z is eager to make this world a better place. This generation will often support environmental and social causes. Gen Alpha / i-Generation born 2013-2025 This generation is growing up with the familiar voice of their friends ‘Siri’ and ‘Alexa’. From utilising facial recognition software to surgical robots, interacting with Artificial Intelligence will be second nature to members of Gen Alpha. This generation will be passionate supporters of climate change, LGBT+ and other human rights and advocacy …but with AI being integrated into online giving platforms and tools to enhance and expand philanthropic giving. Despite the generational differences certain things have not changed; - The demand for reliable professional advisors that can deliver trusted expertise - The desire for lasting dependable relationships with these Advisors to ensure that family succession remain in safe hands - The need for adaptability and understanding in order to accommodate varying generational views and values - And thankfully, the love of humanity! As trusted advisors how can we help? · Make philanthropy a family affair As you continue to develop your client’s family relationship make sure that each generation’s needs are listened to. Whether it is an informal family discussion, or the creation of a formal structure such as a Trust or foundation, you can assist in navigating generational differences by including multiple generations of your client’s family in these meetings. · Be responsive Speed is everything, especially when a client is requesting something that is time-sensitive. Reply to your client as soon as you can. In addition, keep your client updated on relevant matters - communication is essential. · Address your communication avenues Building a broader multichannel communication strategy will ensure you reach and engage all generations from traditional in-person meetings and direct mail approach to connecting through chats platforms, video conferencing and webinars. This may mean spending additional time and resources to optimise your digital communications. · Engage the right people Create your own philanthropic ‘toolkit’ of key advisors; - Professional legal advisors experienced in the charity sector and philanthropic giving - Proficient Tax advisors to provide solutions on how best to utilise available tax reliefs and allowances so as to maximise the benefit to the charity concerned - Competent Investment Advisors to ensure that the right asset allocation strategy is created to support your clients investment objectives and ethics - Philanthropic advisors to research topics a donor may be considering supporting and to look for opportunities for philanthropic funding to match the donor’s goals - A professional and experienced corporate Trustee to advise individuals and families on philanthropy and charitable giving. To deliver their expertise on the creation of new charities, whether by way of a trust, foundation or corporate vehicle, and to assist on administrative, accounting, regulatory and compliance matters. The more skilled Trustee will also be well positioned to advise on cross-border giving, and on any practical issues that may arise. · Always, always, always deliver! Commit to those promises you made to your client and to yourself as their advisor. Go that extra mile and make a difference! Takeaway By taking time to listen, adapt and understand your client’s needs and their family’s diverse generational views and values, you will not only create long-term relationships but thoughtful stewards of your client’s wealth and their lasting legacy. Author: Lauretta Bennett, Senior Manager Rawlinson & Hunter, Cayman Islands Lauretta.Bennett@rawlinson.com.ky

February 2023 This year Rawlinson & Hunter celebrates 50 years of providing professional services in the Cayman Islands. When the fledgling office of three people opened in 1973 there were no emails, no couriers, no faxes and mail took at least a week to get from the UK. From these early days the firm has grown and diversified to where they are today, with over 85 staff, 6 business lines in Cayman and participation in several overseas Rawlinson & Hunter offices. The Cayman Islands office is a financial services firm specialising in private client, corporate, fund governance, restructuring & recovery, accounting and private fund services to a wide range of clients locally and globally. It is the third largest Rawlinson & Hunter international practice, the largest independent trust company in the Cayman Islands and were one of the earliest local providers of professional fund fiduciary services. Celebrating the past and looking to the future, Senior Partner, Alan Milgate said, "With the ever changing global landscape, to remain in business for five decades is a testament to the vision of our founders, adaptability of our leaders and dedication of our team who are committed to navigating and exceeding the needs of our clients. We are extremely proud of the growth and success that the firm has achieved over the last 50 years and thank our stakeholders for their commitment and trust. We look forward to our continued growth and evolution as we build on the strong foundation of our reputation and offerings." Beyond its extensivebusiness portfolio the firm has strong ties with the local community. The Breast Cancer Foundation, Help for Children, the Cayman Islands Crisis Centre, YMCA, Jasmine, National Gallery and CCMI are among numerouscharitable organisations to have receivedsupport. The firm is strongly committed to the development and education of young Caymanians by offering educational scholarships, professional development programs and staff training to build succession locally. Partner, Tamara Corbin "This yearlong celebration will include a focus on the heart of our firm which is our team. During this period the firm will recognise several members of staff for their years of dedicated service. There are currently over 20members of staff who have been with the firm for 10+ years and this year we show appreciation for two special individuals for over 35 years." Rawlinson & Hunter is an international grouping of professional firms and a leading provider of financial advice and private client services. In meeting the international requirements of our clients, wenow operate 12 offices worldwide in 10 countries and employ over 450 people. We pride ourselves on the commitment which we make to delivering a personalised service to all of our clients, whether as accountants, advisers, executors, trustees or directors.

Family offices are nothing new. The Rockefeller family office was founded in 1882 and is still going strong today. However, managing family wealth successfully is a complicated undertaking and starting a dedicated single family office may be one way to manage this complexity. Establishing a family office should be approached the same way as creating any other successful business - with a good strategic plan. Why is the Family Office being created? An important preliminary step is to clarify the objectives for the family office, given that these objectives will determine its mission. There are many reasons why setting up a family office makes sense but at the root is the desire to ensure smooth intergenerational transfer of wealth and to keep the family working together toward a common purpose. Other factors include: - Maintain control of family assets and the decision making process; - Benefit from collective buying power of the family’s combined assets and access to investment, legal and tax information more effectively that any family member could do alone; - Alignment of the direction, interests and goals of all family members with regards to education, communication, philanthropy; - Create openness and transparency to avoid misunderstandings and disputes within the family; - Have a dedicated team devoted to providing key services and help achieve long-term goals; - Identify and manage an array of risks from investment risk to reputational risk; and - Preservation of privacy and security of financial and family information. How much does a Family Office cost? The cost of each family office depends on a number of variables including the size of the family, the number of staff and the nature of the family’s investments. With increased regulatory and compliance reporting, set up and running costs can be high. The general rule of thumb is that a family office typically costs about 1% of the assets being administered. Family offices need to offer competitive remuneration packages in order to attract the top talent. Operating costs are another major factor and can include rent of the office property, trustee fees, external investment management fees and insurance premiums. Throughout the creation and running of a family office, the most important consideration is value. The family should determine whether the benefits of the family office do justify the time and expense involved. Some small well-run offices produce an abundance of benefits relative to cost. The family needs to collectively define what is valuable and beneficial to them and ensure their family office fulfills all of their requirements whilst adhering to a pre-determined operating budget. Who will the Family Office provide services to? Family offices are most often established by founders of successful businesses to serve them and their children. Over time, the children may have their own families and the family office’s client base grows. The family office may also serve extended family and must contend with the reality of managing expectations of spouses, in-laws, stepchildren and adopted family members. Defining the ‘client base’ is important to efficiently allocate resources and capital outlay. What services will the Family Office provide? Although management of the family finances and assets are perhaps considered at the heart of family office services, they also provide a range of other services from strategic planning, administrative support, compliance and regulatory advice, family governance, coordination of philanthropic initiatives and succession planning. In addition, lifestyle or concierge services such as paying bills, arranging travel, management of household personnel may also be required. The range of services delivered may change over time as generations’ age, technology evolves and the investment landscape shifts. Who will be involved in the Family Office? For families with significant wealth, their assets may be sufficiently large and complex to justify a team with wide-ranging expertise and a board comprising of both family members and external parties. For other families it may be more effective to hire a specialist to liaise between the family and multiple third party advisors, rather than recruiting for each specialism internally. A governance and succession process that clearly outlines the role of family members within the office is vital to ensure the involvement of younger family members, particularly whilst there is an opportunity for them to learn from and work with the senior generation and their trusted advisors. Management roles could allow future family leaders to serve on committees or become junior board members. It is not unheard of for family members to take issue with the degree of control wielded by the CEO of their family office. Having clear guidelines will help manage responsibilities and expectations. Every office should have a mission statement, a written code of conduct and perform regular performance reviews. Policies also need to be clear about whether family members can be employees of the office. One of biggest advantages of starting a family office is the ability to hire competent staff who truly understand the family’s needs and motivations. Given family office employees are empowered with tremendous authority and control over the family’s assets, retaining proficient and trustworthy staff is critical to success. What is the appropriate vehicle and location for the Family Office? As can be gleaned from the above, there is no typical family office structure. The legal entity created is driven by a family’s unique jurisdictional, regulatory and tax considerations. In Cayman we are increasingly seeing the use of foundation companies over traditional private trust companies or STAR trusts. Previously, the natural tendency was to locate the family office where the family business was or where the patriarch/matriarch live. However, with new technologies, globalisation and a rising trend towards the remote workforce, family offices are moving to other jurisdictions. Political stability, privacy regulations, access to quality staff and professional advisors are all-important considerations. In conclusion, it is apparent that the considerations for starting a family office are plentiful. Some of the attractive features include highly personalised service, control, exclusivity and confidentiality. However, they can also be a source or catalyst for family dysfunction and an execution failure can lead to the permanent destruction of the family’s wealth if not governed and operated properly. Therefore, it is crucial to consult with the right advisors before formalising a family office structure. Author: Lucy Comacchio, Associate Director Rawlinson & Hunter, Cayman Islands Lucy.Comacchio@rawlinson-hunter.com.ky

The complex wealth and succession planning needs of our UHNW clients require innovative and bespoke solutions. At the core of many of these solutions is often the concept of a trust. For centuries, families have used trusts to maintain their assets and provide security and peace of mind for future generations. While trusts come in many shapes and sizes, every trust requires a trustee and the selection of the right trustee is vital. A competent trustee possesses a variety of skills and expertise to be capable of successfully stewarding a settlor’s material legacy. What is a PTC? There are certain types of assets that settlors wish to place into trusts which are highly specialised in nature or which they, their associates, or their family may still play an important role in managing and operating. While there are particular options available to allow settlors and their families to stay involved, or retain certain powers over the administration of their trusts, one of the more popular tools to achieve this is a Private Trust Company or “PTC”. A PTC, where the magnitude of the trust assets justifies it, can be established to exclusively serve as trustee of a settlor’s trust or indeed their family’s trusts. The idea of a PTC is not new and many jurisdictions have their own versions where the basic concept is quite similar. PTCs, to the extent allowable under the relevant laws and regulations of a given jurisdiction, are usually structured as a company or other corporate entity, which is then often owned by a purpose trust created for the sole purpose of acting as shareholder and prescribing the appointment of the PTC’s board of directors. This helps to ensure longevity and a certain degree of control over the PTC as long as it is required. Some jurisdictions such as the Cayman Islands offer innovative new vehicles like Foundation Companies which can make these aspects of the PTC’s ownership and corporate structuring more customisable and simpler to achieve. The appointment of the PTC’s board of directors can be influenced by the settlor, their wishes, or their family; and it is the PTC’s board of directors that is responsible for all decisions and administration of its trust or trusts in the PTC’s capacity as trustee. The Cayman Islands has been a leading jurisdiction for the creation of PTCs by wealthy families for many years. The Islands have allowed, and continue to allow, such companies to be licensed under its Banks and Trust Companies Law as restricted licensed trust companies. In 2008, a registered PTC vehicle was introduced; one that is exempt from the licensing procedure in particular circumstances. This PTC has to be registered with the Cayman Islands Monetary Authority (“CIMA”). Each type of trust company has its own unique features and benefits. Benefits and Challenges of PTCs There are many potential advantages to PTCs, especially in cases where the management of the trust fund requires special technical expertise, or where a trust’s philanthropic or other purposes would benefit from the direct involvement of those already running such programmes. PTCs can complement existing family office structures, and where appropriate, they may allow for the inclusion of future generations of family members to be involved in trust-related decisions. This often helps to facilitate efficient decision-making and it can provide the opportunity to meaningfully include certain family members and benefit from their skills and perspectives. Although PTCs are very useful in the right circumstances, care should be taken to ensure that they are used for the right reasons and that those appointed as board members to a PTC are suitably qualified to take on the responsibilities of the role. The associated trade-offs should also be properly understood: A higher degree of inclusion of a family in the management of a trust, where decision-makers potentially stand to benefit, can challenge their objectivity and create or exacerbate conflicts. It is common for family interests to diverge as they grow with new generations and the family dynamics change over time. Discussions and decisions involving wealth can easily amplify even the slightest strains in family relationships. The thought of one’s family having a high degree of control over a PTC board can be appealing to many settlors until they come to realise how it can potentially go wrong. There are ways to address these challenges that preserve the desire for inclusion while minimising the potential for conflict. Indeed, many jurisdictions require PTCs to have licensed professional trustee representation on their boards, although to varying degrees. Not only does having a professional and independent trustee on a PTC board bring the necessary technical skills and experience required to fulfill its role, and meet legal and regulatory obligations, it also adds a valuable element of objectivity. Whether it is a family PTC with one’s own advisors, an independent professional provider of trustee services, or a combination of both, the importance of this choice of trustee cannot be overemphasised. Independence and objectivity are vital characteristics of a good trustee, especially where the trustee holds discretionary powers and at times when difficult decisions need to be made. Careful consideration is needed when weighing the pros and cons of creating a PTC and evaluating its usefulness as family dynamics shift with future generations. Author: Ed Ford, CA, TEP Edward.Ford@rawlinson-hunter.com.ky Senior Trust Manager Rawlinson & Hunter

Amanda Bako of Rawlinson & Hunter explains why the appointment of a professional executor can be the safe choice by relinquishing the burden and maximising the efficiency of estate administration. With a rising number of contested wills and disputes between executors, it is increasingly crucial to ensure that appropriate, qualified executor(s) are appointed. More individuals are selecting a professional executor rather than leaving a loved one or close friend with what can very quickly become a burden which they are not equipped to manage. Where an estate consists solely of a private residence and cash, it may be preferable to choose a family member or friend to act as executor. However there are a number of circumstances where selecting a professional executor would be beneficial. COMPLEXITY Assets With high net worth, assets held by individuals can be varied and sophisticated, ranging from financial investments, commercial and residential real estate, and private company shares to business assets. A suitably qualified and experienced professional will be able to manage multiple asset classes and organise the effective disposal of these assets to provide maximum value to the estate. Many professional executors will have a global team of specialised individuals who are able to tackle the complexities of various asset classes in an efficient manner. Cross-border Not only can assets be located in different jurisdictions, many families will also have members located across the globe. These factors can make the administration of an estate extremely onerous, lengthy and stressful. This can require engaging legal and tax advisors in several jurisdictions and a professional executor will have the time capacity and relevant connections to assist. Testamentary Trusts Where there are minor children or vulnerable family members involved, it is common for a will to create a testamentary trust to provide for their ongoing needs. In these situations, it is helpful to choose a trust company who can act as both the executor and trustee for greatest efficiency. CONFLICT Unfortunately, many estates result in family conflict either due to the terms of the will or oftentimes because of the choice of executor, for example, where a parent chooses one child over their siblings. At what is already an emotional time, it is of benefit to have an impartial, independent executor who is able to diffuse any tension or disputes that may arise. LIABILITY An executor has a duty of care when administering an estate and to its beneficiaries. Dealing with a complex or high value estate could lead to mistakes that cause loss to the estate. Executors can be held personally liable for any claims. Choosing a professional executor removes potential personal liability and financial burden. COSTS There is a perception that appointing a professional executor can be expensive. However, when considering a complex estate, it is likely that an inexperienced executor may need to spend additional time consulting with legal and professional advisors, which could result in significant costs being incurred, but also may not maximise asset realisations for the benefit of the estate. Author: Amanda Bako, FCCA, TEP is a Partner with Rawlinson & Hunter in the Cayman Islands. Rawlinson-hunter.com

Trapped assets, in particular those with limited value, are on the rise and as volatilitycontinues to grip the stock marketsand the worldin general, we are seeing more and more open-ended and closed-ended funds who wish to proceed with dissolution but remain in limbo, with no end in sight. Not only does a prolonged wind-down result in unnecessary time spent by management but can also result in excessive service provider costs, to the detrimentof investors. We have found that when paired with a solvent voluntary liquidation, the establishment of a liquidating trust for the assignment of trapped assets can be an effective solution for any fund wishing to seek long-term asset realisation. The objective of a liquidating trust is to expedite the wind-down process and to create efficiencies, allowing investors to receive proceeds in an orderly manner and removes the potential of liability claimed against the funds and/or its directors. This pairing is not only beneficial to the fund but, where relevant, can also provide cost savings with existing management, its principals and directors as the trustee can engage with existing management, its principals, and directors in a consulting role so that asset background and understanding is not lost during the process. Alternatively, existingmanagement can also choose to remove themselves entirely from the process should they wish not to assume any significant role overall. Why a liquidating trust? A liquidating trust can be established for the benefit of any asset type, save there being no restrictions or contingent litigation, and can be established specific to the requirements of the settlor. Asset types that we have assisted to structure into a liquidating trust recently include a potential class action claim which has yet to be consummated, shareholding in an African mining company, a portfolio of small to mid-cap publically listed equities, litigation stubs and illiquid investment portfolios with limited secondary market opportunities. The form of liquidating trust can vary in both structure (standalone or umbrella) and type (discretionary, revocable, irrevocable trusts, etc.) although usually, a discretionary STAR trust is bestsuited to situations of prolonged wind-down due to the flexibility of the objects i.e. the trust can be set up for a purpose or for persons or indeed a mix of both. Investorsmay be named as discretionary beneficiaries and would not have entitlement to the assets,other than on a realisable event. This means that investors not only benefit from future assetrealisations, which could have been disclaimed or written-off priorto commencing voluntary liquidation, but also from thecost efficiencies in pairing the establishment of a liquidating trust with a solvent voluntary liquidation. A regulated trust company, would act as trustee and have absolute discretion over the management and administration of the STAR trust. Although, where relevant, the trustee may also seekthe assistance of liquidation professionals to manage the assets realisation, be it asset auctions or sales in the secondarymarket, as well as those principals or directors who wish to remain engagedas a consultant. Furthermore, a STAR trust requires the appointment of an enforcer who will ensure that the trustee fulfils theirfiduciary obligations in accordance with the trust instrument. This role may be delegated to a third party and further provides comfort to investors that the liquidating trust is being administered for their benefit. R&H Restructuring, are experienced in delivering successful wind-downs and offer a wide range of flexible services to open-ended and close- ended funds in the Cayman Islands that are wanting Author: Daniel McGrath Manager Rawlinson & Hunter LLP, Cayman Islands Daniel.McGrath@rawlinson-hunter.com.ky