El escenario adverso para medir la resistencia de la banca incluye hipótesis como un aumento del desempleo para 2012 de hasta el 22,4%, superior en 3,2 puntos a la previsión de Bruselas y que implicaría más de cinco millones de parados. Igualmente se toma como referencia una situación de deflación el próximo año.

También se contempla una caída bursátil del 14,3% en la Unión Europea, del 20% en el caso de España.

Especialmente sorprendidas son hipótesis relativas al deterioro del mercado de la vivienda. Se prevé, por ejemplo que en España los precios inmobiliarios sufran un deterioro peor de lo previsto. Así por ejemplo se hace el análisis pensando que los bienes inmuebles para usos comerciales podrían llegar hasta el 30% este año y el 24% el año próximo, cuando las previsiones apuntan a una caída del 15% y del 9%, respectivamente.

Es significativa también la hipótesis de un encarecimiento de la deuda pública medida como diferencial con el bono alemán a 10 años. Para el conjunto de la zona euro se hace el análisis pensando que la prima de riesgo podría subir 75 puntos básicos (0,75 puntos porcentuales), mientras que para España subiría 167 puntos básicos; para Irlanda, 258; para Portugal, 246, y para Grecia, 255 puntos básicos.

El examen incluirá las posibles pérdidas derivadas de un agravamiento de la crisis de la deuda soberana, pero solo en la cartera de negociación y no en la deuda que se tenga hasta vencimiento. Eso sí, las entidades estarán obligadas a dar información mucho más detallada al respecto. El recorte de valoración a aplicar al bono español a 10 años será del 14,3%, frente al 19,8% de Portugal, el 17,1% de Grecia o el 19,1% de Irlanda.

De la misma manera, para los inmuebles residenciales se hace el cálculo con una caída del 12% y 11% (lo que acumulado es un 22% en dos años), frente a una previsión en el escenario base de una pérdida de valor del 5% y del 3% respectivamente.

Tampoco se analizará la liquidez de una manera específica en estas pruebas. Sin embargo, sí se analizará el impacto del aumento de intereses, incluido el de la deuda soberana, sobre el coste de la financiación de las entidades. Esta medida nueva este año puede tener especial impacto en la banca española muy dependiente de la financiación mayorista.

Asset protection site: www.wealth-asset-protection.com

Here you can find a list of spanish sites about asset protection and wealth preservation:

www.proteccionactivos.com

www.proteccion-activos.com

www.manual.proteccion-activos.com

www.proteccionpatrimonio.com

www.proteccion-patrimonio.com

www.protegerpatrimonio.com

www.protegerpatrimonio.es

www.salvaguardarpatrimonio.protegerpatrimonio.es

www.protegeractivos.com

www.ptypos.com

www.empresas-internacionales.com

www.empresasextranjeras.com

www.sociedades-internacionales.com

www.sociedades5.com

www.empresas1.es

Please find here a list of sites regarding Abogados (lawyers):

www.jpa-iac.com/definición

www.directory9.org

www.abogados-directorio.com

www.definicion1.com

www.conceptos.biz

www.online-legal.biz

www.abogados-enlinea.com

www.abogados-enlinea.es

www.abogados-online.org

www.abogados-subastas.com

www.legal-magazine.com/es

www.legal-magazine.com/a

www.legal-magazine.com/mx

Some interesting links about international tax in Spanish (Fiscalidad internacional):

www.tax-international.com/es

www.iva-comercio-electronico.tax-international.com

www.planificacionfiscal.info

www.preciostransferencia.com

www.expatriados.com.es

www.fiscalidad-internacional.com

November 2008

The Foundations (Jersey) Law 200- (the “Law”) was approved by the

States of Jersey (the Island’s parliament) on 22 October 2008 and it

is anticipated that the Law will come into force during the first or

second quarter of 2009.

The Law is important for Jersey’s finance industry: it will introduce a

new type of legal entity, the foundation, which can be described as a

hybrid of a trust and a company. A foundation resembles a company

in that it is a body corporate (albeit one without shareholders) and is

governed by a council in accordance with its charter and regulations

in much the same way that a company is managed by its board of

directors. It is akin to a trust in that a foundation must have one or

more objects which may be a purpose (charitable or non charitable)

and/or be for the benefit of one or more beneficiaries.

It is envisaged that foundations will be used primarily for private

wealth management and stated intentions are that the Law should do

the following:

• open up business opportunities with clients from parts of the

world where the concept of trusts is unknown and complicated to

understand;

• be a more acceptable vehicle than a trust in certain jurisdictions

which require a higher degree of transparency for wealth holding

structures; and

• encourage global charities to use Jersey foundations as charitable

vehicles for giving.

There is no reason however why foundations could not be used in

general commercial transactions and indeed some of the features of a

foundation may make them particularly suitable for use as “orphaned”

special purpose vehicles.

Incorporation

The person who calls for the foundation to be incorporated is known

as the “founder” (roughly akin to a settlor of a trust) who may be (but

does not have to be) a council member and/or a beneficiary under

the foundation.

However only a Qualified Person (a “Qualified Person”/”Qualified

Member” for the purposes of the Law is someone who is registered

with the Jersey Financial Services Commission (“

JFSC
“) to carry on

trust company business) can actually apply for the incorporation of a

foundation but a founder can instruct a Qualified Person to apply on

the founder’s behalf.

The incorporation process is straightforward. The Qualified Person

will submit the charter, the appropriate fee and a Qualified

Person’s certificate to the JFSC for incorporation. The Qualified

Person’s certificate must confirm that:

• the Qualified Person will become the Qualified Member on

incorporation;

• the Qualified Person is in possession of the regulations and that

they have been approved by the Qualified Person and the founder;

• the address stated in the certificate is the correct business

address in Jersey of the Qualified Person; and

• a person has been selected to be the guardian of the foundation

on incorporation in accordance with the regulations.

The JFSC can refuse incorporation if the proposed objects (which

may be charitable and/or non-charitable and/or for the benefit of one

or more beneficiaries) are unlawful.

Corporate status
Like a company, a foundation will exist from that date on which it is
incorporated even if, unlike a trust, it has no property at that time.
Once incorporated a foundation will have unlimited corporate
capacity save that it may not directly:
• acquire, hold or dispose of immovable property situate in Jersey; or
• engage in commercial trading that is not incidental to the
attainment of its objects.
Charter
It is a mandatory requirement of the Law that a foundation shall have
a valid charter at all times. Once the foundation has been
incorporated, the charter will be available for public inspection at the
JFSC.
The charter must state:
• the name of the foundation (which must end with the word
“Foundation” or its equivalent in a different language) which must
not be misleading or otherwise undesirable;
• the lawful object(s) of the foundation;
• information regarding winding up, dissolution and the term of the
foundation; and
• details of the initial endowment (if there is one) and if appropriate
a statement that it may be endowed further.
The charter may state:
• the name(s) of the members of the first council;
• any provisions regarding the amendment of the charter; and
• anything which must or may appear in the regulations.
Regulations
A foundation may, if it wishes, have regulations regarding the
administration of a foundation and how its objects are to be carried
out. Significantly there is no requirement to file the regulations in the
public register. In most cases therefore, one would expect the
regulations to remain private but in some cases, for example, a
sizeable charitable purpose foundation, the founder might wish to
place the regulations in the public domain voluntarily or to dispense
with the separate charter and regulations and simply merge their
provisions together into a single publicly available document.
In any event, the Law provides that regulations of a foundation must:
• establish a council;
• provide for the retirement, appointment, removal and remuneration
of council members;
• set out how decisions are to be made by the council;
• set out what decisions (if any) need approval from a separate
person and the identity of that person;
• include provisions relating to the appointment of a guardian; and
• include provisions relating to the retirement, appointment and
remuneration of the guardian.

Corporate status
Like a company, a foundation will exist from that date on which it is
incorporated even if, unlike a trust, it has no property at that time.
Once incorporated a foundation will have unlimited corporate
capacity save that it may not directly:
• acquire, hold or dispose of immovable property situate in Jersey; or
• engage in commercial trading that is not incidental to the
attainment of its objects.
Charter
It is a mandatory requirement of the Law that a foundation shall have
a valid charter at all times. Once the foundation has been
incorporated, the charter will be available for public inspection at the
JFSC.
The charter must state:
• the name of the foundation (which must end with the word
“Foundation” or its equivalent in a different language) which must
not be misleading or otherwise undesirable;
• the lawful object(s) of the foundation;
• information regarding winding up, dissolution and the term of the
foundation; and
• details of the initial endowment (if there is one) and if appropriate
a statement that it may be endowed further.
The charter may state:
• the name(s) of the members of the first council;
• any provisions regarding the amendment of the charter; and
• anything which must or may appear in the regulations.
Regulations
A foundation may, if it wishes, have regulations regarding the
administration of a foundation and how its objects are to be carried
out. Significantly there is no requirement to file the regulations in the
public register. In most cases therefore, one would expect the
regulations to remain private but in some cases, for example, a
sizeable charitable purpose foundation, the founder might wish to
place the regulations in the public domain voluntarily or to dispense
with the separate charter and regulations and simply merge their
provisions together into a single publicly available document.
In any event, the Law provides that regulations of a foundation must:
• establish a council;
• provide for the retirement, appointment, removal and remuneration
of council members;
• set out how decisions are to be made by the council;
• set out what decisions (if any) need approval from a separate
person and the identity of that person;
• include provisions relating to the appointment of a guardian; and
• include provisions relating to the retirement, appointment and
remuneration of the guardian.
the foundation’s objects provide a benefit to a person and/or class of
persons – but the rights of a beneficiary of a trust and a beneficiary
under a foundation are fundamentally different.
The Law expressly provides that a beneficiary under a foundation has
no interest (whether legal or beneficial) in the foundation’s assets or
in the foundation itself. This provision effectively means that
foundations are “ownerless” structures.
However the Law does permit a beneficiary under a foundation to
seek an order from the Royal Court ordering the foundation to
provide a benefit but this right may only be exercised whenever a
particular beneficiary has become entitled to receive a benefit under
the foundation in accordance with the charter or regulations but the
beneficiary has not received that benefit.
Furthermore and except as specifically required by the Law, a court
order, or by its charter or regulations, a foundation is under no
obligation to disclose any information relating to the administration of
the foundation, the assets of the foundation or the way in which the
foundation is carrying out its objects, to any person (whether or not
a beneficiary). In this respect foundations differ markedly from trusts
because ordinarily a trustee is under a statutory duty to produce
documents relating to a forming part of the trusts accounts to a
beneficiary on request.
Guardian
A foundation is required to have a guardian at all times. Apart from
the founder and the Qualified Member, a person may not be both a
member of a foundation’s council and that foundation’s guardian
simultaneously.
The guardian’s role is roughly equivalent to the role of an enforcer of a non
charitable purpose trust in that it must take “such steps as are reasonable
in all the circumstances to ensure that the foundation carries out its
functions”. Accordingly the Law envisages that the council will account
to the guardian for the way in which the council has administered the
foundation’s assets and acted further to the foundation’s objects.
In addition, the regulations of a foundation may give the guardian the
power to approve or disapprove any specified actions of the council; in
this respect a guardian would operate much like a protector of a trust.
Administration, judicial supervision and regulation
A foundation is obliged to include its name and business address on
all written communications and to keep certain records (the charter,
regulations (if any), register of council members, financial records and
the names and addresses of those who have endowed the
foundation) at the Qualified Member’s business address. Like a
company, a foundation will be obliged to pay an annual fee to the
JFSC in order to maintain its name on the JFSC’s register.
The Royal Court has been given extensive powers by the Law to
ensure that a foundation complies with all and any requirements and
obligations found in the Law, its charter or its regulations. Those
powers include:
• the power to order amendment of a charter or regulations;
• the power to give directions;
• the power to protect the interest of minors and unborn
beneficiaries under a foundation; and
• the power to dismiss and appoint a Qualified Member.

Furthermore the following changes will be made when the Law
comes into force:
• the disqualification provisions in the Companies (Jersey) Law
1991 will be expanded to include the disqualification of council
members; and
• the Financial Services (Jersey) Law 1998 will be amended such
that the provision of trust company services in or from within
Jersey to a foundation (incorporated in Jersey or elsewhere) will
become a regulated activity.

The company has no records of trading for three months. The company no longer have assets or property or cash at bank. The creditors must be informed requesting their permission for the company to be dissolved under this action. Creditors are given three months to examine the request to dissolve the company and may reject this request. The company will not be able to change its name during this period. The company will not have discarded any property or assets as yet (this may consist of land and buildings, plant and equipment, debtors and other assets).
Advantages of Dissolution
. This can be a quite fast, cost-effective and clean struck-off of a dormant (non-trading) company from the registrar of companies. Dissolution avoids further questions about property, debts and liabilities that may be shared between shareholders, it also avoids expensive costs of liquidation. It deflects an investigation into the conduct of the directors as demanded in liquidation or receivership.
Disadvantages of Dissolution
A company that is undergoing insolvency proceedings, or that is likely to do so, cannot apply. How do you dissolve a private limited company? If you have a private company and it is not trading you should be aware that the simplest and least expensive method of closing it down is to apply for it to be struck off the register of companies. This is quite a common situation that usually arises when directors of the company want to retire or when the owner/sole director wishes to return to PAYE or self employed status. If you have a limited company that is insolvent or is likely to be insolvent you should not apply.

If you would like your company to be struck off the register it is of the utmost importance that you must check with people the main stakeholders of the company such as its creditors, employees or investors. The correct procedure to dissolve a company is to fill out and return Form 652a to Companies House along with a small fee. Copies of the form asking for dissolution must be given to the following groups within 10 days of the application being submitted: members, creditors, employees, managers or trustees, and directors who have not signed the form.
Finding and Using Information on This Page: Do All Companies Have to Go through Insolvency Proceedings Before Being Dissolved? | Who can Apply to Have a Company Struck Off the Register? | What Happens to the Directors of an Insolvent Company? | What Should I Do Before Applying? | What Happens when the Registrar Accepts a Form 652a Application? | Restoration to the Register | Who Can Apply to Have a Company Restored to the Register? | Where Do I Apply for a Court Order for Restoration? | Bankruptcy & Administration Order | Personal Bankruptcy | Partnership Insolvency |

Advantages of Dissolution:
Dissolution avoids the costs of liquidation, fees and expenses. It is a quick and clean removal of a dormant company from the company’s register. It will avoid any formal investigation which may take place to administrate the directors as required in liquidation or receivership. However, striking-off is only applicable to a private company if, in the past three months, it has not:
• traded or otherwise carried on business;
• changed its name;
• disposed for value of property or rights that, immediately before ceasing to be in business or trade, it held for disposal or gain in the normal course of that business or trade; or
• engaged in any other activity except one necessary or expedient for making a striking-off application, settling the company’s affairs or meeting a statutory requirement. A company can, however, apply if it has settled trading or business debts in the previous three months.
For a reasonable fee we can conduct this procedure for the company if the conditions mentioned above are all met.

Please note: from the date of dissolution, any assets held by a dissolved company will belong to the Crown. The company’s bank account will be frozen and any credit balance in the account will be passed to the Crown.
You May Use this Form to Disslove Your Company: Dissolution of the Company – £200.00

Disadvantages:
Creditors may reject the application; their permission is required to continue with a dissolution. Any shareholder, creditor or liquidator can apply to revive the company for up to 20 years of dissolution. But they may revive the company of the following applies:

If a notice required to creditors was not given correctly or suitably. It comes to attention that company was trading during the three months period when making application to dissolve at the same period.

It comes to the attention that some fraud, misfeasance or other wrongful action was committed by the company or the directors before or during the dissolution process.

There is no assigned method, whilst a commonsense concept off collecting assets and distributing them to creditors in suitable order usually suffices. If performed incorrectly can lead to a revival of the company as above and could be open for abuse. If you are in any doubt as to the application of this method please do not hesitate to contact us.

Dissolution under Section 652 is not considered to amount to a winding-up under the Insolvency Act. You should not refer to it as a winding-up, nor as an ‘informal liquidation’.

Offences and Penalties:
It is an offence:
• to apply when the company is ineligible for striking-off;
• to provide false or misleading information in, or in support of, an application;
• not to copy the application to all relevant parties within seven days;
• not to withdraw the application if the company becomes ineligible.
Most offences attract a fine of up to £5,000 on summary conviction (before a magistrates’ court) or an unlimited fine on indictment (before a jury). If the directors deliberately conceal the application from interested parties, they are liable not only to a fine but also up to seven years imprisonment.

DO ALL COMPANIES HAVE TO GO THROUGH INSOLVENCY PROCEEDINGS BEFORE BEING DISSOLVED?
No. If the Registrar has reason to believe that a company is not carrying on business or is not in operation, its name may be struck off the register and dissolved without going through liquidation. A private company that is not trading may apply to the Registrar to be struck off the register. This procedure is not an alternative to formal insolvency proceedings.

WHO CAN APPLY TO HAVE A COMPANY STRUCK OFF THE REGISTER?
A private company that is not trading may apply to the Registrar to be struck off the register. It can do this if the company is no longer needed. For example, the active directors may wish to retire and there is no-one to take over from them; or it is a subsidiary whose name is no longer needed; or it was set up to exploit an idea that turned out not to be feasible. The procedure is not an alternative to formal insolvency proceedings where these are appropriate, as creditors are likely to prevent the striking off. Even if the company is struck off and dissolved, creditors and others could apply for it to be restored to the register.

A private company can apply to be struck off if, in the previous three months, it has not: traded or otherwise carried on business. Changed its name. For value, disposed of property or rights that, immediately before it ceased to be in business or trade, it held for disposal or gain in the normal course of its business or trade (for example, a company in business to sell apples could not continue selling apples during that three-month period but it could sell the truck it once used to deliver the apples or the warehouse where they were stored).

Or, engaged in any other activity except one necessary or expedient for making a striking-off application, settling the company’s affairs or meeting a statutory requirement (for example, a company may seek professional advice on the application, pay the costs of copying the Form 652a, etc). However, a company can apply for striking off if it has settled trading or business debts in the previous three months.

A company cannot apply to be struck of if it is the subject, or proposed subject, of: any insolvency proceedings (such as liquidation, including where a petition has been presented but has not yet been dealt with); or a Section 425 scheme (that is a compromise or arrangement between a company and its creditors or members).

WHAT HAPPENS TO THE DIRECTORS OF AN INSOLVENT COMPANY?
The liquidator, administrative receiver, administrator or Official Receiver has a duty to send the Secretary of State a report on the conduct of all directors who were in office in the last 3 years of the company’s trading. The Secretary of State has to decide whether it is in the public interest to seek a disqualification order against a director. Examples of the most commonly reported conduct are: continuing the company’s trading when the company was insolvent.

Failing to keep proper accounting records. Failing to prepare and file accounts or make returns to Companies House; and failing to send in returns or pay to the Crown any tax that is due.

WHAT SHOULD I DO BEFORE APPLYING?
There are safeguards for those who are likely to be affected by a company’s dissolution. If your company has creditors, members etc, you are advised to warn all the people listed in question 4, before applying, as any of them may object to the company being struck off. Any loose ends should be dealt with before you apply. It is also advisable to notify any other organisation or party who may have an interest in the company’s affairs, otherwise they might later object to the application.

Examples include local authorities, especially if the company is under any obligation involving planning permission or health and safety issues, training and enterprise councils and government agencies.

WHAT HAPPENS WHEN THE REGISTRAR ACCEPTS A FORM 652A APPLICATION?
The Registrar will advertise and invite objections to the proposed striking-off in the London Gazette. The Registrar will strike the company off the register not less than three months after the date of this notice if he sees no reason to do otherwise and the application has not been withdrawn. The company will be dissolved when the Registrar publishes a notice to that effect in the Gazette. (At the time of striking-off, a letter will be issued to the contact name on Form 652a confirming the proposed date of dissolution.)

RESTORATION TO THE REGISTER
The Registrar cannot restore a company to the register without a Court Order. When the Registrar receives an office copy of the Court Order for restoration, a company is regarded as having continued in existence as if it had not been struck off and dissolved.
You May Use this Form to Restore Your Company: Restoration of the Company – £250.00

WHO CAN APPLY TO HAVE A COMPANY RESTORED TO THE REGISTER?
For companies struck off following a Form 652a application: any of the parties who must be notified of the application can apply to the Court within 20 years of dissolution for the name of the dissolved company to be restored to the register. The Court may order restoration if it is satisfied that: the person was not given a copy of the company’s application. The company’s application involved a breach of the conditions of the application; or for some other reason it is just to do so.

The Secretary of State may also apply to the Court for restoration if this is justified in the public interest. For companies struck off at the instigation of the Registrar: the company, or a member or creditor of it, can apply to the Court for restoration within 20 years of the dissolution. When a company applies for its own restoration, a member of the company must also be an applicant to give any necessary undertakings to the Court.

Where a company is dissolved: the liquidator or any other interested party such as a creditor can apply to the Court for the dissolution to be declared void. In most cases an application must be made within two years of dissolution, but it can be made at any time if its purpose is to bring proceedings against a company for: damages for personal injuries including any sum under Section 1(2)(c) of the Law Reform (Miscellaneous Provisions) Act 1934 (funeral expenses) or damages under the Fatal Accidents Act 1976 or the Damages (Scotland) Act 1976.

WHERE DO I APPLY FOR A COURT ORDER FOR RESTORATION?
Apply to the High Court by completing a claim form (this is the standard form that starts proceedings). The Registrar of the Companies Court in London usually hears restoration cases in chambers once a week on Friday afternoons. Cases are also heard at the District Registries. Alternatively, an application can be made to a County Court that has the authority to wind up the company.

BANKRUPTCY & ADMINISTRATION ORDER
Administration Order Maximum Debt £5,000. An individual can seek the full protection of the court to settle debts of less than £5,000 (there is not a vote, as with an IVA). The court will decide if the arrangement is fair to the creditors. The basis of this arrangement is to try to avert the bankruptcy of debtors who owe (in the courts opinion) a small amount. Failure to maintain the administration order can result in court action by a creditor for a county court judgment or bankruptcy.

BANKRUPTCY
Minimum Debts of £750.00. An individual or a creditor can apply for a bankruptcy order if the debt is at least £750.00. The amount of the debt must not be in dispute. If an individual owed you £800.00 for a service you supplied and would not pay you due to a dispute, you could apply for a bankruptcy order, however, the court would reject the order based on the debtor raising the dispute. The court will not allow an order if there is any doubt whatsoever as to the validity of the debt (even if the debtor is more than likely lying).

If the individual could not pay you due to a lack of money, you would usually be successful. The usual time for a bankrupt to automatically be discharged is two years if it is your first bankruptcy and unsecured creditors are less than £20,000, and three years if unsecured creditors are in excess of £20,000.
PERSONAL BANKRUPTCY
The aim of most creditors (the one’s you owe money to) is not to make an individual bankrupt. Most bankruptcies have little in the way of compensation for unsecured creditors. The government services are more likely to petition your bankruptcy than, say, a trader you owe money to. It is also common for an individual to start a bankruptcy petition themselves: out of desperation to avoid the hounding of some overzealous creditors.

The purpose of bankruptcy is to convert your possessions, and any wages you receive, into lump sum and instalment payments for creditors. A debtors purpose to apply for their own bankruptcy is to form a moratorium (a group of creditors) to agree part repayment of all outstanding debts, and when the agreed repayment has been met, to have a ‘clean slate’.

Individual creditors cannot take action against you. They must make a claim through the ‘trustee’ (the name of the person who controls a bankruptcy) or write off their debt. When appointed the trustee will advertise your demise in a number of newspapers to give all of your creditors a chance to make a claim against the bankruptcy. It is also the responsibility of the bankrupt to make an honest list of all creditors: as a bankruptcy is also a chance to start again the bankrupt should ensure every creditor is notified. Not that a creditor could make a claim against you after a bankruptcy, but it will get all your creditors of your back.

If you own your home you would be fortunate to keep it. You can keep household ‘essentials’: bed, fridge, heating appliances etc. But not, TV’s, video recorders, computers (unless used for work, or used to get work). All ‘tools of trade’ are protected, but will be scrutinized (a new transit van is not a necessity – buying a well used second hand van would be a likely suggestion from the bankruptcy trustee).

A bankruptcy will normally last until the third anniversary of the bankruptcy order. During this time you are not allowed to hold a public office, become a company director (or in all but name run a business) and you must not apply for credit over £250.00 without notifying the lender of your bankruptcy. Your credit file will show your bankruptcy for six years from the bankruptcy order.

There is some talk of allowing some bankrupts to become company directors in as little time as three months from the bankruptcy order. The basis of the issue is: should an entrepreneur who started a business, a sound and well run business, but lost control of the company’s survivability through bad luck, ‘just a few more sales’, ‘a bit more backing from the bank’ etc. be allowed to try again once all matters have been explained to, and sanctioned by the trustee? This option gets my vote.
PARTNERSHIP INSOLVENCY
A partnership can enter into a Partnership Voluntary Arrangement (PVA). In a liquidation of a partnership, the personal assets of the partners are at risk if insufficient assets are available from the realized partnership assets.

OTHER ISSUES
Section 70 was widely discussed in the Guernsey case of
Cross v Benitrust (1998). One of the most interesting
points which arose was whether, as was the case, it was
correct to join the directors to proceedings at the outset.
In Benitrust it was noted that there was no reason why
there should be a bar on suing corporate directors until
all remedies had been exhausted against the trustee, so
that the directors may be joined at the outset albeit only
for a determination as to whether there is a breach of
trust, the position of the directors at the relevant time
and to confirm the trust company falls within section
70(1). Further a declaration may be sought at the outset
that there will be a liability contingent only upon the
giving of judgment for damages and costs.
Were the directors not joined at the outset, certain
fundamental issues (such as whether there was in fact a
breach of trust) would not be res indicata against them.
The court did, however, indicate that there would be
cases where a director could argue he or she had been
improperly joined. An example was where it was clear the
company’s resources were such that there was no
question of the director being called upon.
A second still more interesting point was whether it was
necessary to exhaust remedies against the trust company
as principal debtor before seeking to enforce the
statutory guarantee. There is after all an old rule of
Guernsey law contained in La Droit de Discussion, which
requires just that. Perhaps surprisingly, in Benitrust the
Court was of the view that “such ancient relics as La
Droit de Discussion” should not “trammel the simple
provisions of [section 70]”, and agreed with the first
instance court that section 70 did not prevent
beneficiaries from suing directors until they had
exhausted the remedy against the trustee.
This may mean there is no need even to pursue the trust
company at all, and a claim may be brought directly
against the director, with the director then presumably
having an implied right of indemnity against the company
to the extent the company could have satisfied the debt.
However, it is worth pointing out that it was accepted by
the parties in Benitrust that the trust company in question
had no assets, and this may have influenced the court’s
reasoning. Were section 70 to surface again before the
Guernsey court, I would see the point being argued.

The intention behind section 70 is therefore that it
catches anyone who is in control of the corporate trustee
at the time of the breach. I have seen it suggested that
“director” could in an extreme case include a settlor or
beneficiary in accordance with whose directions or
instructions the trust company was accustomed to act,
but that seems to be stretching the definition too far.
The spirit and doubtless the intention of section 70 is
clearly to catch only those in control of the trustee
company through either a direct or indirect shareholding,
or else a place on or “behind” the board.

DEFENCES
The law does afford directors a number of defences to an
action under section 70. Apart from the right of any
director to argue for instance, that there was no breach
of trust, or that he or she was not a “director” at the time
of breach, section 70(2) allows the court to relieve a
director of all or part of any personal liability as a
guarantor if the director satisfies the court that he or she
ought fairly to be so relieved because either
• he or she was not aware of the breach of trust or of
the intention to commit it and, in being not so aware,
was neither reckless nor negligent; or
• he or she expressly objected, and exercised rights by
way of voting power or otherwise as a shareholder or
director or other officer of the trustee company, so as
to try to prevent the breach.

Although untested, I would expect the court to apply to
directors similar tests as they will apply when deciding to
relieve trustees from liability for breach of trust. This
means that professional directors can expect to be
subjected to a higher standard.