Private trust company for a family operating business
A second-generation industrial family business where no big trust company would hold the shares, and no single family member could be trusted with all of them.
The situation
A founder in their seventies owned an industrial group outright. Their three children were involved in the business to different degrees. Big trust companies wouldn't take on the risk of holding one large trading business, and the founder didn't want to hand decisions to someone who didn't understand it.
- The founder wanted to keep a say in investment decisions without breaking the trust.
- No single child could control the trustee, and the arrangement had to keep working after the founder's death.
- Family members lived in three different countries, so the CRS tax reporting had to be mapped out before signing.
- The business couldn't be disrupted; its bank loan terms referred to the shareholder.
The trustee company is deliberately owned outside the family, so no family member controls the company making decisions about them.
- Dividends
- Profits from the business go up to the holding company, then to the trust, then to family members when the PTC board decides.
- Decisions
- Every payout is minuted with the reasons, including the times the board turned down a family request.
- Reporting
- The trust's CRS classification was settled at the start; the founder, the protector and family members receiving payouts were identified as people who get reported.
What we did, step by step
- 01Governance before entities
Spent six weeks agreeing how decisions would be made — who sits on the board, how many must attend, how deadlock is broken — before setting up any company.
- 02PTC ownership resolved
Put the PTC's shares into a non-charitable purpose trust, so no family member owned the trustee.
- 03Reserved powers drafted narrowly
The founder kept control of investment direction and a veto over selling the business, but not over payouts to family members.
- 04Holding layer interposed
Put a holding company between the trust and the business, agreed with the lender in advance.
- 05CRS mapped
Documented the classification and what gets reported for all three family members' countries before the first payout.
- 06First year supervised
We sat in on the first four board meetings to set the standard for minutes, then stepped back.
- Trustee decisions now made by a board that understands the business, with independent directors holding the balance.
- The founder kept a real say, within limits that stand up to scrutiny.
- Reporting duties identified and met from the first year, rather than discovered in an audit.
- Passing the business on no longer depends on a will, and the arrangement carries on after the founder.
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