Swiss Trust Companies: Why they might be the best corporate structure ever! (Part One of a Four Part Series)

General Overview & Review

  • Saves Time & Money (Part 2)
  • Enhances Profile & Creates Profit (Part 3)
  • Protects Against Lawsuits & Improves Privacy (Part 4)

Part One:

General Overview & Review

Owning a Swiss Trust Company (STC) offers you the opportunity for Profit, Privacy and Asset Protection and when compared to similar corporate structures it also saves time and money. In today’s world often business and personal interests are intertwined. To that end, there is no more effective means to protect yourself or your business than with a bearer share Swiss Trust Company which can accommodate your requirements in total privacy. This is the first in a four part series which will explore this entity and its various benefits in-depth.

To explain a Trust Company you must start with the concept of a “captive.” Captives are typically vehicles to bring critical financial functions in house. Those functions are normally insurance, banking or brokerage in nature. These entities have been frequently misunderstood or abused as tax shelters but there are virtually no tax benefits. The direct benefits include: 1) Cutting corporate costs 2) Control and therefore preserving business opportunity or 3) Personal asset protection for ownership. Should a Trust Company be fully functional – as is the case with Swiss Trust Companies – it is also an excellent alternative to private bank ownership since it will legally cover many of the same transactional needs. A Trust Company is often quicker and less expensive to acquire compared to a bank and thus can also offer a parent company substantial savings in both time and money. Therefore, a Swiss Trust Company may be the fastest and most cost effective alternative available to entrepreneurs with international interests that need to bring vital financial functions in house.

Entrepreneurs can gain these strategic advantages:

  • Move investment capital faster to take advantage of growth opportunities resulting in increased profit.
  • Exercise more control over capital transactions in order to reduce third party fees thus creating savings.
  • Establish a major European beachhead to protect funds from political instability and consolidate global business interest.
  • Alternative to captive bank ownership which can be a very long and expensive process to successfully complete.

A Swiss Trust Company is a hybrid corporate entity that will likely have its origins as a Family Trust or an IBC (International Business Corporation) many years ago. Most are dormant and the previous activities are of little or no consequences since there are no assets or liabilities. What is of importance is that at some point the entity went through a conversion to a Non-Banking Financial Institution. All Swiss Trust Companies are established by taking an older corporate entity, renaming it, changing the Articles of Association and then finally getting approval from the appropriate Swiss Canton. This is a very detailed process that usually takes months of filings and work. Again, the previous activity has no bearing on the current capabilities of the entity but the age of the entity can be of importance which is explained in some detail later. All Non-Banking and Banking Corporate Entities throughout the world follow a similar process and start initially as a corporation. It is important to note that this entity cannot be referred to as a bank, reiterate it is not a tax shelter, and finally that the STC is not a means to circumvent the banking laws of any country.

Swiss law can be vague when it comes to Trust Companies and is done so on purpose to preserve flexibility of the entity without abdicating its responsibility to meet AML (Anti-Money Laundering) obligations. In general, the Swiss prefer self-regulation when possible. To that end, a Private Swiss Trust Company in Switzerland is a self-regulated privileged entity (not regulated by FINMA which oversees banks and brokerages). If your corresponding bank accounts are located in Switzerland than after reaching certain levels an additional SRO (Self Regulating Organization) designation and membershiphttp://en.wikipedia.org/wiki/Self-regulatory_organization may be required for the Trust Company. This is usually at the 20 client level or $10 million in managed assets and can easily be handled by a qualified administrative firm.

The cost range of Swiss Trust Companies is USD$55,000 to USD$250,000. With the recent global economic crisis, the required initial investment has significantly come down which currently makes it a buyers market for those that have the need and the liquid assets. This investment outlay varies according the age of the structure. As a rule of thumb, the older Trust Companies are more appropriate for clients who wish to make it a working Non-Banking Financial entity. Age can be significant when establishing corresponding banking relationships, going public with an Offshore IPO or applying for organizational memberships such as a SWIFT. If a prospective title-holder, however, is looking to benefit from owning a Swiss Trust Company solely for asset protection then a younger company would be more appropriate and thus require a smaller investment.

The host country is an outstanding choice for your business dealings. Though relatively small, Switzerland has only 6.7 million inhabitants, it is internationally recognized as a premier banking center. This is due largely to its tradition of free trade, strong work ethic, technical knowledge and entrepreneurial talent. 16% of those living in Switzerland are foreign citizens, pointing to the cosmopolitan nature of the population. The four national languages of Switzerland are German, French, Italian and Romansch but most professionals speak business level English which lends to the easy of conducting business. Switzerland is also one of the oldest democracies in the world having been established in 1848. Economic development through the last few decades has been marked by strong growth against a background of low inflation, high capacity utilization, modern technology, high productivity and relatively high wages and salaries. The World Economic Forum’s Global Competitiveness Report currently ranks Switzerland’s economy as one of the most competitive in the world.

Competitive factors which contribute to this nation’s ability to compete on the global scale include:

  • Social peace and political stability
  • A leading economy with currency and price stability
  • Highly professional international banks that focus on privacy
  • First-rate infrastructure
  • High productivity combined with high product and service quality
  • First-class and world-renowned universities and technical institutes

The broad range of authority granted to Swiss Trust Company is one of the main attractions for business owners. Very few corporate entities anywhere encompass the range of potential activities that this entity can. Please keep in mind that the STC must be appropriately capitalized prior to engaging in any specific activity. Below we have listed a synopsis for your review.

Authorities of a Swiss Trust Company
A Swiss Trust Company is authorized to conduct the following business activities:

  • The power to loan money.
  • The power to open any bank accounts, including trust and escrow accounts in any bank domiciled in the United States and/ or any bank domiciled in any international location.
  • The power to offer and service a complete range of world wide fiduciary services.
  • The power to participate in life insurance fixed or variable annuity or life settlement policy, credit insurance.
  • The powers to acquire, develop, hold, sell, trade, exchange, dispose, mortgage of real property, precious metals, natural resources.
  • It may engage in the general leasing business, franchising, money funds, mutual funds, formation of general limited partnerships, real estate investment trust.
  • Acts as a holding company for banks, savings and loans, insurance companies small business investments corporations and stock brokerage firms.
  • Reinsurance for political risk/trade and premium financing.
  • The signature of any commercial paper, debt obligation, bonds, stocks, securities, subscription agreements, and any other evidence of indebtness document or agreement binding upon such terms and conditions as determined by this and its Trustees.
  • The Power to Act as Natural Persons
  • The Power to Act as Attorney-in-Fact
  • The Power to Act as Officers, Agent, Employees
  • The Power to Make Contracts
  • The Power to Create Agencies and Joint Ventures
  • The Power of investments
  • The Power to Deal in Goodwill
  • The Power of Donation
  • The Power of Guarantee
  • The Power of Trustee
  • The Power to Act as Investment Advisor
  • The Power to Act as Consultant
  • The Power to Deal in Securities and Commodities Brokerage
  • The Power of Inventory Financing
  • The Power to Deal in Shipping
  • The Power to Create Correspondence Banking Relationships
  • The Power of Collections
  • The Power to Hold Patents
  • The Power to Make Acquisitions
  • The Power to be Registered in Foreign Countries
  • The Power to Sell Annuities
  • The Power to Counter-Insure
  • The Power to Create or Set Aside Outside Of The Company a Special Fund
  • The Power to Sell Endowments
  • The Power to Act as Pension Advisor
  • The Power to Deal in Insurance Brokerage

Conclusion

A Swiss Trust Company is a very unique entity. It brings together the culture of the Swiss in promoting self-regulation and privacy with a functioning entity that can be utilized for asset protection, estate planning or as an alternative to private bank ownership. STCs are also extremely inexpensive when compared to the time and money that would be spent elsewhere attempting to acquire either a bank or a trust company. All things considered, there may not be a comparable corporate structure in the world. In our next report we will provide a detailed analysis of the ability of a Swiss Trust Company to cut costs for ownership.


Posted in: Miscellaneous, Swiss Trust Company, Uncategorized on July 31, 2012

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