Jersey’s Relationship with the Kingdom of Saudi Arabia

Compared with other IFCs, Jersey’s financial services professionals lead the way in visiting Saudi Arabia and meeting clients face to face. As a result, they have developed strong and lasting relationships with families and businesses in the Kingdom over the years.

Restructuring and Redomiciling Existing Structures

We’re the clear IFC of choice for restructuring and redomiciling existing structures established in other international jurisdictions, and we’re perfectly placed to provide expert support against the backdrop of Saudi Vision 2030.

Tax Neutral Environment

Jersey is proud to have a global reputation for integrity, independence and stability, and offers a tax-neutral environment in which to do business.

Caring For Saudi Families, Their Businesses and Their Legacy

Accuro is a management-owned multi-jurisdictional trust and private office business. The specialist Middle East team at Accuro strategically consulted with a prominent Saudi family from the Nejd region. The family have a multi-line international conglomerate owned and managed by two generations of the founder’s family. A dynamic group, characterised by progressive female-led management, the business and its ownership sought structuring for the divisional structure of the conglomerate with governance, succession planning and asset protection objectives.

Jersey trusts and companies supported their structural objectives. A charitable foundation also channelled important legacy plans, accounted for Zakat payments and empowered non-business family members to participate in the structure meaningfully. Private office solutions focussed on the family’s corporate objectives.

These included (a) re-organising the ownership so shareholders have several and identifiable interests (separately held but benefitting from economies of scale), (b) professionalising the administration of the group, its assets and the family’s private assets, and (c) planning for orderly succession, including implementing bespoke good governance around a family constitution, parallel shareholder’s agreement and bespoke corporate policies.

Key drivers accounted for included Shari’a law, family dynamics and productive involvement of blood family members without dis-incentivising loyal staff. It was also important to exit historic offshore structures which were no longer fit for purpose and to maintain family unity, minimise disputes and offer predictability of cost and income.

Jersey a Centre of Excellence in Succession Planning, Trusts and Islamic Finance

Background: The beneficial owner of a large Saudi Arabian investment management group, and his long-standing Jersey-based corporate service provider, sought advice on establishing a vehicle in Jersey to hold and invest in UK-listed stocks as part of a succession plan for his family wealth.

Brief: To find a solution that allows the client to deal with the succession planning issues of forced heirship and any disagreements regarding corporate governance, and to raise finance in a Shari’a compliant way.

Solution: The establishment of a Jersey discretionary trust with underlying company, the ownership and control of the company mirroring the beneficial interests under the trust. This solution meets the client’s underlying investment needs through a secure and private structure in a reputable and regulated jurisdiction, Jersey being a centre of excellence in the field of Islamic finance.

Supporting the Wealth Management Objectives of a Saudi Arabian Family

The role played by a Jersey-based specialist family office services firm is well illustrated in relation to a Saudi Arabian family and their international holdings.

Crestbridge has a long-standing relationship with the family and works closely with the client’s local family office, external directors and representatives of the family. In addition to providing directors, registered office, company secretarial services, full administration, bookkeeping and accountancy services to the structure, Crestbridge is in contact with the family office daily and holds bi-weekly meetings with them.

The introduction of governance structures is to the fore and the Crestbridge team leads and project manages on governance matters. They also maintain a close working relationship with the next generation of the family, while the firm has the depth of knowledge to take into account Shari’a considerations
at all times.

The running of this structure represents a true collaboration between the family, their local family office, trusted advisers and Crestbridge, who maintained their valued relationship with all parties connected to this structure by being proactive and project manages all governance transactional matters.

Expertise and Experience in Wealth Protection Solutions and Shari’a Compliant Structures

Situation: In 2018, a wealthy Saudi Arabia-based family wanted to invest in UK commercial property as part of a wider wealth diversification and succession planning strategy.

The Challenge: Given their nationality it was critical to the family that the structuring and the financing solution was compliant with Shari’a Law.

Solution: The solution was to establish a bespoke Jersey company with multiple share classes not only to enable different voting rights to different members of the family to be compliant with Shari’a Law, but also enabling succession planning for the family’s children to be implemented taking into account their minor age. This coupled with financing using a Murabaha agreement provided an efficient vehicle for the investment.

Equiom’s expertise and experience in developing and managing this kind of wealth protection solution, meant we were able to supply Shari’a compliant structures which met the needs of this family and others like them.

Helping GCC Families with Wealth Structuring

Fiduchi has had a presence in the Middle East for more than three years and has serviced clients in the region for over a decade. As an independent Jersey trust and corporate services provider, Fiduchi is ideally placed to assist families, and family businesses, with their structuring requirements, having done so for more than 30 years.

For one GCC family in particular, Fiduchi has established a new private trust company (PTC) structure in Jersey with two underlying trusts. The result of this exercise was to simplify and rationalise prior holding arrangements: wherever possible (and advantageous from a tax perspective), personal assets were put under the relevant holding company now held via trust, separating business from family assets and consolidating administration in one place.

Part of the exercise involved re-domiciling existing offshore holding companies to Jersey in order to  incorporate them into the newly established structure.

The trusts that have been put in place will ensure smooth succession planning for the majority of the client’s GCC and non-GCC assets. Furthermore, the PTC enables the client for as much or as little participation in the control of the structure as they wish. Jersey was chosen because of its strong global reputation and regulated environment and the fact that Fiduchi had a presence in the GCC, enabling ease of contact.

Streamlining Structures

Highvern were recently engaged by a member of the Saudi Arabian royal family to assist with refining and streamlining their complex private wealth structures. The client’s wealth structuring took place nearly 20 years ago, with real estate and investment assets added piecemeal as they were acquired.

Highvern and the family office professionals worked together to design a future-proof structure which would be more appropriate for the client’s changing investment and funding profile. This included the introduction of a PTC structure to unify and streamline decision making for various trusts established over the last 20 years. Throughout the process it was essential to understand the changing family and jurisdictional dynamics present in Saudi Arabia which provided the impetus for change.

The dispersion of family members across different jurisdictions, often for educational needs, is one factor to
be considered when managing a structure and determining the needs of the beneficiaries. Other factors are an enhanced desire for Saudi Arabian nationals to travel internationally on a regular basis, to have a diversified jurisdictional approach to asset management as a risk reduction tool, and to protect
their personal and familial reputation.

Highvern has very strong business connections in Saudi Arabia and is an expert in assisting clients adapt their private wealth structures to take account of personal and unique jurisdictional circumstances which apply in this fascinating region.

Creating Bespoke Jersey Trust and Company Structures to Manage International Personal Assets

Mourant advised a GCC ultra-high-net-worth individual (UHNWI) on the creation of a bespoke Jersey trust and company structure to hold and manage valuable personal assets situated in various locations in the UK and Europe.

A high degree of client and key advisor involvement was required in the design of the structure. The governance arrangements enable the client, along with his key advisers, to monitor and give certain directions to the trustee (a PTC) in relation to transactions in art, bloodstock, financial investments and real estate, with the Jersey administrator retaining certain controls.

The management arrangements ensure that the client, the advisers, the PTC and the boards of the underlying holding companies, receive regular management reports from the managers of each of the asset classes. The result represents a balance of the requirements of succession planning, asset protection, continuing client involvement and day-to-day governance. This meets the requirements of the client and gives the Jersey administrator the comfort that risks are being managed robustly.

This optimal outcome was achieved by having an understanding of the high level motivations of the client and the reality of day-to-day operations and by ensuring that the administrator’s concerns were taken into account. Investing in the design stage was key, as was the ability to refine the arrangements after stress testing.

Governance with Clarity

Oak are working closely with a UK-based family office to establish a PTC structure for a significant Middle Eastern family to hold their personal investment assets. They were attracted to the Jersey private trust company (PTC) structure as it allows the flexibility to ring fence assets in separate trusts for separate family interests under a single corporate trustee. Whilst consideration was given to appointing family office representatives to the PTC board instead, Oak have created a structure with the family office participating in an investment committee alongside Oak’s professional directors.

It was a key element for the family office to continue to be able to direct the investment strategy within a clear governance framework. It is essential that the governance structure for monitoring and reporting the activities of the PTC is robust as the assets are substantial.

The family looked at various jurisdictions to set up in but selected Jersey because it met all the key criteria. The legal framework was in existence and well-tested, it has a leading compliance and regulatory framework which makes it easier to do business with global financial institutions and sophisticated local service providers with experience of managing complex
structures for international families.

Developing Regulated and Compliant Structures for Family Business and Extended Family Members

The Client: A high-profile and well-respected Saudi Arabian trading family.

The Challenge: The family had become dissatisfied with the level of administration and record-keeping of an existing structure. They asked Ocorian to urgently assist in rectifying the work
of the incumbent trustee.

Solution: Ocorian reviewed the existing structure thoroughly and following tax and legal advice, established a Jersey private foundation to act as trustee and assist in the migration of the underlying entities to Jersey.

Extensive governance work was carried out to ensure compliance, including updating financial statements and bookkeeping records.

A family charter was developed to bring younger members of the family into the business, allowing them to participate in the direction of the trading vehicles and provide advisory assistance to the foundation’s council, as well as act as an inclusive body for the wider family. Six monthly meetings are held between the family, the principal, the advisers and two senior Ocorian directors.

Results: The end result is a well-run, fully regulated and compliant structure, customised to the interests of the family business, cultivating strong relationships across the principal’s large extended family.

Due to the success of the mandate, the family asked Ocorian to assume a position on the foundation
council with the goal of embedding a strong corporate governance culture and to act as an impartial party to guide the family.

The family have also asked Ocorian to establish a Jersey private fund to enable the family to invest into UK development property, a structure that will be managed by our Jersey Funds team.

Jersey Discretionary Trust Provides Saudi UHNW and Business Group Flexibility for the Future

Ogier’s Private Wealth team advised a Saudi UHNWI on transferring the ownership of the strongest  performer in their business group to a trust structure in order to ring-fence its assets and prevent its fragmentation on the client’s death.

A Jersey law governed trust was the preferred option given the asset protection qualities of a Jersey trust.
From a Jersey law perspective, provided the settlor is solvent and there is no other established and vitiating
cause of action, the Royal Court of Jersey has made it very clear that it will uphold the sanctity of a trust.

Ogier also laid out a way to simplify the structure to better suit the client and their family through the creation of an Enforcer Committee at purpose trust level and replacement of the family unit trust with a
more straightforward discretionary trust.

The discretionary trust provided significantly more flexibility to meet changing circumstances going forward.

Family Governance – Bridging Generational Wealth

The Client: A complex and extensive Saudi family with Egyptian roots, the patriarch had three wives and children living in several different countries, including the US. The patriarch established a franchise business with a significant manufacturing group across the region.

The Challenge: Praxis reviewed and advised how to best alter an outdated existing offshore structure taking into consideration the fiscal complexities of the relevant jurisdictions. The patriarch wished to create a family governance framework that included a family counsel for younger members, which would encourage them to be involved and agree on how they interact with each other and the wider businesses. Family members would be required to prove themselves before being given roles in the businesses.

Solution: Working with colleagues in Geneva, the Praxis Jersey team created a Jersey company to act as a private trust company as part of a wider structure. Each family unit benefits from its own trust to minimise the impact from the other units’ fiscal regimes. Working with the family Praxis created a governance document that bound all members to the same principles.

Results: Each family unit has equal opportunity to participate in the family businesses, while being able to benefit from their own “pot” assuming they abide by the principles of the governance document.