30. Creation of a Trust

(1) A Trust may be created by:

• (a) transfer of Property owned by the Settlor to another person as Trustee, and, if the Settlor is a natural person, during the Settlor’s lifetime or by will or other disposition taking effect upon the Settlor’s death;
• (b) the transfer of Property from one Trust in order to settle such Property in a new Trust;
• (c) declaration by the owner of identifiable Property that thereupon the owner will hold the Property as Trustee; or
• (d) exercise of a power of appointment in favour of a Trustee.

(2) A Trust shall come into existence by an instrument in writing including a will or codicil.

31. Requirements for creation

(1) A Trust is created if:

• (a) the Settlor has the capacity to create a Trust;
• (b) the Settlor indicates an intention to create the Trust;
• (c) the Trust either:
• (i) has a definite Beneficiary;
• (ii) is a Charitable Trust, as provided for in section 35 (Charitable Trusts); or
• (iii) is a non-charitable Purpose Trust, as provided for in section 36 (NonCharitable Trusts or Purpose Trusts);
• (d) the Trustee holds or has vested in him or it Property for the benefit of a Beneficiary or for a purpose;
• (e) the Trustee has duties to perform; and
• (f) the same person is not the sole Trustee and sole Beneficiary.

(2) A Beneficiary is definite if the Beneficiary can be ascertained now or in the future.

(3) A Trust may have at the same time a definite Beneficiary and a purpose.

32. Trust purposes

(1) A Trust may only be created to the extent its purposes are sufficiently certain to allow the Trust to be carried out, lawful and not contrary to public policy in the AIFC.

(2) A Trust and its terms shall be for the benefit of its Beneficiaries or in furtherance and support of its purposes.

33. Duration of a Trust

(1) A Trust may continue indefinitely or terminate in accordance with these Regulations or with the terms of the Trust.

(2) No rule against perpetuities or excessive accumulations shall apply to a Trust or to any advancement, appointment, payment or application of assets from a Trust.

(3) Except where the terms of a Trust provide to the contrary, any advancement, appointment, payment or application of assets from that Trust to another Trust shall be valid even if that other Trust may continue after the date by which the first Trust must terminate.

34. Validity and invalidity of a Trust

(1) Subject to subsections 34(2), (3) and (4), a Trust shall be valid and enforceable in accordance with its terms.

(2) A Trust shall be invalid to the extent that:

1. (a) it purports to do anything which is contrary to AIFC Law;
2. (b) it is created for a purpose other than a charitable purpose in relation to which there is no Beneficiary, unless it complies with section 36 (Non-Charitable Trusts or Purpose Trusts);
3. (c) its creation was induced by fraud, duress, undue influence or misrepresentation;
4. (d) the Trust is contrary to public policy in the AIFC; or
5. (e) the terms of the Trust are so uncertain that its performance is rendered impossible.

(3) Where a Trust is created for two or more purposes of which some are lawful and others are unlawful:

1. (a) if those purposes cannot be separated the Trust shall be invalid; or
2. (b) where those purposes can be separated the Court may declare that the Trust is valid as to the purposes which are lawful.

(4) A Trust may be validly created which has Beneficiaries, charitable purposes and purposes which are not charitable, in which case section 35 (Charitable Trusts) shall apply in relation to the charitable purposes and sections 35 (Charitable Trusts) and 36 (NonCharitable Trusts or Purpose Trusts) shall apply in relation to the purposes which are not charitable.

35. Charitable Trusts

(1) A Charitable Trust may be created for the relief of poverty, the advancement of education or religion, the promotion of health or art, the protection of the environment, or any other purposes which are beneficial to the general public.

(2) If the terms of a Charitable Trust do not indicate a particular charitable purpose or Beneficiary or a means by which a particular charitable purpose or Beneficiary may be selected, the Court may select one or more charitable purposes or Beneficiaries in accordance with the Settlor’s intention to the extent it can be ascertained.

(3) Subject to subsection 35(4) if a particular charitable purpose becomes unlawful, impracticable, impossible to achieve, contrary to public policy in the AIFC, or obsolete in that, by reason of changed circumstances, it fails to achieve the purpose of the Trust:

• (a) the Trust does not fail, in whole or in part;
• (b) the Trust Property does not revert to the Settlor or the Settlor’s successors in interest; and
• (c) the Court may apply cy-près to vary or terminate the Trust by directing that the Trust Property be applied or distributed, in whole or in part, to one or more charitable purposes or Beneficiaries in accordance with the Settlor’s intention to the extent it can be ascertained and otherwise as the Court may direct.

(4) A provision in the terms of a Charitable Trust that would result in distribution of the Trust Property to a non-charitable Beneficiary prevails over the power of the Court under subsection 35(3) to apply cy-près to vary or terminate the Trust only if, when the provision takes effect, the Trust Property is to revert to the Settlor and the Settlor is still living.

(5) A Charitable Trust may be enforced by the Settlor of the Trust, if the Settlor is still living, maintaining a proceeding to Enforce such Trust or by the Court on the application of any of the Settlor’s heirs or the AFSA or a person designated by it.

36. Non-Charitable Trusts or Purpose Trusts

(1) A Trust shall not be invalid by reason of subsection 34(2)(b) (Validity and invalidity of a Trust) if the terms of the Trust provide for the appointment of an Enforcer in relation to its non-charitable purposes and for the appointment of a new Enforcer at any time when there is none.

(2) Subject to subsection 36(1), a Trust may be declared by Trust Instrument for a noncharitable purpose, including the purpose of holding or investing in shares in a company or juridical person or any other assets constituting the Trust Property if:

• (a) the purpose is possible and sufficiently certain to allow the Trust to be carried out;
• (b) the purpose is not contrary to public policy in the AIFC or unlawful under the laws of the AIFC; or
• (c) the Trust Instrument specifies the event upon the happening of which the Trust terminates and provides for the disposition of surplus assets of the Trust upon its termination.

(3) It shall be the duty of an Enforcer to Enforce the Trust in relation to its non- charitable purposes.

(4) The appointment of a person as Enforcer of a Trust in relation to its non- charitable purposes shall not have effect if he is also a Trustee of the Trust or has a conflict of interest.

(5) The terms of the Trust may provide, or the Court may order, that some or all of the costs incurred by the Enforcer in performing his duties shall be reimbursed to him out of the Trust fund.

(6) Except as permitted by these Regulations or expressly provided by the terms of the Trust, or with the approval of the Court an Enforcer shall not:

• (a) directly or indirectly profit from his appointment;
• (b) cause or permit any other person to profit directly or indirectly from such appointment; or
• (c) on his own account enter into any transaction with the Trustees or relating to the Trust Property which may result in profit to him or the Trustee.

(7) Subject to subection 36(8), an Enforcer may resign his office by notice in writing delivered to the Trustee. Such resignation shall take effect upon delivery of notice.

(8) A resignation given in order to facilitate a Breach of Trust shall be of no effect.

(9) An Enforcer shall cease to be an Enforcer of the Trust in relation to its non- charitable purposes immediately upon:

• (a) the Enforcer’s removal from office by the Court;
• (b) the Enforcer’s resignation becoming effective;
• (c) the coming into effect of a provision in the terms of a Trust under which the Enforcer is removed from office or otherwise ceases to hold office; or
• (d) the Enforcer’s appointment as a Trustee of the Trust.

(10) A Trustee of a Trust for non-charitable purposes shall, at any time when there is no Enforcer in relation to them, take such steps as may be necessary to secure the appointment of a new Enforcer.

(11) Where the Trustee of a Trust for non-charitable purposes has reason to believe that the Enforcer in relation to such purposes is unwilling or refuses to act, or is unfit to act or incapable of acting, he shall apply to the Court for the removal of the Enforcer and the appointment of a replacement.

(12) The Trustee shall apply to the Court for the appointment of a new Enforcer where there is no provision for the appointment of a new Enforcer in the Trust Instrument or the provisions in the Trust Instrument are not effective to secure the appointment of a new Enforcer, or the Enforcer is unwilling or refuses to act within 30 days of becoming aware that there is no Enforcer willing and able to act.

(13) If the Trustee does not make an application in accordance with subsection 36(12), the Court may impose a fine on the Trustee not exceeding 10 per centum of the value of the Trust Property.

37. Variation and revocation of a Trust

(1) A Trust may expressly provide that:

• (a) its terms are capable of variation; or
• (b) the Trust itself or a power exercisable under the Trust is revocable either in whole or in part.

(2) Unless the terms of a Trust expressly provide that the Trust is revocable, it shall be irrevocable.

(3) Where a Trust provides that the terms of the Trust may be varied, such power to vary shall be without prejudice to the power vested in the Court by these Regulations for the variation of the terms of the Trust.

(4) No variation of the terms of the Trust or revocation of a Trust or a power exercisable under a Trust shall prejudice anything lawfully done by a Trustee in relation to a Trust prior to his receiving a notice of such variation or revocation.

(5) Subject to the terms of the Trust, where a Trust is revoked, either in whole or in part, the Trustee shall hold the Trust Property affected by the revocation for the Settlor absolutely or if the Settlor is dead, for the Settlor’s personal representative or estate.

(6) Where a power to revoke, a general power of appointment or the present Beneficial Interest in respect of all or part of the Trust Property is reserved or granted to a person, the Trust Instrument may provide that for so long as the Settlor, Beneficiary or other holder of the power is not the sole Trustee, the Trustee shall owe no duty to any other person in relation to all or such part of the Trust Property and accordingly shall have no responsibility to any other person for acts or omissions occurring during that person’s lifetime in respect of that Property.

(7) For the purposes of this section, the “Settlor” is the particular person who provided the Property which is the subject of revocation.

(8) The Court may vary the terms of a Trust:

• (a) even if unambiguous, to conform the terms to the Settlor’s intention if it is provided by clear and convincing evidence that both the Settlor’s intent and the terms of the Trust were affected by a mistake of fact or law, whether in expression or inducement;
• (b) if, because of circumstances not anticipated by the Settlor, modification will further the purpose of the Trust; or
• (c) if continuation of the Trust on its existing terms would be impractical or wasteful or impair the administration of the Trust; with effect from either the date the order for variation of the Trust was made or such earlier date as to the Court seems fit.

(9) To achieve the Settlor’s tax objectives in relation to any jurisdiction to which the Trust or Settlor may be subject, the Court may vary the terms of a Trust in a manner that is not contrary to the Settlor’s probable intention. The Court may provide that the variation has retroactive effect.

(10) An application under subsection 37(8) may be made by the Settlor, the Trustee, a Beneficiary or the guardian or representative of a Beneficiary who is a Minor, incapacitated, unascertained or unborn.

(11) The terms of a Trust may provide that if at any time the Trust Property includes any Property which by reason of the law of the Republic of Kazakhstan or any other specified jurisdiction may be held only by a national of that country the only persons who may be a Trustee, Protector or Beneficiary under the Trust are nationals of that jurisdiction at that time, and may further provide that such provision may not be varied or revoked.

(12) If the terms of a Trust contain an irrevocable provision of the type referred to in subsection 37(11), notwithstanding any other provision of these Regulations (including subsection 6(1)), that provision may not be varied or revoked.

38. Power of Court to authorise dealings with Trust Property

(1) Where any transaction affecting or concerning any Trust Property is in the opinion of the Court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the Trustee by the Trust Instrument, if any, or by law, the Court may, by order, confer upon the Trustee, either generally or in any particular instance, the necessary power for that purpose, on such terms, and subject to such provision and conditions, if any, as the Court may think fit, and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne as between capital and Income.

(2) The Court may make an order under this section at a time after the dealing has commenced or is completed.

(3) The Court may, from time to time, rescind or vary any order made under this section, or may make any new or further order.

(4) An application to the Court under this section may be made by the Trustee or any of them if more than one, or by any Beneficiary.

(5) The power conferred by this section is in addition to the powers conferred on the Court by subsection 37(8) (Variation and revocation of a Trust).

39. Failure or lapse of interest

(1) Subject to the terms of a Trust and to any order of the Court, the Trust Property or interest under the Trust shall be held by the Trustee for the Settlor absolutely or if the Settlor is dead, for the Settlor’s personal representatives or estate where:

• (a) the interest in question fails or lapses;
• (b) the Trust Property is vested in a person otherwise than for his sole benefit but the Trusts upon which he is to hold the Property are not declared or communicated to him; or
• (c) the Trust terminates otherwise than in pursuance of subsection 40(1)(d) (Termination of a Trust).

(2) For the purposes of this section, the “Settlor” is the particular person who provided the Property affected by the failure or lapse.

40. Termination of a Trust

(1) Without prejudice to the powers of the Court under these Regulations a Trust terminates:

• (a) if the Trust is revoked or expires pursuant to its terms;
• (b) if there is no Beneficiary or person who can become a Beneficiary in accordance with the terms of the Trust or if no purpose of the Trust remains to be achieved;
• (c) if the purposes of the Trust have become unlawful, or impossible to achieve; or
• (d) notwithstanding the terms of the Trust, upon consent of all the Beneficiaries in existence who have been ascertained and none of whom is a Minor or a person under a legal disability.

(2) The Court may terminate a Trust:

• (a) because of circumstances not anticipated by the Settlor, if termination will further the purposes of the Trust; or
• (b) if the value of the Trust Property is insufficient to justify the cost of administration.

(3) An application to the Court under this section may be made by a Settlor, a Trustee or a Beneficiary as the case may be.

41. Distribution of Property

(1) Without prejudice to the powers of the Court under subsection 41(4), on the termination of the Trust the Trustee shall distribute the Trust Property to the persons entitled thereto within a reasonable time and in accordance with the terms of the Trust.

(2) If the Trust Instrument makes no provision as to the proportions of the Trust Property to which the Beneficiaries are entitled inter se, the Beneficiaries shall take in equal proportions.

(3) The Trustee may retain sufficient assets or obtain satisfactory security to make reasonable provision for liabilities, whether existing, future, contingent or otherwise, before distributing the Trust Property under subsection 41(1).

(4) The Court may, on the termination of a Trust or at any time thereafter, upon an application made by a Trustee or any Beneficiary as the case may be:

• (a) require the Trustee to distribute the Trust Property;
• (b) direct the Trustee not to distribute the Trust Property; or
• (c) make such other order as it thinks fit.