Lawmakers on Thursday paved way for a draft law regulating trusts and trustee’s activities in the country as well as controlling and supervising them to maintain proper standards of conduct and acceptable practices of trusteeship.
The bill will now go to the Lower Chamber’s Committee in charge after most legislators approved the basis of the bill.
The concept of Trust has its roots in the Commonwealth.
In common law legal systems, a trust is a relationship between three parties whereby property (real or personal, tangible or intangible) is transferred by one party to be held by another party for the benefit of a third party. Property of any sort may be held on trust, but growth assets are more commonly placed into trust, for tax and estate planning benefits.
The Minister of Trade and Commerce, Francois Kanimba, told Parliament that trust business has existed in Rwanda for a long time without clear supervision and regulation.
The minister said the purpose of the proposed law is to create an enabling legal framework for the establishment, regulation and supervision of trusts.
According to him, the law will be part of the reforms initiated by the government to make the country one of the best places to do business.
Even though lawmakers deemed it long overdue, most sought more clarifications on the seemingly new trend.
asked the minister to clarify on who an intermediary and arbitrator are, among other things.
“Who is in charge of the regulation system of arbitration? How is it done, by who and when?” Jean Baptiste Zimulinda wanted to know.
Kanimba told the MPs that the Trusts are registered by the Registrar General who also issues directives guiding their running.
“The Registrar General appears to be the regulator who will monitor this law.” Kanimba said.
Earlier, the minister explained that Rwanda has undertaken efforts to improve private and public investments with the objective of getting an annual growth rate of eight percent that is necessary to reduce poverty.
Kanimba noted that in the region, Kenya, Uganda and Tanzania have a Trust Law which has substantially supported the creation of Collective Investment Schemes.
The proposed law will provide a conducive environment for the emergence of new financial services in capital markets, banking, pensions and even the legal profession.
It will make it possible to create investment vehicles and schemes like Unit Trusts, Mutual Funds, REITS (Real Estate Investment Trusts), and SPVs (Special Purpose Vehicles).
The minister said the upcoming Collective Investment Schemes law and even the existing company’s Act make references to Trustees, yet there is no clear legal framework for creating and regulating Trusts.
He noted that the Trust law will also enable planning and funding in such areas as family and business succession planning, charity, education, research, among others.