Draft law no. 269 on "fiducie" (trust)

Draft law no. 269 on fiducie was tabled at the public session of the Parliament (Conseil National) on 11 June 2025 and referred to the National Finance and Economy Committee (CFEN).

Note: a bill adopted by Parliament (National Council) is forwarded to the Government, which has the option of transforming it into a bill or suspending the legislative procedure.

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SUMMARY

The "fiducie" (trust) is "a legal entity known in most European countries" (Explanatory Memorandum) that draft law no. 269 intends to create in two forms, in order to :

• "adapt Monegasque law to developments in business practice in order to enrich the wealth engineering options that Monaco can offer with the fiducie-gestion" (management trust) (’which enables a certain number of assets of different kinds to be entrusted to a professional manager in order to benefit from his/her expertise and management resources for the benefit of the settlor or beneficiary");
• "strengthening Monegasque law on security interests and companies in difficulty through the use of the fiducie-sûreté" (security trust) (’which enables the settlor to grant the creditor a security interest in the assets transferred to him/her and to strengthen his/her control over the repayment of his/her debt").

Draft law no. 269 is based in part on the French fiducie system (articles 2011 to 2030 of the French Civil Code).

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Outline of draft law no. 269 (before being referred to the Committee)

The draft law is divided into 8 chapters and contains 44 articles:

CHAPTER I – Nature of the fiducie

Article 1. Definition of the fiducie: an operation by which one or more settlors ("constituants"), whether natural persons or legal entities, transfer present or future assets, rights or security interests, or a group of assets, rights or security interests, to one or more fiduciary(ies) ("fiduciaires"/trustees) who, keeping them separate from their own assets, act with a view to a specific purpose, determined by the fiducie contract, for the benefit of one or more beneficiaries ("bénéficiaires").

Article 2. Definition of the fiduciary estate: made up of the assets transferred in fiducie, it constitutes an autonomous estate separate from that of the settlor, the fiduciary or the beneficiary, over which none of them has any real right ("droit réel", jus in re).

Articles 3 and 4. Establishment of the fiducie, registers, enforceability of the fiducie: by contract, will, or by judgment where authorised by law. The purpose of a fiducie established by contract for valuable consideration may be to guarantee the performance of an obligation. The fiducie is not enforceable against third parties until it is published in the register of fiducies ('registre des fiducies") and, where applicable, in the register relating to the transfer of ownership, depending on whether the property transferred in fiducieis movable or immovable (including mortgages). The terms relating to the register of fiducies will be specified by Sovereign Order.

Articles 5 and 6. Date and effects of the coming into force of the fiducie contract: the fiducie is constituted as soon as the beneficiary or beneficiaries accept the fiducie agreement. In the case of a fiducie established by will, the effects of acceptance are retroactive to the date of death. Acceptance of the fiducie divests the settlor of the assets, entrusts the fiduciary with their allocation and the administration of the fiduciary estate and is sufficient to make the beneficiary's entitlement certain.

CHAPITER II – Fiducie contract

Article 7. Mandatory terms of the contract (on pain of nullity) :

1. Assets, rights or securities transferred (determinable if they are future)
2. Duration of the transfer (max. 99 years)
3. Identity of the settlor(s)
4. Identity of the fiduciary(ies)
5. Identity of the beneficiaries or, where the persons who will be the beneficiaries of the fiducie have not yet been designated, the category of persons in whose principal interest the legal arrangement has been created.
6. Mission, scope of powers of administration and disposal of the fiduciary(ies).

Article 8. Registration: on pain of nullity, the contract and its amendments must be registered in the register of fiducies within one month of being signed and, depending on the movable or immovable nature of the assets transferred to the fiducie, in the corresponding registers.

The identification details and supporting documents that must be attached to the application for entry in the register of fiducies will be specified by Sovereign Order.

Article 9. Maximum term: 99 years, similar to Monegasque companies.

CHAPTER III – Different forms of fiducie

Articles 10, 11, 12. Definition of the two recognised forms of fiducie:

• Fiducie de gestion (Management): allows the settlor to provide the fiduciary with the means to effectively manage the assets transferred to him/er, in the personal interest of the settlor or a third party beneficiary.
• Fiducie de sûreté (Security): allows the settlor to grant the creditor a security interest in the assets transferred to the fiduciary.

CHAPTER IV – Administration of the fiducie

Section I – Settlor ("constituant")

Articles 13 to 17 :

• Settlors: may be legal entities incorporated under Monegasque law, natural persons of Monegasque nationality or Monegasque residents.
• The settlor may be the beneficiary of the fiducie.
• Unless otherwise stipulated in the fiducie contract, the settlor may designate a third party to look after his/er interests and guarantee his/er rights vis-à-vis the fiduciary.
  The settlor, fiduciary or third party may designate beneficiaries in accordance with the criteria set out in the fiducie deed and the principles of Monegasque public policy.

Section II – Fiduciary ("fiduciaire")

Articles 18 to 28 :

• The following may be fiduciaries: credit institutions and management companies established in Monaco, regulated professions designated by sovereign order (notaries, lawyers, chartered accountants).
• Judicial appointment: in the event of impossibility of providing for its appointment, failure to act, breaches.
• Powers of administration: exclusive control and administration of the fiduciary estate; the documents of title relating to the assets comprising the fiduciary estate are drawn up in his/er name; s/he exercises all the rights attaching to the fiduciary estate and may take any measure likely to ensure its appropriation. S/he acts as an administrator of the property of others charged with full administration.
• In order to protect the rights of the beneficiaries, the fiduciary must provide a guarantee from a bank or financial institution authorised to give guarantees and having its registered office or branch in the Principality (minimum amount set by Sovereign Order) and take out professional indemnity insurance.
• Contractual freedom to specify the terms and conditions under which the fiduciary must report to the settlor or designated third party on the performance of his/er duties.
• The fiduciary must expressly mention his/er capacity when acting on behalf of the fiducie (in order to avoid the application of the "theory of appearance" and to protect third parties and beneficiaries). Similarly, where the fiduciary assets include property or rights the transfer of which is subject to publication, the transfer must mention the name of the fiduciary in that capacity.
• In its dealings with third parties, thefiduciary is deemed to have the powers of an owner. S/he is bound even by acts for which s/he did not have powers under the fiduciary contract, unless s/he proves that the third party knew that the act exceeded his powers or that s/he could not have been unaware of it in the circumstances.
• Accounting rules: the fiduciary keeps independent accounts for the special purpose assets entrusted to it, in accordance with the conditions set out in Sovereign Order no. 3.167 of 29 January 1946 governing the preparation of the balance sheet of public limited companies and limited partnerships, as amended.
• Limitation of the effects of a fuciary's bankruptcy on the assets entrusted to him/er: the opening of collective proceedings for the settlement of liabilities against the fiduciary does not affect the fiduciary assets. Without prejudice to the rights of the settlor's creditors who have a right of pursuit attached to a security published prior to the fiduciary contract, and except in cases of fraud against the settlor's creditors, the fiduciary assets may only be seized by the holders of claims arising from the safekeeping or management of those assets. If the fiduciary assets are insufficient, the settlor's assets constitute the common pledge of these creditors, unless otherwise stipulated in the fiduciary contract, whereby all or part of the liabilities are to be borne by the fiduciary. The fiducie contract may also limit the liability to the fiduciary assets alone. Such a clause is enforceable only against creditors who have expressly accepted it.
• The fiduciary is liable, on his/her own assets, for any faults s/he commits in the performance of his/her duties.

Section III – Beneficiary

Articles 29 to 31 :

• The beneficiary must meet the conditions required by the fiducie contract to receive the assets and property rights arising from the fiduciary assets.
• The transfer of rights resulting from the fiducie contract and, if the beneficiary is not designated, his/er subsequent designation must, on pain of nullity, give rise to a written deed registered in the register of fiducies.
• Beneficiary's rights: if the fiducie contract so provides, the beneficiary has the right to demand, during the term of the fiducie, either the provision of a benefit granted to him or her, or the payment of the fruits and revenues and the capital or only one of them.

Section IV – Surveillance and control measures

Articles 32 to 36 :

• The powers of supervision are attributed to the settlors and their heirs and to the beneficiaries, and in cases provided for by Sovereign Order to certain bodies. Sovereign Orders may provide for a special supervisory regime for certain fiducies.
• The settlor, the beneficiary or any interested third party may take legal action against a fiduciary whose actions or omissions are likely to be prejudicial to the fiduciary estate.
• The fiduciary, settlor and beneficiary are jointly and severally liable for acts performed in fraud of the rights of the creditors of the settlor or of the fiduciary estate, if they participate therein.

CHAPTER V – Modifications

Article 37. Increasing the fiduciary estate: any person may increase the fiduciary patrimony by transferring property to it by contract or will and following the rules specific to the creation of a fiducie. In doing so, they do not acquire the rights of a settlor. The property transferred merges into the fiduciary estate and is administered in accordance with the terms of the fiducie contract. Any person may add assets to an existing fiducie without becoming a settlor. The assets are managed in accordance with the original contract.

Article 38. End of the fiducie (judicial decision): where a fiducie has ceased to meet the wishes of the settlor, in particular as a result of unknown or unforeseeable circumstances that make it impossible or too onerous to continue the object of the fiducie, the court of first instance may, at the request of an interested party, terminate the fiducie.

CHAPTER VI – End of the fiducie

Article 39. Revocation of the fiducie : the fiducie contract may be revoked by the settlor until it has been accepted by the beneficiary. Once accepted by the beneficiary, the deed may only be amended or revoked with the agreement of the beneficiary or by court order.

Article 40. End of the fiducie : by the occurrence of the term, the achievement of the object pursued when this takes place before the term or in the event of revocation by the settlor; also if the contract so provides, or failing this by a court decision, when all the beneficiaries renounce the fiducie; also if the fiduciary goes into liquidation or is dissolved, or disappears as a result of a sale or takeover.

Article 41. Effects of the termination of the fiducie. When the fiducie contract is terminated in the absence of a beneficiary or in the event of renunciation by the beneficiary, the rights, property or securities present in the fiduciary estate revert ipso jure to the settlor or his/er successors.

CHAPTER VII – Tax regime

Article 42. Fixed registration duty of €50: fiducie contract; deeds recording changes to information, the termination of the fiducie deed, and the transfer of property or real rights subsequent to its formation.

CHAPTER VIII – Miscellaneous provisions

Article 43. Fight against money laundering, the financing of terrorism and proliferation of weapons of mass destruction, and corruption: the provisions of articles 6-1 to 6-3 and 13-1-1 to 13-1-4 of Law no. 214 of 27 February 1936 revising Law no. 207 of 12 July 1935 on trusts, as amended, as well as the related penalties, are applicable. Compliance with FATF Recommendation 25 "Transparency and beneficial ownership of legal arrangements"(basic information, beneficial ownership, supervision).

Article 44. Amendment to Article 337 of the Criminal Code (breach of trust): includes settlors and beneficiaries of a fiducie contract.

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