PERU Law and Practice Contributed by: Percy Castle, Violeta Moncada, Angel Quispe and Dayana Evangelista, Casahierro Abogados
trust service companies and securitisation compa - nies, as applicable depending on the nature of the trust arrangement. Under the same legal framework, the trustee is vest - ed with legal title in trust ( dominio fiduciario ) over the assets comprising the trust estate ( patrimonio fide - icometido ). Such title includes the powers to man - age, use, dispose of and recover the trust assets, all of which must be exercised strictly in accordance with the terms of the trust instrument and any limita- tions expressly set forth therein. Any act performed in breach of those terms or limitations may be subject to legal challenge and annulment. Accordingly, the trustee’s primary duty is to safeguard and manage the assets and rights comprising the trust estate with the diligence of a prudent merchant and loyal administrator, while carrying out the purposes for which the trust was established. To fulfil its fidu - ciary duties, the trustee is authorised to participate in such acts, agreements, transactions, investments and other legal arrangements as may be necessary or appropriate to achieve the objectives of the trust. In addition, corporate trustees are subject to the supervision of the Superintendency of Banking, Insurance and Private Pension Funds (SBS). As regu - lated entities, they are required to maintain specified records and information available to the SBS and to comply with the applicable regulatory framework gov - erning risk management, internal controls, anti-money laundering and counter-terrorist financing obligations, as well as other prudential requirements. 6.2 Fiduciary Liabilities Peruvian law does not recognise a specific doctrine equivalent to the “piercing of the trust veil.” Instead, a Peruvian trust constitutes an autonomous estate ( patrimonio fideicometido ), legally separate from the assets of the settler, the trustee and the beneficiaries. Accordingly, liabilities arising from the administration of the trust must, as a general rule, be satisfied solely out of the assets comprising the trust estate. Nevertheless, this asset segregation is not absolute. Peruvian courts may declare certain trust-related transactions ineffective or unenforceable where the
trust structure has been used for unlawful purposes, to defraud creditors, through sham transactions, abuse of rights or in violation of mandatory provisions of law. In such cases, the statutory grounds for the nullity of a trust set forth in the General Law of the Financial and Insurance System (Law No. 26702) apply in the first instance. Additionally, the general remedies available under Peruvian civil law – such as actions for nul - lity, ineffectiveness or the “ acción pauliana ” (fraudu - lent conveyance action) – apply, rather than a distinct doctrine of piercing the trust veil. Likewise, the trustee is not personally liable for the obligations of the trust estate solely by virtue of acting as trustee. However, the trustee may incur contractu - al, civil, administrative and, where applicable, criminal liability for breaching the fiduciary duties imposed by the General Law of the Financial and Insurance Sys - tem (Law No. 26702), the regulations issued by the Superintendency of Banking, Insurance and Private Pension Funds or the terms of the trust instrument itself. In particular, where a corporate trustee breaches its fiduciary duties through wilful misconduct or gross negligence, it is required to restore to the trust estate the value of the assets lost or diminished as a result of such breach, together with compensation for any damages suffered, without prejudice to any additional civil, administrative or criminal liability that may arise under applicable law. 6.3 Fiduciary Regulation Under Peruvian law, a trustee is required to administer the trust assets in accordance with the purpose of the trust and the fiduciary duties of diligence, loyalty, prudence and good faith inherent in its role as admin - istrator of an autonomous trust estate. Accordingly, investment decisions must be consistent with the objectives established by the settlor and the interests of the beneficiaries, while avoiding speculative trans - actions or investments that are inconsistent with the purpose of the trust. In this regard, the Peruvian legal framework adopts a predominantly contract-based and fiduciary duty- oriented approach, rather than a system of detailed statutory rules governing permitted investments
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