PERU Law and Practice Contributed by: Percy Castle, Violeta Moncada, Angel Quispe and Dayana Evangelista, Casahierro Abogados
or portfolio allocation. Consequently, the scope of the trustee’s investment powers and the applicable investment strategy are determined primarily by the terms of the trust instrument, subject to the trustee’s general fiduciary obligations and the applicable regu - latory framework. From a tax perspective in Peru, there are no specific fiscal incentives designed to reward or encourage fiduciaries to invest assets prudently. 6.4 Fiduciary Investment Peruvian law does not recognise a statutory rule equivalent to the “prudent investor rule”, nor has it expressly adopted the Modern Portfolio Theory (MPT) as the standard governing the administration and investment of trust assets. Instead, the General Law of the Financial and Insurance System (Law No. 26702) establishes a framework based on the trus - tee’s fiduciary duties of diligence, loyalty and good faith, supplemented by the provisions of the trust instrument and the regulatory oversight exercised by the Superintendency of Banking, Insurance and Pri - vate Pension Funds. Likewise, Peruvian law does not impose a general statutory duty to diversify trust investments. Whether diversification is appropriate depends on the nature of the trust estate, the objectives of the trust and the powers expressly granted to the trustee under the trust instrument. In practice, it is common for wealth planning trusts to maintain significant concentrations in particular assets – such as shares in a family-owned business, real estate or other strategic investments – without such concentration being regarded, in itself, as inconsistent with prudent administration, provided that it is consistent with the purpose of the trust and the settlor’s intentions. In this context, where the trust estate holds shares or equity interests in a company, the trustee may exer - cise the rights attached to such ownership, including both voting and economic rights, in accordance with the terms of the trust instrument. As a result, trusts are frequently used to hold and preserve controlling interests in family businesses as part of succession and wealth planning strategies.
Nevertheless, the exercise of these powers is sub - ject to important limitations. First, the trustee must act strictly within the scope and purpose of the trust and comply with the instructions set out by the settler in the trust instrument. Second, the trustee remains bound by its fiduciary duties of diligence, loyalty and the avoidance of conflicts of interest, as well as by the regulatory requirements applicable to licensed fiduci - ary institutions supervised by the SBS. 7. Citizenship and Residency 7.1 Requirements for Domicile, Residency and Citizenship From the perspective of civil law, domicile in Peru is mainly governed by the Civil Code. Domicile is defined as the place where a person resides with the inten - tion of remaining there and, therefore, it comprises an objective element (habitual residence) and a subjec - tive element (intention to remain). Every person has a general domicile, which is unique, without prejudice to the fact that he or she may estab - lish special domiciles for certain legal purposes (for example, contractual or procedural domicile). Like - wise, the law recognises cases of legal domicile, such as in the case of legal entities (domiciled in the place where their administration or principal centre of activi - ties is located). A change of domicile occurs when the person estab - lishes his or her residence in a new place with the intention of remaining there, and the burden of proof regarding the change of domicile lies with the person alleging it. For its part, citizenship is governed by the Political Constitution of Peru and the rules on nationality. Peru - vian citizenship is acquired by birth (whether in Peru - vian territory or abroad to Peruvian parents, subject to registration) or by naturalisation, in accordance with the applicable legal requirements. Citizenship is independent from domicile and does not depend on residence. Regarding tax residency, Articles 7 and 8 of the Peru - vian Income Tax Law establish that Peruvian citizens
521 CHAMBERS.COM
Powered by FlippingBook