Bill seeking to regulate trust companies OK’d

Legislation seeking to regulate trust companies based on the islands cleared the House of Representatives yesterday, setting into motion a plan to lure Asian and U.S. investors with millions of dollars in trust accounts.

HB 12-82, sponsored by Rep. William S. Torres, came just as Guam successfully attracted initial investments of $40 million from trust companies in the U.S. with the recent signing of the law regulating the financial sector.

The measure seeks to establish a mechanism to regulate and license trust companies that will be based here in order to protect public interest, while ensuring efficiency in the delivery in this type of service.

Trust companies could be the CNMI’s future to help stir the local economy based on an economic study commissioned by the Northern Marianas College.

The House Committee on House Commerce and Tourism Committee endorsed Mr. Torres proposal after months of review and after considering recommendations from several government agencies.

It noted that this new type of financial service would cater not only to Asian investors, but U.S.-based entrepreneurs and investors as well who would want to set up their businesses on the islands.

HB 12-82 aims to “bring under public supervision those persons who are engaged in, or who desire to engage in the business of a trust company, not in connection with banking business,” the committee said in a report.

This will also ensure of an “adequate, efficient and competitive” trust company service in the CNMI, the committee said in endorsing the legislation. It now heads to the Senate for action.

Meanwhile, the lower house during its regular session yesterday reconsidered its action on a seeking a 100 percent rebate on taxes paid on cash compensation involving land transaction between the government and private landowners.

HB 12-131 has been pending in the Governor’s Office where it is risking possible veto as some of its provisions are being questioned by the governor’s advisers, according to House Floor Leader Oscar M. Babauta.

“The language in HB 12-131 is ambiguous. They interpret it to mean that the rebate should be 100 percent of what is paid to the landowners by the government,” he told in an interview.

The lower house is expected to re-draft the bill for a minor amendment which it hopes to pass within the next few days, added Mr. Babauta.

Offered by Rep. Heinz S. Hofschneider, the measure will compliment two existing laws that set the mechanism for land exchange and compensation by the government for private properties.

But landowners agreeing to buy out of their lots instead of land exchange are required to pay taxes to the CNMI, thereby getting an unfair deal compared with those who want to be compensated with another property.

The measure will further remedy this inequity by providing a 100 percent tax rebate on taxes paid on cash compensation received from the sale of private land to the government on or after January 1, 1994.