Rwandan govt revises laws governing trusts, insolvency

Rwanda's cabinet meeting recently approved draft laws governing trusts, as well as insolvency and bankruptcy. The new legislation aims to attract international investors and enhance the country's position as a financial hub in Africa. Antonny Mukulu, Chief Legal Officer at the Kigali International Financial Centre, shed light on the significance of the revised laws in a recent interview with CNBC Africa. Trusts have played a crucial role in facilitating investments in Rwanda, particularly in the context of succession planning. Existing trusts have enabled individuals to leave assets for their children, which are then managed by a third party for the benefit of the beneficiaries. These trusts have contributed to the growth of the economy and the overall GDP of the country. The amendments to the current trust law will introduce several key aspects, including the recognition of foreign trusts. Recognizing foreign trusts is crucial for Rwanda as it strives to establish itself as a financial hub. The new law will also focus on compliance standards, with trusts being required to register with the registrar of companies and be managed by professional trustees. Mukulu highlighted the importance of aligning Rwanda's trust laws with international best practices and standards to attract more foreign investments. The revised insolvency and bankruptcy law will address cross-border insolvency issues, recognizing proceedings from foreign jurisdictions and their impact on companies operating in Rwanda. The law will provide clarity and reduce the costs associated with recognizing foreign insolvency orders. Additionally, the law will introduce provisions for protected cell companies, a new type of company structure in Rwanda. These companies, which consist of a parent company and separate cells, allow investors to diversify and manage risks effectively. The incorporation of protected cell companies into the insolvency law demonstrates Rwanda's commitment to fostering a conducive business environment for both local and international investors. The revisions to the trust and insolvency laws underline Rwanda's determination to enhance its legal framework to meet the evolving needs of the business community. By aligning its laws with international standards and introducing innovative company structures, Rwanda is positioning itself as a competitive destination for investment in Africa. The recent legislative changes will not only attract foreign investors but also boost confidence in the country's financial system, thereby driving economic growth and development.