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SEYCHELLES INTERNATIONAL
BUSINESS COMPANY
- SEYCHELLES SPECIAL
LICENCE COMPANY
- SEYCHELLES LIMITED
PARTNERSHIP
- SEYCHELLES PROTECTED
CELL COMPANY
- SEYCHELLES
TRUSTS
- SEYCHELLES
FOUNDATIONS
The
vast majority of companies formed in the Seychelles
for offshore purposes are incorporated under the
International Business Companies Act 1994 (see
below). However this law did not supersede the
existing Companies Law 1972, which is based on
English law and is used to form various types
of company used by businesses trading in the Seychelles,
and also for offshore businesses which are not
permitted to use the IBC form, such as banks,
insurance companies and mutual funds.
Companies
formed under the Companies Act 1972 can be private
companies limited by shares, by guarantee, or
hybrid; or they can be unlimited, but that is
rare. Public companies can also be formed under
the Act. For all these types of company, Memorandum
and Articles of Association must be filed at the
Companies Registry, along with the registration
fee.
Foreign
companies can re-establish themselves in the Seychelles
by way of continuation without the necessity for
reciprocal arrangements in the original country
of incorporation. An IBC wishing to leave the
Seychelles may do so.
In 2003, the government
legislated for additional types of company: Special
Licence Companies, Protected Cell Companies and
Limited Partnerships.
In 2009, Foundations
were added to the Seychelles financial services
offering.
In 2011, the government
has been considering a new Companies Act which
would unify and replace the existing “dual”
system consisting of the Companies Act 1972 (the
72 Act) and the the International Business Companies
Act 1994 (IBC Act). The proposed Act received
much criticism and the government put forward
an amended Act which is currently still under
discussion.
According to a government
White Paper on the proposed Companies Bill 2011,
the key aims of the new act are:
- To modernize
and simplify Seychelles corporate law;
- To unify Seychelles
corporate law and adopt a single Act system,
instead of the existing “dual” system
consisting of the 72 Act and the IBC Act; thereby
making for a less cumbersome and more coordinated
approach;
- To provide an
improved and more efficient and effective environment
for the operation of companies in the domestic
market;
- To provide a
strong yet attractive regulatory framework,
conducive to continued competitiveness and sustained
growth for Seychelles as an international financial
centre;
- To improve Seychelles
corporate law, including making it more comprehensive
and addressing existing issues and ambiguities;
- Consistent with
the unification of corporate law and with the
aim of improved service delivery, SIBA (or its
successor, FSC) will assume the role of Registrar
in respect of all companies in Seychelles (instead
of the present, less-efficient system of having
a separate Registrar for domestic and offshore
companies);
- To further consolidate
Seychelles corporate law by providing for CSLs
(special licence companies) and PCCs (protected
cell companies) within the New Act (ie.in conjunction
with the repeal of the existing Companies (Special
Licences) Act 2003 and the Protected Cell Companies
Act 2003); and
- To reduce the
differences between ordinary companies and IBCs.
A White Paper memorandum
dated February 19, 2011, outlined proposals for
a new Trusts Act, which aims to modernize and
improve on Seychelles’ existing trust law,
the International Trusts Act, 1994 (ITA), and
to provide a stronger basis for building Seychelles
trust business.
The memo identfies
a number of shortcomings in the ITA which the
proposed Trust Act 2011 would address. These include:
- The
broad definition of international trust is problematic
as regards foreign law trusts;
- While the ITA
purports on the one hand to allow for Seychelles
international trusts governed by foreign law,
in contradiction of that section 7 gives the
Seychelles courts “exclusive” jurisdiction
in all matters pertaining to international trusts;
- There is no provision
for private trust companies;
- Tax exemptions
not provided for in the ITA itself; and
- Non-inclusion
of various modern offshore trust law features
and general need for updating
The
memo stated that the draft Trusts bill 2011 is
heavily modelled on Jersey's Trusts Act.
Seychelles
International Business Company
The
International Business Company is the most widely
used vehicle for offshore operations in the Seychelles;
it normally takes the form of a private company
limited by shares, but can also be a Limited Life
Company. The governing legislation is the International
Business Companies Act 1994. Statutory requirements
are minimal, and flexible:
- Only one director
and one shareholder are required;
- Shareholders,
directors and officers need not be resident
in the Seychelles and there is no stipulation
as to their nationality;
- There is no minimum
capital requirement; shares may be either registered
or bearer and may be issued in any currency;
- Accounts need
not be kept; however, if they are kept there
is no requirement for an audit.
- No returns are
needed of shareholders, directors or officers;
- Shareholders
and directors meetings need not be held in the
Seychelles and can be held by telephone;
- The Memorandum
and Articles of Association are the only documents
to be held on the public record.
IBC status is granted
subject to certain conditions:
- No business
may be transacted with residents of the Seychelles;
- No ownership
interest in real property in the Seychelles
is permitted; property may be leased for office
use only;
- Banking or trust
business may be carried on only if an appropriate
license is issued;
- Likewise, a licence
is required to carry on insurance or re-insurance
business;
- Engaging in the
business of company management or providing
registered facilities for Seychelles-incorporated
companies is not permitted.
IBCs are permitted
various activities within the Seychelles without
compromising their offshore status under the Act;
these include:
- professional
contacts with lawyers, accountants etc;
- preparation and
maintenance of books and records;
- the holding of
directors' or shareholders' meetings;
- ownership of
shares in other Seychelles companies, whether
under the Act or the Companies Act 1972;
- ownership of
Government or Central Bank securities;
- ownership of
a vessel registered in Seychelles.
It is usual to use
a registered agent in the Seychelles to incorporate
an IBC (eventually it is obligatory to appoint
one anyway). Fees for incorporation of an IBC
are based on the company's authorised share capital.
Normally, the incorporation process takes no more
than one day; however, for banks, trust companies
and insurers the process is lengthier (see Offshore
Business Sectors).
Statutory incorporation
fees used to be USD100 for capital up to USD100,000,
and USD1,000 for capital over USD100,000. However,
there is no longer any increase in licensing fees
for share capital above USD100,000. Share capital
is unlimited.
The annual
renewal fees are also set at USD100, but are subject
to a 7.5% tax. These fee levels are fixed
for the life of the company, whatever changes
may be made for new companies.
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Seychelles
Special Licence Company
Special
Licence Companies (CSL) are formed under the Companies
(Special Licence) Act, 2003 (the Act). Unlike
the IBC, a CSL may carry on permitted business
inside as well as outside of Seychelles. The CSL
entity is a Seychelles domestic company (under
the Companies Act 1972), which is granted a special
licence under the Act. A CSL has substantial statutory
tax advantages (see Offshore
Legal and Tax Regime) including access to
the Seychelles Double Tax Agreements, of which
that with China is of particular current interest.
Key
features of the CSL are as follows:
- A
CSL may carry on any business as permitted under
the Schedule to the Act - including as an international
holding company, a headquarters company, a franchise
company, a marketing company, a company holding
intellectual property, an investment company,
etc.
-
Bearer shares are not permitted;
-
Nominee shares are permitted, but the name and
address of beneficial owner is required to be
disclosed to the Registrar of Companies. This
information is not made publicly available by
the Registrar.
-
Foreign shareholders are permitted;
- There
is a minimum of 2 Directors, who may be located
outside of the Seychelles;
- A
Seychelles-resident Company Secretary is required;
- Directors'
or shareholders' meetings can be hekd anywhere,
including by telephone or video-link;
- An
annual company return and audited accounts must
be filed;
- There
is provision for "redomiciliation"
- a foreign or Seychelles IBC may be continued
as a CSL - and an CSL may redomicile to another
jurisdiction.
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Seychelles
Limited Partnership
Limited
Partnerships (LP) are formed under the Limited
Partnership Act, 2003 (the Act). An LP has substantial
statutory tax advantages (see Offshore
Legal and Tax Regime) including the ability
to receive income from sources outside of the
Seychelles and distribute such income to foreign
partners without incurring a Seychelles tax liability.
A Seychelles LP is highly-suitable for international
joint venture activities.
Key
features of the LP are as follows:
-
The LP is required to have one or more general
partners who are liable for the debts of the
LP, and one or more limited partners who are
not so liable in most circumstances.
-
At least one general partner must be a Seychelles
person (either a resident individual or an IBC
or domestic company or CSL or an LP);
-
A Seychelles registered office is required;
-
An LP shall not carry on business in Seychelles,
except to the extent necessary for the carrying
on of the LP's business outside of Seychelles;
- An
annual certificate must be filed verifying compliance
by the LP with the provisions of the Act.
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Seychelles
Protected Cell Company
Protected
Cell Companies (PCC) are formed under the Protected
Cell Companies Act, 2003 (the Act). A PCC is a
Seychelles domestic company that has the right
to create one or more identifiable cells so as
to segregate and protect cellular assets as permitted
under the Act. While each cell created by a PCC
is separately identifiable and may have its own
cellular assets, no cell will constitute a legal
entity separate from the company (ie only the
PCC is a separate legal entity).
The
Directors of a PCC have a duty to keep cellular
assets separate from non-cellular assets, and
to keep the assets attributable to each cell separate
from the assets attributable to other cells. Liabilities
attributable to a particular cell of a PCC cannot
attach the assets of other cells.
As
in other jurisdictions, the PCC has particular
use and appeal for captive insurance and collective
investment scheme applications. It is likely that
approval will be limited to these areas and for
non-domestic business only.
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Seychelles Trusts
The International
Trusts Act 1994 established, for the first time,
a regime for international trusts in the Seychelles;
it does not provide for domestic trusts. The Act
was drafted after a thorough study of current
practice in a number of leading offshore jurisdictions.
Under the Act, the Seychelles International Business
Authority (SIBA) is appointed as the regulatory
body for trusts, alongside the Court.
The following are
some of the key features of the Seychelles Trust
regime (see Law of Offshore
for further details):
- An international
trust may be created in writing, by will or
by oral declaration; deemed trusts are admitted,
as are those resulting from a decision of the
Court;
- Purpose trusts
are permitted;
- The settlor must
reside outside the Seychelles for the duration
of the trust; at least one trustee must reside
in the jurisdiction, but this trustee may be
an IBC, which shall not thus be deemed as resident;
an IBC may therefore be a settlor;
- The trust property
may not include any Seychelles movable or immovable
property.
- The names of
settlors and beneficiaries are confidential
under the Act, unless a Court orders disclosure
under the Anti-money Laundering Act;
- The standard
perpetuity period is 100 years; but it does
not apply to purpose trusts;
- The accumulation
of income is permitted;
- Forced heirship
judgements are specifically excluded.
An international
trust is exempt from tax in the Seychelles; a
registration fee of USD100 is payable to SIBA.
Registration of trusts must be carried out by
one of the two licensed trustees currently operating
in the Seychelles.
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Seychelles Foundations
The
Seychelles’ Foundations Act 2009 was enacted
in late December 2009 and provides for a new addition
to Seychelles’ financial services product
portfolio – Seychelles foundations. Key
features and benefits under the Act are as follows:
- A
Seychelles foundation is established by a charter
made in writing and signed by one or more founders
and on the issuance of a certificate of registration
by the Registrar (the Seychelles International
Business Authority) upon registration of the
foundation under the Act. On registration, a
foundation is a separate legal entity.
- A
fee of USD200 is payable to the Registry (Seychelles
International Business Authority) on establishment
of a Seychelles foundation. An annual renewal
fee of USD200 is payable annually thereafter
to the Registry (due on the day before the foundation’s
initial registration anniversary date).
- The
assets of a foundation shall be of a value of
not less than USD1 or the equivalent in any
other currency. The initial assets may be endowed
after registration of a foundation.
- Unlike
in other foundation jurisdictions, it is not
mandatory to state in the charter, or to otherwise
file at the Registry, the names of the councillors
of a Seychelles foundation.
- While
the charter of a foundation is required to be
filed at the Registry, there is no requirement
to file a foundation’s regulations. While
a foundation must have a charter, it may adopt
regulations. A foundation will commonly adopt
regulations, to ensure that matters pertaining
to foundation beneficiaries and distribution
entitlements remain non-public.
- The
objects of a Seychelles foundation may be charitable,
non-charitable or both, and may be to benefit
a beneficiary or beneficiaries, or to carry
out a specified purpose, or to do both.
- A
foundation’s Council manages the foundation
and is responsible for the administration and
distribution of the foundation’s assets
and the carrying out the foundation’s
objects. A Seychelles foundation must have a
minimum of 1 councillor, who may be a natural
person or corporate entity.
- A
foundation is exempt from Seychelles Business
Tax on its income and is exempt from Seychelles
withholding tax, social security contributions
and stamp duty (except in relation to any permitted
lease of Seychelles real estate for own office
use).
- A
foundation may own assets worldwide. However,
the assets of a foundation may not include any
Seychelles real estate or other Seychelles property
(subject to various exceptions under the Act,
including shares in Seychelles IBCs or CSLs,
interests under a Seychelles trust, Seychelles
limited partnership or another Seychelles foundation,
or a Seychelles bank account, etc).
- A
foundation’s founder may be a natural
person or a corporate entity, and a founder
may be a foundation beneficiary but not the
sole beneficiary. Nominee founders are permissible
A founder may reserve, in the foundation charter
or regulations, to the founder or for other
persons, various rights – such as the
right to approve investment activities of the
foundation, the right to appoint or remove councillors,
protectors and beneficiaries.
- The
appointment of a protector (otherwise known
as a guardian) is optional. A protector may
be a natural or legal person.
- Seychelles
foundation assets are the property of the foundation
only, that is, neither the founder nor the beneficiaries
have any ownership interest in foundation assets.
- While
a Seychelles foundation is required to keep
proper books of account and records as its council
considers necessary in order to reflect the
financial position of the foundation, it is
not subject to a mandatory annual audit requirement
or to any requirement to file financial accounts
or annual return in Seychelles.
- The
Act provides for continuation of foreign foundations
in Seychelles and for continuation of Seychelles
foundations overseas. The Act also provides
for two or more existing foundations to consolidate
into a new foundation and for an existing foundation
to merge into another existing foundation.
The
Act provides for strong foundation asset protection,
including as follows:
- Provisions
protecting dispositions to a Seychelles foundation
from challenge from creditors of the founder;
and a 2 year statute of limitations for creditors’
claims coupled with a high onus of proof (beyond
reasonable doubt, rather than on the balance
of probabilities);
-
Specific exclusion of foreign forced-heirship
laws;
-
Provision may be made for the foundation to
retain title to assets conditionally distributed
to beneficiaries;
-
Beneficiaries’ rights to information may
be restricted;
-
Provision may be made to disentitle a beneficiary
who challenges asset transfers to or distributions
by a foundation.
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