SEYCHELLES: OFFSHORE BUSUINESS SECTORS

On this Page:

- SEYCHELLES BANKING
- SEYCHELLES INSURANCE
- SEYCHELLES INVESTMENT FUND MANAGEMENT
- SEYCHELLES SHIP MANAGEMENT AND MARITIME OPERATIONS

Offshore business in Seychelles began its development in 1994 when the Government launched a series of legislative initiatives aimed at establishing the country as a thoroughly modern, world-class international offshore financial centre. Much of the legislation was based on that of successful jurisdictions such as the British Virgin Islands and the Bahamas.

In 1994 legislation was enacted covering the registration of offshore companies, offshore trusts and the licensing of international trade zone companies. Additional legislation was introduced covering the licensing of offshore banks, offshore insurance companies and the establishment of a securities industry; and in 2003, the government legislated for additional types of company: Special Licence Companies, Protected Cell Companies and Limited Partnerships.

The Seychelles International Business Authority (SIBA) was set up by the Seychelles International Business Authority Act 1994 to administer the offshore sector and deals with the registration of offshore companies as well as supervision of the Seychelles International Trade Zone (SITZ).

In May, 2003, the government said it wanted the offshore sector to become a 'third pillar' of the economy, revealing that SIBA's efforts had led to a 40% increase in offshore incorporations.

At the end of 2004 there were more than 17,000 International Business Companies in the Seychelles. By 2008 the number of IBCs on the register had surpassed 50,000, making the Seychelles one of the fastest growing offshore centres in the world. An Interactive Gambling Bill was also passed in 2003, which incorporates this aspect of the gaming industry into existing law.

The International Corporate Service Providers Act, 2003, substantially improved and simplify the regime for incoming investment. Previously, the Seychelles International Business Authority (SIBA) had power to issue a licence to offshore businesses, but entitlement to fiscal concessions depended on obtaining a certificate from the Ministry of Finance under the Investment Promotion Act.

The new Act streamlined the procedure for establishing an offshore business, avoiding the need for a separate IPA application to the Finance Ministry. See Offshore Legal and Tax Regimes for further details of the new legislation.

In July, 2004, it was announced that the promotion of the Seychelles investment sector is to become the responsibility of a new body, the Seychelles Investment Bureau (SIB), which will take on the task from a number of other government offices. Chief executive officer of the SIB, Joseph Nourrice, explained that the bureau will act as a one stop shop for the investment community and will coordinate all promotion activities. “The amount of procedures will be reduced tremendously,” he observed.

Previously, the Investment Desk at the Ministry of Finance had played a large part in the jurisdiction’s promotional activities, and the SIB has assumed the promotional role previously taken on by the Seychelles International Business Authority, which now concentrates on regulation.

An immediate priority for the SIB was the drafting of an investment code for the Seychelles which according to Mr Nourrice “will act as the backbone for our marketing tools”.

In August, 2005, SIBA said that the Seychelles' offshore financial industry intend to boost the industry's annual turnover to US$300 million per year over ten to fifteen years, transforming the offshore financial services sector into the largest pillar of the Seychelles' economy.

Speaking to the Seychelles Nation, Ahmed Afif, managing director of the Seychelles International Business Authority (SIBA) envisaged a doubling in the number of offshore services providers, an increase in the number of licensed offshore banks from one to five, the establishment of a business park and significant growth in the 150-strong workforce currently employed by the offshore sector.

In March 2007, President James Michel announced in his annual State of the Nation address that the government was looking to expand the offshore sector with the addition of new products, including mutual funds, special license companies, a stock exchange and new products and services in the insurance sector, some of which have already been incorporated into legislation.

The stock exchange is due to open in September, 2008.

This section of the site describes the most important types of offshore business activity carried out from the Seychelles.


Seychelles Banking

Banking in the Seychelles is governed by the Financial Institutions Act 1984 as amended in 1995. Licences are issued by the Offshore Banking Department of the Central Bank and are granted only to companies incorporated under the Companies Act 1972 or foreign companies which have registered under the Companies Act. Licenses are issued for domestic banking, offshore banking, or both. When both are conducted, it must be through separate offices. Offshore banks are permitted to operate numbered accounts for their clients.

Applicants must supply extensive information to the Central Bank, including copies of the last three balance sheets and a business plan. The Bank imposes various prudential requirements and requires monthly balance sheet submissions. See Law of Offshore for further details of the licensing and supervisory regimes.

The annual licence fee is USD15,000, payable to the Central Bank in any convertible currency. At the time of writing, there are six licensed commercial banks in the Seychelles, together with a credit union and two money changers. Of the commercial banks, two are state owned, two are branches of foreign banks and two are locally incorporated subsidiaries. Whilst all the banks hold licences to conduct domestic banking, only two have been granted licenses to carry out offshore banking activities.

All licensed offshore (non-domestic) banks are exempted from Seychelles taxes and duties for a 20 year period from the date the licence was granted, although a non-domestic bank may elect to pay business tax in Seychelles on its taxable income as agreed with the Commissioner of Taxes.

In December, 2004, the National Assembly passed the Central Bank of Seychelles Act 2004. The Act makes provision for the Central Bank to operate more as an independent institution. The government said that the enactment of the Bill would allow the Central Bank to operate without government interference and will be more efficient in ensuring accountability and transparency in the supervision of the monetary system and its quest to safeguard price stability through measures of control and fiscal policies.

In April, 2005, the Managing Director for Barclays Africa, Mr. Malcom Hewitt, announced the company’s plan to start an Offshore Banking service in Seychelles as of 2005. Mr. Hewitt said that the unit would present a colossal opportunity for both Barclays and the Seychelles as a whole.

The Anti-Money Laundering Act 2006 established a Financial Intelligence Unit (FIU) as a unit of the Central Bank, bringing the Seychelles' anti-money laundering regime more into line with international practices.

The FIU has the authority to request information considered relevant to an offence under the Act, and from reporting entities, supervisory agencies and law enforcement agencies. The FIU may enter into agreements with foreign states to facilitate the exchange of information to assist investigations into suspected cases of money laundering and terror financing.

The Anti-Money Laundering Act requires reporting entities to take "reasonable measures" to ascertain the purpose of any transaction in excess of SR100,000, or of SR50,000 in the case of cash transactions, and the origin and ultimate destination of the funds involved in the transactions.

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Seychelles Insurance

See Offshore Business Review – Insurance for a more general treatment of captive insurance companies.

The Insurance Act 1994 is modelled on the Insurance Act of Singapore; 1995 amendments provide for the licensing of offshore insurance companies, insurance managers and principal insurance representatives; captives are also covered by the Insurance (Non-Domestic Insurance Business) Regulations 1996. In 2003 the Protected Cell Companies Act, 2003 was passed. 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.

In 2008, new legislation was introduced, in the form of the the Insurance Act 2008. For more information on this, see Law of Offshore.

Licensing of domestic and non-domestic (offshore) insurance companies is in the hands of the Insurance Authority under the Minister of Finance and Communications. Licenses are granted only to companies incorporated under the Companies Act 1972 or foreign companies which have registered under the Companies Act.

Applications for licences include at least the following information:

The minimum paid up capital for general or life insurance companies is US$125,000, for reinsurance companies, US$1million, and for captive insurance companies, US$70,000. These sums must be deposited at a bank licensed by the Seychelles Central Bank (see above). Domestic insurance companies need minimum capital of SR 2m, of which 30% must be invested in prescribed Government securities, and must have adequate reinsurance arrangements. See Offshore Legal and Tax Regimes for details of processing fees and annual licensing fees payable. The Insurance Authority imposes a number of continuing prudential and supervisory requirements on insurance companies.

All licensed offshore (non-domestic) insurance companies are exempted from Seychelles taxes and duties for a 20 year period from the date the licence was granted, although a non-domestic insurer may elect to pay business tax in Seychelles on its taxable income as agreed with the Commissioner of Taxes.

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Seychelles Investment Fund Management

The Government intends to foster the creation of a Mutual Funds sector in the Seychelles, and enabling legislation was put in place in 1997. The regulations made under the Act provide for a modern regulatory system aimed at attracting international mutual funds promoters from around the world.

Funds may be established either as investment companies or unit trusts. In the case of investment companies, a wide choice of vehicles are available. All funds must have a registered office and a licensed administrator in Seychelles.

The Act provides for a licensing regime for mutual funds and mutual fund administrators under the Central Bank. Licensed banks, insurance companies and International Business Companies are excluded from the operation of the Act. Applicants for licenses would need to be companies incorporated under the Companies Act 1972 or foreign companies which have registered under the Companies Act, or unit trusts.

An overseas mutual fund needs to have a local managing agent, or in the case of a unit trust, a resident trustee. The Act imposes prudential responsibilities on the Bank, and lays down some general principles for offering documents. A private mutual fund must have minimum paid-up capital of US$5m held by not more than 50 investors; a public fund needs authorised share capital of at least US$2m of which at least US$1m is paid-up (or issued and fully-paid in the case of a unit trust), or it can be listed on a recognised exchange.

Licensed mutual funds and fund administrators are exempt from taxes, including social security taxes.

In 2008, new legislation was introduced, in the form of the the Mutual Funds And Hedge Funds Act 2008. For more information on this, see Law of Offshore.

Seeking to build on the success of the financial services industry, Seychelles’ the Mutual Fund Act was redrafted in 2008 to plug gaps in the previous legislation. The redraft extended the powers of the regulator, introducing additional rights to request periodical audits, request information for inspection and grant powers to enter, search and take copies of any licensed operations and guaranteeing compatibility with international standards enforced by FATF, IMF, International Organisation of Securities Commission and Offshore Group of Insurance Supervisors.

“As with all areas of the financial services industry it is essential that we, as the regulator of the jurisdiction, achieve the appropriate balance in the legislation between providing local firms with the competitive advantage they require, at the same time as ensuring that it is a well regulated industry which conforms to the international standards required to maintain investors’ confidence,” explained Conrad Benoiton, the Director General of the Central Bank’s recently created Securities and Financial Markets division, which is responsible for the registration as well as regulating and supervising of non bank business activities.

The redrawn legislation also allows expatriate employment levels of up to 50%, replicating existing regulations for the offshore sector, which have not negatively impacted upon the local labour market. The newly drafted legislation is also intended to bolster banking and legal services necessary for mutual fund operations.

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Seychelles Ship Management and Maritime Operations

See Offshore Business Review – Shipping for a more general treatment of offshore shipping registries.

The Merchant Shipping Act 1992 governs the shipping industry in the Seychelles. Ships and yachts may be registered in the Seychelles under the terms of the Act. Consular and diplomatic representatives of Seychelles abroad are also empowered to issue provisional certificates of registration to vessels satisfying the ownership and registration criteria. The shipping law also provides for parallel registration of bareboat charters in the Seychelles registry; likewise, a Seychelles vessel may be parallel-registered abroad during chartering.

An International Business Company is the most effective vehicle for offshore ownership of a Seychelles-registered vessel or ship management operation. Such a company will be exempt from Seychelles taxation on profits and dividends. Sale and transfer of Seychelles-registered vessels or the companies owning them are also free of tax, as are the salaries of officers and crew of Seychelles-registered vessels operating internationally.

A normal range of documentation is required for Seychelles registration of a vessel. The age limit for registration is 15 years. The Government recognises most leading classification societies; for surveying and certification purposes the Government has appointed American bureau of Shipping, Bureau Veritas, Nippon kaiji Kyokai and Det Norske Veritas.

The Civil Aviation Act (amended in 1996) provides the framework for the registration of aircraft mortgages. As with ship registration, consular and diplomatic representatives of Seychelles abroad can issue provisional certification of registration.

The Seychelles is an increasingly popular centre for the leasing and insurance of ships and aircraft.

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