The
Turks and Caicos Islands emergence as a major
corporate domicile dates from the enactment
of the Companies Ordinance 1981. The legislation
was regarded as highly innovative and has
been duplicated by other jurisdictions. The
Ordinance continues to be amended to meet
the changing demands of the international
business community.
Currently there are five types of companies
which can be incorporated under the Ordinance,
namely the Ordinary company, the Exempt company
(also known as the International Business
Company), the Foreign Company, the Limited
Life company, and the Hybrid company. All
the companies can be limited by share or guarantee.
An existing overseas company may transfer
its domicile to the Turks and Caicos Islands
where the laws of the overseas country do
not prohibit such a transfer. A Turks and
Caicos company can transfer its domicile to
an overseas country where the overseas country
laws allow for such a transfer. Once a company
is redomiciled to the Islands it is deemed
to have been incorporated there under the
1981 Companies Ordinance.
The companies registry offers same day clearance
of names, same day registration and extremely
competitive registration rates. All names
of companies require the prior approval of
the Financial Services Commission to ensure
that no name gives the impression of providing
a public financial service without due licensing.
The
law on ultra vires need not apply to Turks
and Caicos Islands companies since there is
no requirement under the Ordinance for a company
to have an objects clause in its Memorandum.
The legal consequence of this provision is
that if no objects are specified then the
company has power to carry on any business
not prohibited by law.
There is no distinction between a private
and public company under the law. However
the shares of an exempted company cannot be
offered to the public unless a prospectus
is approved by the registrar of companies.
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Turks
and Caicos Ordinary Resident Company
Ordinary companies are generally used by those
wishing to purchase real estate or otherwise
carry on business within the Turks and Caicos
Islands (in contrast to Exempt companies which
are used by those wishing to carry on business
outside the Islands). The company must include
the word 'limited' in its name.
For
public record purposes the Ordinary company
must file an annual return with the names,
addresses and occupations of shareholders,
directors and corporate officers. An Ordinary
company must also declare on an annual basis
that there has been no change in its beneficial
ownership.
An
Ordinary company must conduct a shareholders
general meeting at least once annually.
Fees
on incorporation depend on the level of authorised
capital:
- For
capital up to $50,000 the fee is $275;
- For
capital over $50,000 and up to $100,000
the fee is $450;
- For
capital over $100,000 and up to $750,000
the fee is $550;
- For
capital over $750,000 and up to $2m the
fee is $1,050;
- Capital
over $2m is charged at $2,050.
The
annual filing fee to accompany the annual
return is $250; these fees can be paid in
advance at a discounted rate.
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Turks
and Caicos Exempt Company
The attraction of the Exempt Company lies
in a combination of its tax exempt status
and minimal disclosure and administrative
requirements.
In order to obtain tax exempt status the subscribers
must at the time of incorporation lodge at
the Companies Registry a signed declaration
stating that the business of the company will
be mainly carried on outside the Turks and
Caicos Islands.
The
subscribers are not required to inform the
Registrar of the identity of the beneficial
owners. An exempt company must nominate a
representative resident in the Islands for
the purpose of service of legal process. There
are more than 15,000 International Business
Companies registered in the Turks and Caicos
Islands.
- Bearer
shares or shares of no par value are permitted;
- A
sole shareholder, director or subscriber:
is permitted;
- Resident
or non-resident corporate directors, shareholders
or secretary are permitted;
- Only
the registered office and articles of
association are available on the public
file; the only other reporting is an annual
declaration of compliance with Exempt
company conditions;
- The
company must keep its corporate seal at
its registered office but need not maintain
there any record of the shareholders,
directors, secretary, mortgages or charges;
- The
company need not hold any annual meetings
and such as are held need not be held
in the Turks and Caicos Islands;
- Subject
to certain solvency requirements the company
may purchase or redeem its own shares;
- The
company can use a foreign name and need
not use or include the word limited in
its name;
- The
company's capital may be registered in
a foreign currency;
- Accounts
need not be filed or audited.
Fees
on incorporation depend on the level of authorised
capital:
- For
capital up to $5,000 the fee is $100;
- For
capital up to $50,000 the fee is $100
plus 1% of the excess of capital over
$5,000;
- For
capital over $50,000 and up to $100,000
the fee is $550 plus 0.5% of the excess
of capital over $50,000;
- For
capital over $100,000 and up to $1m the
fee is $800 plus 0.1% of the excess of
capital over $100,000;
- Capital
over $1m is charged at $1,700.
The
annual filing fee to accompany the annual
return is $300; these fees can be paid in
advance at a discounted rate.
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Turks
and Caicos Limited Life Company
The
Limited Life Company (LLC) was designed to
combine the benefits of a partnership with
the advantages of a corporate entity. The
legislation was drafted primarily to comply
with the United States Internal Revenue Service
criteria for treating the entity as a partnership
for tax purposes meaning that profits and
losses are treated as attributable to the
shareholders rather than the company itself.
The demand for LLCs comes primarily from the
United States where they are known as limited
liability companies.
The
LLC has the following characteristics
- The
memorandum of association of the company
must limit the life of the company to
a period of 50 years which may by a special
resolution be extended to 150 years;
-
Automatic dissolution of the company will
occur upon one of several events specified
under the law; it is possible to override
these provisions by providing otherwise
in the articles of association;
- The
LLC may be managed by its members or by
a designated manager (thus the corporate
characteristic of centralised management
is absent; instead management of the LLC
more closely resembles management of the
common law partnership;
- The
law expressly contemplates the cessation
of membership upon the occurrence of prescribed
events e.g. death, bankruptcy or transfer
of ownership where the same is specified
or prohibited in the Articles;
- The
Articles may be drafted so as to prohibit
or restrict the transfer of any shares
or interest in the company and may provide
for the consequent cessation of membership;
-
The law allows for a variety of capital
structures and for members to have different
levels of liability on winding up.
-
The company must describe itself as a
Limited Life Company.
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Turks and Caicos Hybrid Company
The Hybrid company turns accepted concepts
of company law on their head. It has 2 classes
of members:
- The
shareholders who have voting control but
no right to dividends or to share in any
distribution of capital upon winding up;
- The
guarantor members who have no voting control
but who have a right to dividends and
to any distribution of capital on winding
up.
The Hybrid has been described as a quasi trust
with the shareholders (the controlling members)
effectively constituting the trustees and
the guarantor members (the participating members)
effectively constituting the beneficiaries.
It may be particularly useful for persons
from civil law jurisdictions where the concept
of a trust is not legally recognised but the
concept of a company is and who can therefore
use a company to avail themselves of all the
benefits of a trust. Furthermore, difficult
questions affecting a trust such as the governing
law can be avoided since most jurisdictions
accept that the law governing an incorporated
body is the place of its incorporation.
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Turks
and Caicos Foreign Company
A company incorporated in a foreign jurisdiction
that wishes to carry on business or hold land
in the Turks and Caicos Islands must register
as a foreign company with the Registrar of
Companies within a month of undertaking such
activities. Its status will then be similar
to that of the Ordinary Resident Company (see
above). Registration costs and an annual fee
are payable thereafter.
When
filing its annual application for re-registration
the foreign company must give details of a
resident who can accept legal process on its
behalf and must file information on the names,
addresses and occupations of its shareholders,
directors and officers
The
annual filing fee to accompany the annual
return is $250; these fees can be paid in
advance at a discounted rate.
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Turks
and Caicos Limited Partnership
The
law is contained in the Limited Partnerships
Ordinance (1992). Every Limited Partnership
must have at least one general and one or
more limited partners. A Limited Partnership
cannot have more than 100 partners. A general
partner's liability is unlimited whereas the
limited partners liability is limited to the
amount of unpaid capital unless the partnership
agreement specifies a different amount.
A
general partner manages the firm; a limited
partner who manages the firm will lose his
exemption from limited liability. A general
partner can be both a general partner and
a limited partner at the same time. A partner
may be an individual, a company or a partnership
in itself .
At
least one general partner must be resident
or incorporated in the Islands or if the partner
is a partnership then at least one of the
partners of the partnership must be resident
or incorporated in the Islands.
Every
Limited Partnership must have the words Limited
Partnership in its name and must have a registered
office on the Islands for the service of process
and delivery of notices. To register as a
Limited Partnership the general partner must
pay the prescribed fee and file at the companies
registry a statement specifying the name of
the partnership, the general nature of its
business, the address on the islands of its
registered office, the duration of the partnership
and the full name and address of each general
partner. A Limited Partnership must file an
annual return and pay an annual fee.
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Turks
and Caicos Exempted Limited Partnership
A Limited Partnership doing business outside
the Islands can apply to the Governor for
tax exempt status which if granted will exempt
it from paying any Island taxes for a period
of 50 years. An Exempt Limited Partnership
is not required to file details of its limited
partners at the Companies Registry although
a requirement to maintain proper details at
the firm's registered office still applies.
An Exempt Limited Partnership must both file
an annual declaration of compliance with the
law and pay an annual fee.
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Turks
and Caicos Trusts
The Trust Ordinance (1990) sets out the law
relating to trusts. The Ordinance is not exhaustive
and English principles of law apply unless
overridden by the specific statutory provisions.
The Ordinance was drafted with a view to making
the Turks and Caicos Island a more attractive
jurisdiction in which to settle a trust and
to this end contains features from other jurisdictions
and recommendations from eminent English counsel.
The
Ordinance defines a professional trustee as
someone who receives remuneration for his
services as a trustee, sets out the general
requirements for licensing professional trustees,
the powers and duties of the Superintendent
of Trustees, and has miscellaneous provisions
regarding liability, confidentiality and the
non application of the Recording of Deeds
Ordinance, which improves privacy.
The
Ordinance has been approved for the purposes
of the Hague Convention.
Key
characteristics of the trusts regime in the
Turks and Caicos Islands are as follows:
- There
is strict regulation of licensed professional
trustees (see Offshore
Legal and Tax Regimes);
- There
is no requirement to register trust deed
or the beneficiaries;
- There
is no rule against perpetuities;
- The
trust deed may specify one proper law
for interpretation of the terms of the
trust deed and another to apply to the
administration of the trust assets;
- Foreign
judgements are excluded;
- The
Voidable Dispositions Ordinance 1998 sharply
circumscribes the circumstances in which
a "disposition" can be set aside by a
creditor;
- Trustees
have wide investment powers;
- Re-domiciliation
of a trust is permitted.
See
Law of Offshore
for further details of the legal regime for
Trusts in Turks and Caicos.
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