The
Turks and Caicos Islands emergence as
a major corporate domicile dates from
the enactment of the Companies Ordinance
1981. The legislation is 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.
In
common with many other offshore jurisdictions,
the Turks and Caicos Islands are responding
to pressure from the OECD by tightening
up regulation. Specifically, the Turks
and Caicos responded to the recommendations
of the November 2000 KPMG Independent
Review of Financial Sectors in the Caribbean
Overseas Territories.
In recent years in line with international
banking guidelines the Turks and Caicos
Islands have adopted a policy of accepting
only established banks or the treasury
operations of listed corporations. In
1998 Belize Bank selected the Turks and
Caicos Islands as the venue for its first
venture outside Belize making Belize Bank
only the 4th bank ever to be licensed
in the Turks and Caicos Island for domestic
purposes. The introduction of mutual funds
legislation was expected to attract further
applications for banking licences. There
are eight licensed banks in the jurisdiction,
most of which are licensed to carry out
domestic and international services from
within the islands.
- National
Banking Licence: This licence is granted
for banking activities to be carried
out locally with islanders and other
residents and will only be granted
to the branches or subsidiaries of
banks which have an established track
record and which are subject to effective
consolidated supervision by their
home supervisory authority. Exceptionally
a national banking licence may also
be granted where the bank is predominantly
locally owned.
- Overseas
Banking Licence: This licence is granted
for banking activities which are to
be carried on outside the Turks and
Caicos Islands. The holder of such
a licence cannot accept deposits from
or lend to residents of the Islands.
An application for such a licence
will only be considered from:
-
The branches or subsidiaries of
banks with an established track
record and which are subject to
effective consolidated supervision
by the overseas banks home supervisory
authority
- Banks
which although not subsidiaries
are closely associated with an
overseas bank and which by agreement
will be included within the consolidated
supervision exercised over the
overseas bank by the overseas
banks home supervisory authority
- Wholly
owned subsidiaries of major corporations
where the objective of the subsidiary
is to undertake in house treasury
operations which are fully consolidated
within the published financial
statements of the parent company.
All banking
licences are subject to continual detailed
review. Whilst there are no published guidelines
as to the minimum capital, two of the main
requirements are the submission of a detailed
business plan and the written consent of
the home supervisory banking authority.
A national banking licensee holder must
file monthly and quarterly statements. An
overseas banking licensee holder is required
to file less detailed returns on a quarterly
basis. All banks must submit annual audited
accounts. See Law
of Offshore for further details of the
application process and the supervisory
regime; see Offshore
Legal and Tax Regimes for details of
fees payable.
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Turks and Caicos Insurance
See Offshore Business
Review – Insurance for a more
general treatment of captive insurance
companies.
The Turks and Caicos Islands is a significant
centre for offshore insurance services.
More than 3,000 (2008) licences have been
issued to Insurance companies and intermediaries
under the Insurance Ordinance 1989. The
insurance legislation in the Islands has
been described as both flexible enough
to accommodate the needs of the client
and to keep operating costs low but yet
backed up by a regulatory regime which
is strictly enforced.
The
Islands are said to be a domicile of choice
for captive and restricted licence insurers.
While
several dozen captive insurers have been
set up, but the Turks and Caicos' main
insurance success story is the 'credit
life' or "producer owned reinsurance
companies" (PORCS) many of which
are owned by US automobile dealers who
reinsure credit related risks arising
from their dealerships which have been
placed initially with rated primary insurers.
More than 2,000 such companies have been
set up. Credit life reinsurance companies
are known as section 7(11) companies.
They are restricted to offering reinsurance
only to named and acceptable insurance
carriers already regulated in an approved
jurisdiction and are exempted from certain
reporting requirements and licensing fees.
There
has also been burgeoning interest in the
formation of mortgage guarantee reinsurance
companies.
The
insurance industry is governed by the
Insurance Ordinance 1989 and the Insurance
Regulations 1990. These Ordinances together
with the 1995 Guidelines on the Issuance
of Insurance Licences establish the licensing
process: see Law
of Offshore for further details of
the licensing and supervisory regimes.
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Turks
and Caicos Investment Fund Management
Collective investment schemes may be created
either by incorporating a mutual fund
company or by establishing a unit trust.
Although historically mutual funds and
open ended investment companies have been
governed by the Companies Ordinance 1981,
in December 1998 new Mutual Funds legislation
was approved and implemented.
Application for registration must be made
to the Financial Services Commission.
Unless the fund falls within an exempted
category it must be licensed and registered.
In granting a licence emphasis is placed
on the credentials of the promoters and
their expertise in the proposed investment
area. All funds are subject to ongoing
monitoring of their activities. The new
legislation provides for the appointment
of licensed administrators who will oversee
the conduct of the fund in the interests
of the investors.
The
Islands' mutual funds regime provides
for four types of fund:
-
Registered mutual funds constituted under TCI law which
are authorized to issue equity interests only to investors
who meet prescribed qualifications or in which equity
interests are listed on a stock exchange recognized by
the TCI authorities for this purpose.
-
Recognized mutual funds constituted outside the TCI whose
equity interest are listed on an approved exchange.
-
Licensed mutual funds, a category for funds which fall
outside the registered and recognized headings, but are
otherwise approved.
- Exempt mutual funds in which the equity interests are
held by not more than fifteen investors the majority of
whom are capable of appointing or removing the operator
of the fund, or funds that are authorized to issue equity
interests only to professional investors (as defined).
A
TCI fund can be structured as a company,
a partnership (limited or otherwise) or
as a unit trust.
The
Investment Dealers Licensing Ordinance came
into effect in 2003 and provides for the
regulation, licensing and supervision of
securities brokers, asset managers and investment
advisors. It includes a requirement that
a licensee must maintain minimum capital
in liquid assets within the TCI, which at
the time of implementation, amounted to
the higher of USD250,000 or 2.5% of funds
under management.
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TO TOP
Turks and Caicos Ship Management and Maritime
Operations
See Offshore Business
Review – Shipping for a more
general treatment of offshore shipping
registries.
The Financial Services Commission is responsible
for the registration of ships. The Islands
have an active shipping registry in which
vessels of up to 150 Gross Registered
Tonnage can be registered. By way of exception,
registration is allowed of vessels of
more than 150 Gross Registered Tonnage
where such registration is deemed to be
of unusual economic benefit to the Islands.
Registration
is confined to vessels owned by British
subjects or entities or corporate bodies
established under and subject to the laws
of the Turks and Caicos Islands, the United
Kingdom and other British dependent territories.
A non-British subject can register his
boat in the Islands by transferring ownership
to a company incorporated in the Islands.
Registration of ship mortgages and transfers
from other shipping registries can also
be carried out.
There
are no requirements as to crew nationality.
Registration in the Turks and Caicos Islands
entitles a vessel to fly the red ensign
and to any rights of passage which might
accrue thereto as well as other incidental
privileges arising within the British
Commonwealth.
Vessel registration in the Turks and Caicos
Islands is conducted in accordance with
the provisions of the United Kingdom Merchant
Shipping Acts of 1884-1967. The Merchant
Shipping (Categorisation of Registries
of Overseas Territories) Order 1992 restricted
the category of ships which could be registered
in the Islands to vessels of 150 Gross
Registered Tonnage and expressly prohibited
the registration of passenger ships and
ships used on international voyages.
In most jurisdictions, and the Turks and
Caicos Islands is no exception to the
rule, an extended visit can be treated
by Customs as a declaration of intention
to permanently import the vessel. A vessel
imported into the Islands attracts import
duty and a surcharge representing 11%
of the value of the ship. On 15th March
1996 the Islands' Director of Customs
issued the Customs (Pleasure Craft) Direction
1996 with a view to removing the uncertain
tax situation which arises when a vessel
is on an extended visit. In order to avail
oneself of the benefits of this directive
the vessel's captain must fly the yellow
quarantine flag from the time of entry
to the time of departure, must not drop
anchor, must not load or unload in the
absence or authorisation of a customs
officer, must file the necessary reports
which Customs requires and upon departure
must apply for clearance on the prescribed
form obtained from the Customs officer
attending the vessel at the time of its
entry into the Islands.
Alternatively
the captain of a vessel can apply for
a Temporary Cruising Permit which allows
the yacht to stay on the Islands for up
to three months without being subject
to duty. A vessel can only apply for 2
Temporary Cruising Permits in any one
year which effectively means that if a
vessel is moored for more than six months
in the Turks and Caicos Islands it will
be deemed to have been permanently imported
and will be required to pay import duty
amounting to 11% of its value.
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Turks and Caicos Trust Management
There are 17 licensed companies offering
professional trustee services making trusts
one of the most active areas of the Turks
and Caicos Islands offshore centre. Most
functions relating to the licensing, review
and regulation of trusts are carried out
by the Superintendent of Trustees based
at the Financial Services Commission.
The
Trustees (Licensing) Ordinance 1992 provides
for the licensing and regulation of trust
companies and other professional trustees.
The Trustees (Licensing) Regulations 1992
set out the form of the application for
obtaining a trustee licence, the categories
of trust licences, the details required
in an application for a trustee licence,
reporting requirements and the rules governing
the conduct of licensed trustees. Licensed
trustees are required to submit financial
returns, appoint auditors and maintain
professional indemnity insurance.
The
Trust Ordinance (1990) 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 miscellaneous provisions regarding
liability, confidentiality and the non-
application of the Recording of Deeds
Ordinance.
Licenses
can be restricted or unrestricted:
The Trustees
Licensing Exemption Order 1992 exempts the
following entities from licensing:
site describes the most important types
of offshore business activity carried
out from the Turks & Caicos Islands.
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