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This is a non-exhaustive list of the main
Turks and Caicos statutes affecting offshore
and non-resident business. The statutes are listed in alphabetical order – click on the statute for a fuller description of the statute, the legal regime it forms part of, or in some cases the text of the law.
The
Financial Services Commission is a government
department and is responsible for the
industries which currently have a licensing
regime (i.e. banking, insurance and trustees),
the registry of companies and the registry
of trademarks and patents. Licensing regimes
are expected for mutual fund administrators
and company service providers. In
response to pressure from the OECD and
the FATF, as well as the UK government,
the FSC arranged the passing of the Proceeds
of Crime Ordinance in 1998 and the Proceeds
of Crime (Money Laundering) Regulations
2000; as a result the Turks & Caicos
did not appear on the FATF's money-laundering
'black-list'.
The industry is governed by the Banking
Ordinance 1979 and the Banking (Amendment)
Ordinance 1989. Supervision is exercised
by the Superintendent of the Financial
Services Commission.
Two
types of banking licence can be granted:
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.
Applicants
for banking licenses must provide references
and evidence of 'a sound knowledge of
banking'. A company must have a minimum
of two directors. A business plan must
be submitted providing at least the following
information:
the
proposed commercial activities and
business objectives, including the
type and source of business contemplated;
the
initial assets, and anticipated assets
and liabilities over a 2-year period;
qualifications
and experience of proposed management
and senior personnel;
anticipated
customer base;
prudential
policies and control systems;
reasons
for choosing the Islands as an operating
base.
Set
capital requirements have been abandoned
and there are no prescribed reserve levels,
but financial capacity must be maintained
according to the following criteria:
generally,
a 10% capital ratio should be the
target;
dividends,
loss provisions and reserves should
be sourced from retained earnings;
attention
will be paid to the design and control
of credit policy, to the nature and
volume of business, and to the composition
of liabilities.
reserves
should normally represent 5% of liabilities
and liquidity should equate to 25%
of deposits;
no
borrower should represent exposure
of more than 25% of capital, and any
loans exceeding 10% of capital should
be reported to the Supervisor.
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.
The main requirements of the licensing
process can be summarised as follows:
The
submission of a detailed Business
Plan covering stipulated areas such
as anticipated premium income by category,
assessment of risk factors, reinsurance
programme and expected loss ratios;
The
submission of detailed biographical
affidavits on the beneficial owners,
directors and management;
Appropriate
capitalisation of the proposed insurance
company. Although companies engaged
in general insurance should have a
minimum capital of US$100,000 and
those engaging in long term insurance
a minimum capital of US$180,000, the
desired capitalisation of the company
will be determined by the ratio of
its net worth to premium volume projected
in the Business Plan;
Identification
where appropriate of the local resident
representative, the insurance manager,
the auditor and for life insurance
companies the actuary;
Details
of acceptable arrangements for business
production, underwriting and claims
handling;
The
company's incorporation papers.
A
licence can normally be obtained within
thirty days if properly prepared and documented.
An application fee is payable on submission
of an application for an insurers licence.
The licence fee (non-domestic business)
is payable at the date of the grant of
the licence and annually thereafter. The
licensing period runs from 1st April to
31st March.
Restricted licence reinsurers dealing
with one direct writer are exempted from
paying fees and from a number of other
requirements under the Ordinance. Under
section 7 (11) of the Insurance Ordinance,
if an insurer gives an undertaking that
it will not engage in any business other
than the reinsurance of risks covered
by a single named insurer, it may potentially
obtain exemption from practically all
the requirements of the Ordinance apart
from the need for a licence.
The
exemption was tailored to encourage the
incorporation in the TCI of producer owned
reinsurance companies (PORCs). A PORC
is a reinsurance company that is beneficially
owned or controlled by the producers of
business ultimately reinsured by the PORC.
Typical uses include service contract/extended
warranty business, mortgage guarantee
insurance, provision of life, and accident
and health reinsurance coverage to the
US car dealership industry.
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 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 no requirement to register the
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.
Exclusion
of foreign law: in the absence of
a term to the contrary Turks and Caicos
Island law provides that the laws of any
other jurisdiction with which the trust
or any disposition made thereunder may
otherwise be connected is to be excluded.
The courts of the Turks and Caicos Islands
consider they have jurisdiction over a
trust in any one of the following circumstances:
where the trustees reside on the Islands,
where the trust property is situated on
the Islands, where the trusts are administered
from the Islands, and where the trust
was set up under Turks and Caicos Islands
law.
Limitation
Periods for the setting aside of a "Disposition"
: a "disposition is the transfer of assets
into a trust by a settlor. Creditors who
have a claim against a settlor may wish
to set aside the "disposition" and use
the proceeds realised to satisfy their
claim. The provisions of the Voidable
Dispositions Ordinance 1998 sharply circumscribes
the circumstances in which a "disposition"
can be set aside by a creditor and so
make the Turks and Caicos Islands that
much more attractive a jurisdiction into
which to settle a trust.
Generally speaking the Ordinance only
applies to "dispositions" made after the
Ordinance became law. "Dispositions" can
be set aside by the Supreme Court on the
application of a creditor in any of the
following sets of circumstances:
if within 2 years of the "disposition"
the settlor is deemed to have a contractual
debt towards the creditor. If an application
to the Supreme Court is not to be
time barred it must be commenced by
the creditor within 6 years of the
"disposition" or within 6 years of
the day the contractual debt arose,
whichever is the later;
if at the time of the "disposition"
the settlor had a contingent liability
towards the creditor. Where the liability
was contingent an application to set
aside a "disposition" must be commenced
within 6 years of the "disposition"
if it is not to be time barred;
if
within 2 years of the "disposition"
the creditor had the right to bring
a legal action against the settlor
for an outstanding debt . If the application
by the creditor to the Supreme Court
to set aside the disposition is not
to be time barred it must be commenced
either within 6 years of the disposition
or within 6 years of the legal action
accruing, whichever is the later.
In any application to set aside a "disposition"
the burden of proof lies on the creditor
to prove that the settlor wilfully intended
to defeat the obligation owing to the
creditor by making the "disposition".
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