St Vincent and the Grenadines Offshore Business Sectors

A new St Vincent and the Grenadines investment promotion agency, the National Investment Promotions Inc. (NIPI), commenced operations in August, 2004, taking over from the Development Corporation (DEVCO), which initially managed the investment promotion functions of St Vincent and the Grenadines. In an effort to bolster NIPI's image locally and internationally, it was rebranded as Invest SVG and launched in August, 2009. The agency reports to the Office of the Prime Minister, Dr Ralph Gonsalves.

Since securing its removal from the Financial Action Task Force (FATF) blacklist of Non-Cooperative Countries and Territories, the Caribbean jurisdiction of St Vincent and the Grenadines has reported strong growth in the registration of international business companies.

In April 2008, the Government of St Vincent and the Grenadines announced that it was working along with the European Union to significantly develop the e-Business Sector within the country.

This came as the Ministry of Telecommunications prepared to launch the Business Skills Development and e-Business Incubators funded by the European Union.

Speaking to NBC News, Team Leader and Incubator Manager of the EU Team, Irina Nunberger reportedly explained that the aim of the project is to develop the nation’s entire business sector, while offering services to develop ICT driven businesses.

Miss Nunberger stated that her team will provide training and advice for businesses wanting to launch an e-commerce venture, while also working along with the Government to develop the e-Government Sector.

She revealed that they will also be developing the business networking sector through the establishment of the Local Business Incubator, and that the team will foster networking locally, regionally and internationally.

Business Development Officer from the EU team, Colin Maclean added, according to the Government, that one of the main objectives of the project is to develop the rural business fraternity.

Mr Maclean revealed that the team is working alongside organizations such as the Center for Enterprise Development, the National Development Foundation and the Chamber of Industry and Commerce to develop these rural businesses, which are often overlooked.

St. Vincent and the Grenadines Banking

The International Banks Act of 1996 and Regulations together with the International Banks (Amendment) Act (No 30 of 2002) and the International Banks (Amendment) Regulations 2002 (S R & O No. 31 of 2002) govern the registration of international banks.

Until 2005, the International Financial Services Authority (previously the Offshore Finance Authority) collaborated with the Saint Kitts-based Eastern Caribbean Central Bank, (ECCB), in the licensing and supervision of international banks. Although the IFSA is ultimately responsible for granting all international bank licenses, the International Banks Act was amended to provide for the ECCB to cooperate with the IFSA in reviewing all bank applications as well as in ongoing supervision of banks.

In May, 2005, the ECCB gave notice to terminate its involvement in the regulation/supervision of the International Banking sector in St Vincent and the Grenadines. The ECCB stated that it would continue to provide assistance with capacity building/training to IFSA, and with conducting due diligence checks on prospective entrants applying for licences under the International Banks Act.

In 2008, amendments to The Banking Act repatriated control over international banks to the International Financial Services Authority (IFSA). The tightening of the regulatory regime for banks after 2000 resulted in a sharp drop in the number of offshore banks operating in the jurisdiction, from 40 in 2001 to just four at the end of December, 2010. The government is thought not to be keen to see rapid expansion of the banking sector.

All banks are subject to onsite inspections at least every 12 – 18 months.

The IFSA grants two Classes of Offshore Banking Licence:

A Class I Offshore Banking License which is for the purpose of carrying on an offshore banking business generally. Each Class I bank must establish and maintain a capital fund with fully paid-up capital of not less than USD1,000,000.00 or its equivalent in another currency, and Class I banks are required to hold a deposit or invest the sum of USD500,000 or its equivalent in another currency, in such a manner as the Authority may prescribe.
A Class II Offshore Banking License which is for the purpose of carrying on offshore banking business subject to the restriction that the licensee shall not offer or provide its offshore banking business services, or otherwise receive or solicit funds by way of trade or business, except from non-Resident persons specifically named or described in an undertaking accompanying the application for the license, which undertaking shall, without further notice, constitute a condition to the Class II license, if and when the same is granted. Each Class II bank must establish and maintain a Capital fund with fully paid-up capital of USD500,000.00 or its equivalent in another currency. In addition, Class II banks are required to hold a deposit or invest the sum of USD100,000.00 or its equivalent in another currency in such a manner as the Authority may prescribe.

The holder of a Class I or a Class II Offshore Banking License shall not, without the written approval of the Authority, carry on any banking business with any Resident except in connection with the rendering of offshore banking business services from within the State or as expressly provided herein or in other laws governing the operations and activities of the licensee.

All Offshore banks applying for a licence to operate in St. Vincent and the Grenadines must submit a completed application (in duplicate) along with the prescribed fee to the IFSA. All applicants are required to complete a ‘fit and proper’ questionnaire. The following requirements apply to all banks that are issued with a licence to operate in St. Vincent and the Grenadines:

They must establish a physical presence in the island;
They must have local employees;
There must be at lease one local Director approved by the Offshore Finance Authority.

There is a non-refundable application fee, initially set at USD1,000 for Class 1 applicants; the fee is USD1,000 for Class 2 applicants. Annual fees are USD10,000 for Class 1 and USD5,000 for Class 2 banks.

Banking confidentiality is enforced by law; however the Exchange of Information Act, 2002 provides for international co-operation in various circumstances. See Other International Agreements for further details.

The Banking Act was, in 2006, updated with regard to information sharing, limits on large exposures, fit and proper criteria for directors and management, and increased enforcement powers to supervisors.

In March, 2009, after the US US Securities Exchange Commission accused Millennium Bank of being involved in a USD68 million Ponzi scheme, the government moved swiftly to close the bank down, saying that it had not wished to give it a banking license in the first place. “The funds alleged to be defrauded from investors did not pass through Millennium Bank in St Vincent and the Grenadines nor our National Commercial Bank,” said Prime Minister Gonsalves. “It is believed that domestic banks in the US were used to deposit funds from investors in the name of United Trust Switzerland and then payments made to the defendants.”

St. Vincent and the Grenadines Insurance

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

St Vincent and the Grenadines has identified the international insurance sector as an excellent growth area. The present insurance regime offers a great deal of flexibility to insurers wishing to conduct international insurance business.

The sector is regulated by the International Insurance (Amendment and Consolidation) Act 1998 which came into effect on December 15, 1998 and, the International Insurance Regulations gazetted on June 22, 1999 . Together these laws set the legal framework for the high quality of regulatory and administrative processes necessary to foster and maintain market participation, transparency and confidence. The legislation governing insurance was updated in several aspects in 2006, however, and plans were afoot for further updates in 2007.

Under this regime insurers have a choice of five classes of international insurance companies. This flexibility is designed to accommodate both the largest and the smallest insurance enterprises and allows for a diverse range of activity:

Class I - Unrestricted - insurers can carry on any international insurance business, including long term;
Class II - General - Insurers can carry on general but not long-term international insurance business;
Class III - Association - insurers can carry on general and long-term international insurance business with two or more owners of the insurer and/or their affiliates, and up to 30% of business with persons who are not owners of the insurer or their affiliates;
Class IV - Group - insurer can carry on general and/or long term international insurance business with one owner, its affiliates, and employees;
Class V - Single - insurer may carry on any international insurance business, with the sole owner of the insurer, if a company, or with the beneficial owners of the insurer, if a trust.

There are individual capital requirements for each class; higher requirements for higher risk firms. At the application stage, the firms themselves are allowed to state a class of business and to make their own specific assessment of the overall level of financial resources they would need to meet their liability.

At the end of December, 2010, there were six international insurance companies registered in St Vincent and the Grenadines.

Annual fees are USD3,000 for Classes I, II and III; and USD2,000 for Classes IV and V.

St. Vincent and the Grenadines Investment Fund Management

Mutual funds are regulated by the Mutual Funds Act, 1997 as amended by the Mutual Funds (Amendment) Act 1998, with Regulations issued in 1999. The Act provides for the licensing of both domestic and offshore mutual funds. There are essentially two categories of fund licenses, namely a private and accredited fund license and a public fund license.

The legal structures that can form the basis of a St. Vincent mutual fund include an incorporated company, a partnership or a unit trust. Open ended, closed ended and integral funds are allowed, as are umbrella type funds.

A Public Fund means a mutual fund, which offers any shares it issues for subscription or purchase to any interested member of the general public. A Public Fund must publish a prospectus and file it with the Offshore Finance Authority. There are no capital adequacy requirements or minimum subscription limits placed on public funds. However they must maintain accounting records and financial statements. Public funds that intend to do business with residents must also submit an offering document synopsis to the International Financial Services Authority.

A Private and Accredited fund is a mutual fund that either has no more than fifty investors or issues shares on a private basis. An accredited fund issues shares only to accredited investors, with an initial investment of not less than USD25,000, at the time of writing. An accredited investor is one who has a net worth in excess of USD1 million.

All applications to carry on business as a Public Fund or Private Fund must be submitted to the St. Vincent and the Grenadines International Financial Services Authority for the attention of the Registrar of Mutual Funds.

Insofar as administrators and managers are concerned, they are required to apply to the Authority for a license to carry on business as administrators or managers. The Act provides that a natural person, any mutual fund, company, trusts or trustee may apply for a license to carry on business as administrators or managers. Applicants must show evidence that they have or have available to them expertise and resources necessary to carry out the business proposed. The applicant must meet standard fit and proper requirements.

The competence and character of managers and administrators is seen as paramount to the efficient operation of the Mutual Fund and the integrity of the jurisdiction. Accordingly, the Authority requires that only fit and proper persons may be issued licenses to carry on business as managers and administrators.

As at December 31, 2010, there are 87 Mutual Funds registered in St Vincent and the Grenadines.

There is a licence fee of USD600 for a mutual fund, and an annual fee also of USD600, at the time of writing.

St. Vincent and the Grenadines Ship Management and Maritime Operations

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

The registration of vessels under the Flag of St. Vincent and the Grenadines is governed by the Merchant Shipping Act, 1982, as amended by the 2004 Shipping Act, and the Wreck and Salvage Act (Act 55 of 1989).

Characteristics of the St Vincent and the Grenadines flag are as follows:

Low company formation and ship registration costs;
No restrictions on the nationality of the ship owner, the master, officers and crew;
No restrictions or taxation on the sale, transfer or mortgaging of SVG registered ships;
No trading restrictions and preferential treatment;
A ship may be registered if it is owned by:
- Any individual who is a citizen of St. Vincent domiciled in St. Vincent.
- Any body corporate, partnership or other association of individuals registered in accordance with the laws of St. Vincent and the Grenadines and having their main office in St. Vincent.
- Any body corporate, partnership or other association of individuals registered according to law in any foreign country, provided that, when the main office is situated outside St. Vincent, a Registered Agent in St. Vincent is appointed.
Vessels must not be older than 18 years (15 years for tankers) unless special permission is granted.

Registration requirements are as follows:

Application form for Registration completed and signed;
Good Standing Certificate (of the owning company);
A Proof of ownership or copy of notarised of Sale Bill or copy of Purchase Contract or Builder's Certificate (New Ship only);
Certificate of general inspection issued by a Classification Society / confirmation of class (if applicable), or nautical Surveyor. The Classification Society must confirm that the vessel’s class will be retained under the new Ownership/Flag and that the new statutory certificates will be issued after the completion of the necessary surveys;
Continuous Synposis Records (when I.S.P.S Code is applicable;
Payment of registration and annual fees;
A Permission for transfer or recent of Register Transcript and/or recent Non-Encumbrance Certificate or Deletion Certificate from the present registry (if applicable);
A copy or photocopy of the existing Tonnage Certificate or Certificate of Measurement (for yachts over 24m);
A copy of ISM Document of Compliance (DOC) of the vessel's operator and a copy of the short term (or interim) SMC or confirmation from the authorised organisation that same is being issued (if applicable);
An Accounting Authority Identification Code (A.A.I.C.) and confirmation from the accounting authority that it will be responsible for the radio traffic accounts (if applicable).

The following Organisations are authorised to issue statutory documents on behalf of St.Vincent & The Grenadines Administration after satisfactory surveys:

ABS (American Bureau of Shipping), BV (Bureau Veritas), CCS (China Classification Society), CR (Croatian Register of Shipping), DNV (Det Norske Veritas), RINa (Registro Italiano Navale), HRS (Hellenic Register of Shipping), INSB (International Naval Surveys Bureau), KRS (Korean Register of Shipping), LR (Lloyds Register of Shipping), NKK (Nippon Kaiji Kyokai), RS (Russian Maritime Register of Shipping), PRS (Polish Register of Shipping), and GL (Germanischer Lloyd).

Registration fees are as follows:

Lowtax Jurisdictions

St. Vincent and the Grenadines: Offshore Business Sectors

On this Page:

St. Vincent and the Grenadines Banking

St. Vincent and the Grenadines Insurance

St. Vincent and the Grenadines Investment Fund Management

St. Vincent and the Grenadines Ship Management and Maritime Operations

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