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St
Kitts and Nevis has made steady progress
in developing its financial services sector
since securing its removal from the Financial
Action Task Force (FATF) and Organisation
of Economic Cooperation and Development
(OECD) blacklists in 2002, but has had
to develop new legislation and financial
products to ensure that it stayed off
the list.
Nevis
emerged as an offshore jurisdiction after
enacting its Nevis Business Corporation
Ordinance in 1984, based upon American
corporate law of the state of Delaware.
Under the Constitution adopted when St.Kitts
and Nevis became fully independent in
1983, Nevis has its own Legislative Assembly
which swiftly took advantage of its autonomous
powers to pass the Ordinance, which was
followed by Trust, LLC and Mutual Fund
legislation.
Although St Kitts has aimed primarily
at attracting industrial and tourist investment
with very tax-friendly incentive legislation,
Nevis's achievements in attracting offshore
companies inspired St.Kitts to establish
its own offshore regime in 1996 with a
new Companies Act and Trusts Act. Still,
St. Kitts continues to hope that by concentrating
on industrial investment it will develop
a less competitive and consequently more
harmonious relationship with Nevis.
In
an attempt to broaden the Federation's
attractions, the St Kitts government introduced
two new pieces of legislation in 2002:
the Merchant Shipping Act and the Foundation
Act (2003). The new Merchant Shipping
Act makes provisions for the registration
of ships and pleasure vessels in St. Kitts.
Since its launch in February 2005, over
500 ships having been registered with
a total deadweight of over 650,000 tonnes.
The revenue from this activity increased
from ECD250,000 in 2006 to over ECD1 million
for 2007. The St. Kitts & Nevis International
Ship Registry is also finalising plans
to increase its attractiveness to yacht
and pleasure vessel owners, which will
again both assist local owners of such
craft and increase the numbers of such
craft on the Ship Registry.
The
Foundation Act provides for the formation
of private Foundations. The Foundation
Act is expected to enhance the attractiveness
of St. Kitts as an international financial
center through the introduction of a civil
law concept into the traditionally common-law
system.
All
offshore finance businesses in the Federation
need authorisation under the Financial
Services (Regulations) Order, 1997. This
includes deposit-taking business, investment
business, insurance business, trust business
and corporate service provision.
The
Nevis Multiform
Foundations Ordinance came into force
on October 1st 2005. It introduces a flexible
hybrid multiform of foundation into the
Nevis international financial services
regime.
St.
Kitts had 1,680 companies on the register
as of 31st December 2005.
This
section of the
site describes the most important types
of offshore business activity carried
out from St Kitts and Nevis.
St. Kitts and Nevis Banking
Domestic
banking is regulated by the Banking Act
1991 and non-domestic banking falls under
the Financial Servicers (Regulations)
Order 1997. Nevis has its own Offshore
Banking Ordinance 1996.
Two
types of banking licenses are granted
under the Federation's 1997 Financial
Services (Regulations) Order. 'Unrestricted'
licenses require minimum financial resources
of 1,350,000 East Caribbean dollars ($500,000),
while for 'restricted' licenses the level
is only 135,000 East Caribbean dollars
($50,000).
The
Confidential Relationship Act, 1985 for
St. Kitts-Nevis offers complete confidentiality
should foreign authorities seek private
banking and financial records. Prison terms
are mandatory for violation of the statute.
The
banking system consists of the Government
owned St Kitts-Nevis National Bank, the
Development Bank of St Kitts and Nevis,
the privately-owned Bank of Nevis and
the Bank of Nevis International, First
Caribbean International, Royal Bank of
Canada, Bank of Nova Scotia, RBTT Bank,
the Nevis Co-operative Credit Union, the
St Kitts Co-operative Credit Union and
the Foundation for National Development.
The National Bank, which is the largest
commercial bank in the Eastern Caribbean
Currency Union has assets in excess of
a billion dollars. By mid-2005 the assets
of commercial banks had reached $3 bn.
The
Nevis Offshore Banking Ordinance 1996
defines offshore banking as follows:
Receiving
of foreign funds through the acceptance
of foreign money, deposits payable upon
receipt demand or after a fixed period
or after notice;
The
sale or placement of foreign bonds certifcates,
notes or other debt obligations or other
securities, or
Any other similar activities involving
foreign money or foreign securities,
and
Either in whole or in part using foreign
funds so acquired for loans, advances
and investments whether in Nevis or
elsewhere.
Licences under the Banking Ordinance are
issued to eligible companies or qualified
foreign banks. An eligible company must
be a wholly owned subsidiary of a local
bank regulated by the Eastern Caribbean
Central Bank that is licensed under the
Banking Act to do business in Nevis. A
qualified foreign bank is a foreign bank
that is licensed under the Banking Act,
or is foreign bank with minimum capitalization
and assets, as prescribed by the Minister,
that is not licensed under the Banking
Act but is licensed to do domestic banking
in its jurisdiction of incorporation.
An eligible company must be incorporated
under the Companies Act as a company limited
by shares, and must have objects or business
activity restricted to offshore banking
from within Nevis. It must have at least
one director who is a citizen of St. Kitts
and Nevis with a residence in Nevis. The
minimum Authorised Capital must be at
least ECD2 Million, of which not less
than ECD1 Million has been Subscribed
and Paid Up in cash, such cash being deposited
in an account maintained by the Permanent
Secretary at the Eastern Caribbean Central
Bank.
Not
later than four months after the close
of its financial year, a licensee must
forward to the Permanent Secretary copies
of its balance sheet and profit and loss
account and the full and correct names
of the directors of the licensee. The
balance sheet and the profit and loss
account must bear on its face the certificate
of an auditor.
Non-domestic
insurance and assurance businesses must
be licensed under the Insurance Act.
The Federation's 1997 Financial Services
(Regulations) Order set the following
minimum net assets for applicants wishing
to engage in insurance business: long-term
and general insurance business, 810,000
East Caribbean dollars ($300,000), reduced
to 540,000 East Caribbean dollars ($200,000)
for long-term but not general insurance,
and further lowered to 270,000 East
Caribbean dollars ($100,000) for general
but not long-term insurance.
In
July, 2004, the Nevis Ministry of Finance
and Development in Nevis announced the
passage of the Nevis International Insurance
Ordinance. The Ordinance is divided
into six sections, and provides for
the licensing and regulation of general
insurance, captive insurance and reinsurance
companies. It is compulsory for insurance
companies to have a physical presence
in Nevis, whether via a resident manager
or a fully trained registered agent,
with adequate knowledge and experience
of the insurance industry.
In
2006, lawmakers on Nevis approved an
amendment to the jurisdiction's insurance
law that clarified and tightened up
certain sections of the legislation
to combat fraud. The Nevis International
Insurance (Amendment) Ordinance, 2006
updated the Nevis International Insurance
Act of 2004, and, according to then
Premier Vance Amory, was drafted to
"eliminate loopholes which could
be exploited by persons who do not really
care what they do in international business."
In
June 2006, St Kitts and Nevis Prime
Minister and Minister of Finance, Dr
Denzil Douglas, revealed on a promotional
trip to Switzerland that the government
would soon introduce captive insurance
legislation. According to Douglas, the
new captive insurance vehicle would
be "extremely competitive",
with low licence fees for small captives.
The
Captive Insurance Companies Act received
the assent of the Governor General on
August 16, 2006. Under
the Act:
Captive
insurance companies are subject to the provisions
of sections 7, 8, 9, 10 and 11 of the Act
and to the provisions of Part I of the Insurance
Act, 1968.
Except
for an association captive insurance company
which shall be either a stock insurer or a
mutual insurer, a captive insurance company
may be formed in the State as any type of
entity authorized under the Companies Act,
1996.
A
captive insurance company shall have at least
two directors or managers.
A
captive insurance company formed for the purpose
of underwriting insurance risks within the State,
or within and outside the State, shall have
at least one director or manager who is a resident
in St Kitts and Nevis.
A
captive insurance company shall not adopt a
name that is the same, deceptively similar,
or likely to be confused with or mistaken for
any other existing business name registered
in the State.
A
captive insurance company shall not do any insurance
business in or from within the State unless:
it
applies for and obtains from the Registrar
a license authorizing it to conduct insurance
business in or from within the State;
it
maintains a registered office in the State;
and
it
appoints a registered agent to accept service
of process and to otherwise act on its behalf
in the State.
A
captive insurance company formed or registered
in the State, may when permitted by its articles
of association, charter, or other organizational
document, apply to the Registrar for a license
to issue any and all classes of insurance referred
to in section 3(1) of the Insurance Act, 1968,
except that:
a
pure captive insurance company may not insure
any risks other than those of its parent and
affiliated companies or controlled unaffiliated
businesses;
an
association captive insurance company may not
insure any risks other than those of the member
organizations of its association, and their
affiliated companies;
a
group captive insurance company may not insure
any risks other than those of its parent, owners
and affiliated persons, provided, however, that
not more than one-third of its insurance business
may involve risks of unaffiliated persons;
a
captive insurance company may not provide personal
motor vehicle or homeowner’s insurance
coverage or any component thereof;
a
captive insurance company may not accept or
cede reinsurance except as provided in section
16 of the Act; and
a
captive insurance company may provide excess
workers’ compensation insurance to its
parent and affiliated companies, unless prohibited
by the law of the state or country having jurisdiction
over the transaction.
An
application for a licence by a captive insurance
company must be made to the Registrar in the prescribed
form accompanied by:
a
certified copy of the captive insurance company’s
organizational documents, a statement under
oath of its president and secretary, or, if
none, its directors or managers, showing its
financial condition;
a
description of the captive insurance company’s
three year business plan including coverages,
deductibles and coverage limits, together with
such additional information as the Registrar
may reasonably require to enable him to assess
and approve the business plan; and
evidence
of the following:
the
amount and liquidity of its assets relative
to the risks to be assumed;
the
adequacy of the expertise, experience, and
character of the person or persons who will
manage it;
the
overall soundness of its plan of operation;
the
adequacy of the loss prevention programs
of its insureds;
minimum
unimpaired capital and surplus as specified
in section 14;
any
other information deemed relevant by the
Registrar in ascertaining whether the proposed
captive insurance company will be able to
meet its policy obligations;
and
a non-refundable application fee of EC$1,620.00.
There
is
a license fee of EC$8,100.00 for the
year of registration and a renewal fee
for each year thereafter of EC$8,100.00.
However,
the licence fee for a 'small captive
insurance company' is EC$2,160.00 for
the year of registration and EC$2,160.00
annually thereafter.
A
'small captive insurance company' means
a captive insurance company with annual
net written premiums, or, if greater,
direct written premiums, not exceeding
EC$4,050,000.00.
A
small captive insurance company may
apply for a license in a prescribed
simplified form.
Nevis
enacted new insurance legislation in
2009 with the Insurance Act. See the
Table of Statutes under Law
of Offshore for more detail.
Trust
management has become an important business
for St Kitts and Nevis.
Like all offshore finance businesses
in the Federation, trust management
companies need authorisation under the
Financial Services (Regulations) Order,
1997. Under the Order, applicants wishing
to establish a trust business handling
both unrestricted and restricted business
must have net assets of 540,000 east
Caribbean dollars ($200,000) or its
equivalent in other currencies, reduced
to 54,000 east Caribbean dollars ($20,000)
for restricted business.
Nevis
trusts are formed under the Nevis International
Exempt Trust Ordinance of 1994, as amended
to September 2000. The Trust Ordinance
includes special provisions to enhance
the use of Nevis as a preferred jurisdiction
for the establishment of Asset Protection
Trusts.
The
St Kitts and Nevis Trusts Act 1996 was
a replacement for the 1961 Trustee Ordinance
modeled after the 1925 English Trusts
Act, and also contains modern asset
protection provisions.
St
Kitts and Nevis Investment Fund Management
(Nevis)
Investment
funds may be formed in Nevis under the
Nevis International Mutual Funds Ordinance
2004. A mutual fund is defined under
the Ordinance as a company incorporated,
a partnership formed, a unit trust organized
or other similar body formed under the
laws of Nevis or any other jurisdiction
which collects and pools investor funds
for the purpose of collective investment.
The
definition includes umbrella funds whose
shares are split into a number of different
classes of funds or sub-funds. It also
includes a fund which has one or more
investors which are mutual funds not
registered or recognized by the Ordinance.
The
Ordinance divides mutual funds into
three classes:
Public
Funds, offering shares or units to the general
public and which are required to be registered;
Private
Funds, offering shares on a private basis
with no more than 50 investors and which are
required to be recognized by the Minister
of Finance upon proof that it is lawfully
constituted; and
Professional
Funds, available only to professional investors
with an initial investment of not less than
USD100,000. These are also required to be
recognized by the Minister of Finance, but
can be fully operational for a period of 14
days without being recognized under the Ordinance.
The
Ordinance allows a licensed or recognized
mutual fund of an approved jurisdiction
to be continued or redomiciled in Nevis.
Also, Managers or Administrators who
are not resident or domicile in Nevis
and who are authorized to provide services
under the laws of a recognized jurisdiction
may operate from within Nevis after
receiving written permission from the
Minister of Finance.
The
Nevis International Mutual Funds Regulations
2007 set the annual licence renewal
fee at USD300 for Public Funds and USD200
for Private Funds and Professional Funds.
The 2007 Regulations have allowed mutual
funds to register in Nevis since 1st
January, 2008.
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LOWTAX.NET
13/07 
site describes the most important types
of offshore business activity carried
out from St Kitts and Nevis. 
