Seychelles News – New International Business Companies Act, 2016
In its effort to be more compliant with the recommendations of the Organization for Economic Co-operation and Development and also with Financial Action Task Force standards, several amendments to the International Business Act, 1994 (the “Act”) had to be made. In line of this, towards the end of 2013, the following amendments were made:
- Prohibition for the use of bearer shares;
- Location of the registers of companies to be maintained at the registered office; and
- Requirements for all International Business Companies to provide to the registered agent an annual return in a form of a declaration either in original or scanned copy.
The National Assembly of Seychelles gave its approval for the enactment of the new International Business Companies Act, 2016 on 26th July, 2016. The new IBC Act, 2016 will come into force as of 1st December, 2016.
The Act makes provision for a strong and attractive regulatory framework (according to the Financial Standard), contributing to continued competitive and sustainable growth for Seychelles as an International Financial Services Centre. Since the enactment of the International Business Companies Act, 1994 (“1994 Act”), IBCs has become a success story for Seychelles in our non‐bank financial services industry. To date, Seychelles has registered over 175,000 companies under the 1994 Act and currently over 70,000 companies are still active. Seychelles has recognized the need to strive to improve on the IBC features and attractiveness while ensuring a robust regulatory environment which meets international standards.
The major policy changes, amongst other changes, under the new IBC Act are as follows:
- The list of prohibited activities that an IBC shall not undertake has been extended to include carrying on securities business, mutual fund and gambling business as defined under the relevant Seychelles laws unless such activities are licensed or otherwise legally able to do so under the laws of each country in which the IBC carries on such business.
- Every IBC will be required to keep a beneficial ownership Register at its registered office in Seychelles (exemption applies for listed IBCs and subsidiaries of listed IBCs).
- Provisions to allow IBCs to be Protected Cell Companies (PCCs).
- All IBCs will be required to file with the Registrar a copy of its register of directors. Every IBC shall have a period of 12 months from the Act commencement date to file a copy of its register of directors with Registrar and the filed register will be made publicly accessible after two years following the Act commencement date.
- Clear provisions have been introduced to prohibit an IBC from issuing bearer shares.
- New provisions have been introduced to discourage aged shelf companies. The new Act provides that the first director(s) must be appointed within 9 months of the date of the company’s registration.
- The striking‐off process has been reduced from 180 days to 90 days.
- The new Act provides for Protected Cell Companies, reserve directors, optional registration of the company’s register of members and beneficial owners, optional filing of annual financial statements with the Registrar and disqualification of a director by the Court.
- The fine under the general offence provision and the fine for making false statements to the Registrar have been increased to $50,000. The penalty fee for failure to keep accurate Register of Members has been increased to $500 and $50 per day thereafter. A new provision has also been included to require the Registrar, before imposing any penalty fees under the Act, to give the person concerned an opportunity of being heard.
- An IBC will no longer be able to hold bonds, treasury bills and other securities issued by the Government of Seychelles or the Central Bank of Seychelles and will no longer be permitted to hold a lease of property for use as an office from which to communicate with members or where books and records of the company are prepared or maintained.
- The new Act clarifies that an IBC may own or manage a vessel registered in Seychelles under the Merchant Shipping Act and the vessel may visit or be situated in Seychelles waters, provided that the IBC shall not carry on any business in Seychelles including, without limitation, fishing, charter or tourism business involving the vessel.
- New provisions has been introduced to discourage aged shelf companies which are damaging to the reputation of Seychelles and also to improve our standing with the OECD and FATF. The new Act provides that the first director(s) must be appointed within 9 months of the date of the company’s incorporation.
- The IBC search fee has been reduced from $100 to $10.
- A person aggrieved by a decision of the Registrar may, within 90 days of service of notice of the decision of the Registrar, appeal against the decision to the Appeals Board established under the Financial Services Authority (Appeals Board) Regulations, 2014.
- Permitted IBC Name Suffixes – In accordance with World Bank (STAR Report) recommendations, the permitted IBC name suffixes denoting limited liability has been reduced. The new IBC Act will permit only the following suffixes: “Limited”, “Corporation” or “Incorporated” or the abbreviations “Ltd”, “Corp”, “Inc” (or PCC for protected cell companies). The new name requirements will only apply to companies incorporated or continued under the new Act and will not apply to existing IBCs incorporated or continued under the IBC Act 1994.
For further information on changes to the regime and how they might affect you and your clients, please feel free to contact your KEY account managers.