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SEYCHELLES: IBC ACT 2016 REPLACES IBC ACT 1994

 

The International Business Companies Act 2016 (the Act) came into force on 1 November 2016 (the Act commencement date) and repealed and replaced the International Business Companies Act 1994 as amended (the former Act). The Act regulates Seychelles international business companies (IBCs). IBCs incorporated under the former Act were automatically re-registered under the Act.

 

Approaching 200,000 companies were registered under the former Act, including over 18,000 registered in 2015, making Seychelles IBCs one of the world’s most popular offshore companies. Notwithstanding the success of the former Act, Seychelles recognised the need to modernize and improve on the features of the IBC while ensuring a robust regulatory environment meeting international standards. The Act retains many attractive features from the former Act, including:

 

  • No change to the low US$100 incorporation fee and US$100 annual renewal fee payable to the Registrar.

  • IBCs continue to be exempt from Seychelles taxes on income or profits.

  • No filing with the Registrar, and no public access to, details of shareholders or beneficial owners.

  • No requirement for preparation, audit or filing of annual accounts.

  • A minimum of 1 director and 1 shareholder, who may be a non-resident individual or body corporate.

 

DIFFERENCES UNDER THE NEW ACT

 

Appointment of first directors within 9 months of incorporation The subscriber(s) to a company’s memorandum shall, within nine months of the date of incorporation of the company, appoint the first director(s) of the company.

 

Reserve directors – Where a company has only one member who is an individual and that member is also the sole director of the company, that individual may nominate a person as a reserve director to act in the place of the sole director in the event of his death.

 

Filing of Register of Directors with the Registrar – There is a requirement for an IBC to file a copy of its Register of Directors with the Registrar within 30 days of the appointment of its first director(s) and thereafter within 30 days of any change in the content of its Register of Directors. There is no public access to director information filed with the Registrar at least until 1 November 2018.

 

Register of Beneficial Owners – There is a requirement for an IBC to keep a Register of Beneficial Owners at its registered office in Seychelles, alongside its existing Register of Directors and Register of Members. The Register of Beneficial Owners is not filed with the Registrar and is not open to public access. A company (other than a listed company) is required to identify its beneficial owners. Within 30 days of a person becoming a beneficial owner in relation to a company he is required to give written notice to the company of his registrable particulars (the information to be kept in the company’s Register of Beneficial Owners). The registered person shall notify the company if he ceases to be a beneficial owner or of any change to his registrable particulars.

 

Register of Charges – An IBC that has a charge over any of its assets must keep a Register of Charges at its registered office in Seychelles.

 

Registration of Charges with the RegistrarWhile registration of a charge over a company’s assets is optional under section 181(1) of the Act, most lender chargees will insist on registration of a relevant charge (i.e. a charge created on or after the Act commencement date) because registration determines the priorities ranking of creditors having relevant charges over the same secured assets.

 

Protected cell companies (PCCs)PCCs are companies whose assets and liabilities may be attributed to a particular separate “cell” of the PCC or to the PCC itself. A PCC provides for statutory ring-fencing of assets (i.e. a principal benefit of PCCs is in the segregation of assets and liabilities within separate cells). The rights of creditors are limited to the assets of the cell of which they are creditors. PCCs are typically used for mutual fund structures and captive insurance business.

 

Provision for limited life companiesAn IBC is a limited life company if its memorandum includes a provision that the company shall be wound up and dissolved upon: (i) the expiration of a fixed period of time; or (ii) the bankruptcy, death, expulsion, insanity, resignation or retirement of any member of the company; or (iii) the happening of some other event which is not the expiration of a fixed period of time.

 

A new solvency test in relation to the payment of dividendsThe directors may only authorise a distribution (including a dividend) by the company to members if they are satisfied, on reasonable grounds, that the company will, immediately after the distribution, satisfy the “solvency test”. For the purposes of the Act, a company satisfies the solvency test if: (i) the company is able to pay its debts as they become due; and (ii) the value of the company’s assets is greater than the value of its liabilities. A resolution of directors approving a distribution must contain a statement that, in the opinion of the directors, the company will, immediately after the distribution, satisfy the solvency test.

 

 

 

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