Depending on your requirements, setting up a Mauritius Special Purpose Fund can either be done through an open-ended fund (CIS) or a closed ended fund (CEF), the main difference being the frequency at which the fund plans to redeem the investments.

 

On an indicative basis, we have displayed below OCI’s fee schedule for the setting up of an SPF through a CIS and our fact sheet on CIS and CEF.

 

Services that OCI Can supply or arrange (and costs thereof) in relation to a Special Purpose Fund in Mauritius are detailed below.

 

Services to the Fund	Services to the CIS Manager
KYC Review and Set-up of a GBC structured as a Special Purpose Fund.	Establishment of the CIS Manager
Registered Office Address	Registered Office Address
Company Secretarial Services	Company Secretarial Services
Directorship services	Directorship services
Preparation of Annual Financial Statements	Preparation of Annual Financial Statements
Monthly NAV calculation	Provision of Money Laundering Reporting Officer
Provision of Money Laundering Reporting Officer	Provision of Compliance Officer
Provision of Compliance Officer	Tax and Statutory Filings
Tax and Statutory Filings	FATCA/CRS
FATCA/CRS

 

 

Introduction

This letter specifies the services we are to deliver as your service provider for the subject of this engagement, the team we have assigned to the Engagement, how you will remunerate us and other terms of business governing our relationship.

 

We kindly request you to read this letter carefully and confirm your agreement with its terms by signing and returning to us the enclosed duplicate.

 

1. 1.     Mauritius GBC structured as a Special Purpose Fund

 

1. A.   Set-Up Fee:

Particulars			USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.		15,000
Opening of first bank account in Mauritius		2,700
Government Fees:
ROC Processing Fee		350
Annual Fee payable to FSC- GBC Licence		1,950
Annual Fee payable to FSC – Fund licence		3,000
FSC Processing Fee – GBC Licence		500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)		500
Total :		20,300
Legal Fees
The above excludes Legal Fees if required (in the range USD 10,000-15,000)

 

1. B.    Annual Administration Fees

 

Particulars	USD Annual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	700
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Government Fees
Preparation of Tax Return	1,350
Tax Residence Certificate  payable to MRA	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to the FSC – Fund Licence	3,000
Annual Fee payable to ROC	275
Accounting and Other Fees
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors Calculation and Sign-off of NAV	10,000
Professional fees for due diligence on investors	USD 100 per investor

 

 

 

 

1. 2.     Mauritius GBC – CIS Manager

 

 

1. Incorporation Fee:

Particulars			USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.		4,000
Opening of first bank account		1,350
Government Fees:
ROC Processing Fee		350
Annual Fee payable to FSC- GBC Licence		1,950
Annual Fee payable to FSC – Fund licence		3,000
FSC Processing Fee – GBC Licence		500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)		500
Total :		5,300
Optional
The above excludes Legal Fees if required

 

1. Annual Administration Fees

 

Particulars	USDAnnual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Preparation of Tax Return	1,350
Renewal of Tax Residence Certificate	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to ROC	350
Accounting & Investor Due Diligence Services
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors	USD 7,000

 

 

OTHER SERVICES	USD
Provision of Fully Serviced Office Space	1,200 monthly
Annual Fee : Provision of a nominee shareholder pp	2,000
Annual Fee : Provision of a nominee director pp	2,000
Notarization and Apostilation – Per set of document	330
Certificate of Good Standing	300
Certificate of Incumbency	200
Renewal of TRC	750
Bank Account opening outside of Mauritius	Price on Application
Power of Attorney	200/hr
Change of Director	200/hr

 

3.     Mauritius GBC structured as a Special Purpose Fund Set-Up Fee: Particulars USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.		15,000
Opening of first bank account in Mauritius		3,000
Government Fees:
ROC Processing Fee		350
Annual Fee payable to FSC- GBC Licence		1,950
Annual Fee payable to FSC – Fund licence		3,000
FSC Processing Fee – GBC Licence		500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)		500
Total :		20,300
Legal Fees
The above excludes Legal Fees if required (in the range USD 10,000-15,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Annual Administration Fees

 

Particulars	USD Annual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	,000
Government Fees
Preparation of Tax Return	1,000
Tax Residence Certificate  payable to MRA	500
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to the FSC – Fund Licence	3,000
Annual Fee payable to ROC	275
Accounting and Other Fees
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors Calculation and Sign-off of NAV	10,000
Professional fees for due diligence on investors	USD 135 per investor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. 4.     Mauritius GBC – CIS Manager

 

 

1. G.   Incorporation Fee:

Particulars			USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.		4,000
Opening of first bank account		1,350
Government Fees:
ROC Processing Fee		350
Annual Fee payable to FSC- GBC Licence		1,950
Annual Fee payable to FSC – Fund licence		3,000
FSC Processing Fee – GBC Licence		500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)		500
Total :		5,300
Optional
The above excludes Legal Fees if required

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. H.   Annual Administration Fees

 

Particulars	USDAnnual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Preparation of Tax Return	1,350
Renewal of Tax Residence Certificate	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to ROC	350
Accounting & Investor Due Diligence Services
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors	USD 7,000

 

 

OTHER SERVICES	USD
Provision of Fully Serviced Office Space	1,200 monthly
Annual Fee : Provision of a nominee shareholder pp	2000
Annual Fee : Provision of a nominee director pp	2000
Notarization and Apostilation – Per set of document	330
Certificate of Good Standing	260
Certificate of Incumbency	200
Renewal of TRC	750
Bank Account opening outside of Mauritius	Price on Application
Power of Attorney	200/hr
Change of Director	200/hr
Share Transfer	200/hr
Increase of Share Capital	200/hr
Standard charge in respect of disbursements	130
Amendment of memorandum of association	200/hr
Change of Company Name	400
Miscellaneous non-standard work in relation to company management to be carried out by a qualified member of staff as and when specifically requested by client (perusal, preparation, modification and issue of legal and commercial documents, correspondence, responses to third-party inquiries, and similar)	200/hr

 

   

Notes on our fees:

 

1. All fees will be subject annually to an indexation of 2%
2. All fees and hourly rates are exclusive of VAT and disbursements
3. FSC fee is payable in advance on incorporation on a pro-rata basis up to 30 June; For subsequent years, the annual licence fee is payable annually at latest by 30 June. In the event of late payment, a penalty will be chargeable by the FSC and thereafter the licence shall lapse and no other business can be transacted by the entity.
4. The ROC annual fee is payable by 10 January of each year.
5. The retainer covers the appointment of a Company Secretary; Any other administrative services will be charged on a time-spent basis.
6. Wherever retainer is mentioned in this proposal, it covers the minimum charge for the applicable service. Depending on the complexity and volume of transactions, additional charges may be claimed on an agreed time-spent basis.
7. Any other administrative work or professional services not specified above shall be charged on an agreed time-spent basis.
8. Fee schedules do not include external Auditors fees which vary depending on choice of auditor.
9. Fee schedules do not include legal costs (when required)
10. Local Director Fees should be added to fees should Directors Services be retained.

Customer Due Diligence Checklist

List A – Documents required for an individual

 

1. A certified true copy of the individual’s current valid passport, driving licence or national identity card. The document must be pre-signed and should bear a (clear) photograph of the person.
2. A recent original or certified true copy of the individual’s utility bill (dated not less than three months), bank or credit card statement or an original bank reference confirming his/her current  residential address. Note that “P.O. Box” addresses are not accepted.
3. An original bank reference from a recognised banking institution bank which has known the person for at least the last two years, confirming that the bank account of the individual is currently in good standing.
4. Individual Questionnaire including declaration of source of funds (template to be provided by OCI upon signature of the fee proposal).
5. FSC Personal Questionnaire
6. Evidence of source of funds.
7. Detailed CV.
8. Signed FATCA/CRS Declaration form.

 

Enhanced Due Diligence measures

 

1. Signed declaration of source wealth.

2. Evidence of the source of wealth (i.e.; bank statements for the last 6 months).

 

List B- Documents required for a Company

 

1. Certified true copy of the Certificate Incorporation or Registration and certified true copy of the Company’s licence (where the latter is a regulated entity).
2. Original Certificate of Good Standing.
3. Certified true copy of the constitution or Memorandum and Article of Association of the Company.
4. Details of the registered office and place of business.
5. Copy of latest audited accounts or original signed Corporate Profile (template to be provided by OCI upon signature of the fee proposal).
6. Certified true copy of the register of directors
7. A certified true copy of at least two directors’ current valid passport, driving licence or national identity card. The document must be pre-signed and should bear a (clear) photograph of the person.

A recent original or certified true copy of the two directors’ utility bill (dated not less than three months), bank or credit card statement or original bank reference confirming his/her current residential address. Note that “P.O. Box” addresses are not accepted.

1. Certified true copy of the register of shareholders.
2. Complete set of due diligence documents (as per List A/B/C/D/E/F) on controlling shareholders of the Company.
3. Original or certified true copy of due diligence documents on the senior managing official of the Company.
4. Certified board resolution confirming the person authorized to act on behalf of the Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
5. Signed declaration source of funds (template to be provided by Redbird upon signature of the fee proposal) and evidence of source of funds.
6. Signed FATCA/CRS Declaration form.

Enhanced Due Diligence measures

 

1. Signed declaration of the source of fund and source of wealth of the Ultimate beneficial owner (“UBO”) together with the relevant evidences.
2. Bank Reference Letter of the UBO.

 

* The senior managing official will need to be identified by OCI in the event that the natural person who ultimately has controlling ownership interest in the Company cannot be identified.

 

List C- Documents required for a Trust

 

1. Certified true copy of the extract of the trust deed.
2. Certificate of registration, where applicable.
3. Details of registered office and place of business of the trustee.
4. Complete set of due diligence documents (as per List A/B/C/D/E/F) on principals of the trust (Trustees, Beneficiaries, Settlors, Protectors, Enforcers).
5. Original or certified true copy of due diligence documents on the senior managing official of the Trust.
6. Signed declaration of source of funds for Settlors/Contributor (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
7. Signed FATCA/CRS Declaration form.

 

List D- Documents required for a Partnership

 

1. Certified true copy of the partnership deed and certificate of registration (if registered).
2. Copy of the latest report and accounts.
3. Complete set of due diligence documents (as per List A/B/C/D/E/F) on the General Partners and the Limited Partners.
4. Original Certificate of Authority (signed by the General Partners) confirming the person authorized to act on behalf of the Partnership as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
5. Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
6. Signed FATCA/CRS Declaration form.

 

 

List E- Documents required for a Société

 

1. Certified true copy of acte de société including profile of the Société.
2. Original Certificate of Good Standing.
3. Complete set of due diligence documents (as per List A/B/C/D/E/F) on the Principals, Administrators Gérants f the Société.
4. Original or certified true copy of due diligence documents on the senior managing official of the Société*
5. Original Certificate of Authority (signed by the Administrators or Gérants) confirming the person authorized to act on behalf of the Société as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
6. Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
7. Signed FATCA/CRS Declaration form.

 

Enhanced Due Diligence measures

 

1. Signed declaration of the source of fund and source of wealth of the UBO together with the relevant evidences.
2. Bank Reference Letter of the UBO.

 

List F- Documents required for a Foundation

 

1. Certified true copy of the Foundation Charter and certified true copy of the Certificate of Registration (if registered).
2. Copy of the latest report and accounts of the Foundation.
3. Complete set of due diligence documents (as per List A/B/C/D/E/F) on the Founder, members of the Council and beneficiaries of the Foundation.
4. Original or certified true copy of due diligence documents on the senior managing official of the Foundation
5. Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
6. Signed FATCA/CRS Declaration form.

 

Enhanced Due Diligence measures

 

1. Signed declaration of the source of fund and source of wealth of the UBO together with the relevant evidences.
2. Bank Reference Letter of the UBO.

 

REDUCED OR SIMPLIFIED CDD

 

Regulated financial services business based in Mauritius or in an equivalent jurisdiction (i.e. subject to the supervision of a public authority)

 

1. Proof of existence.

2. Regulated status.

3. Signed FATCA/CRS Declaration form.

 

Public companies listed on Recognised Stock / Investment Exchanges.

 

1. Proof of existence.

2. Proof of listing status.

3. Copy of latest annual report and account.

4. Original Certificate of Authority (signed by the directors) confirming the person authorized to act on behalf of the Public Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.

5. Signed FATCA/CRS Decdaration form.

 

Government administrations or enterprises and statutory body

 

1. Certified copy of the Charter or Constitutive Document or Enactment which established the body.
2. Original Certificate of Authority (signed by the directors) confirming the person authorized to act on behalf of the Public Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.

 

Note: Enhanced due diligence measures may be carried out by OCI on politically exposed persons (PEPS), non-face-to face business relationships, NCCT and non-equivalent jurisdictions, where adverse information is obtained, etc. In these circumstances, OCI reserves the right to request further information and documents, irrespective of percentage shareholding.

Note: Certification can be done either by a lawyer, notary, banker, or an accountant holding a recognised professional qualification; a serving police or customs officer; a member of the judiciary; a senior civil servant; an employee of an embassy or consulate of the country of issue of identity documentation.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

 

 

Two weeks ago we looked at the various options for the set-up of Investment Funds in Mauritius. Today we drill down to take a close look at the SPF ie Mauritius’s version of an Incubator Fund (ie a Start Up Fund aimed primarily at first time Fund Promoters and or Successful Traders looking to spread their wings by taking on/trading investor funds for the first time)

 

1. What is a Special Purpose Fund (“SPF”)?

 

New measures announced in the 2019/2020 Mauritius National Budget included the modernising of the existing Special Purpose Fund regime to provide further flexibility and ease access to new markets.

 

In line with this measure and its object to study new avenues for the development of the Financial Services Sector, the Mauritius Financial Services Commission (“FSC”) issued the Financial Services (Special Purpose Fund) Rules 2021 to govern “Special Purpose Funds” (“SPFs”), effective as from 6 March 2021. These new rules have replaced the Financial Services (Special Purpose Fund) Rules 2013.

 

An SPF is a Collective Investment Scheme (“CIS”) or a Closed-End Fund (“CEF”) which is authorised by the FSC as a Special Purpose Fund.

 

 

2. What are the requirements for a CIS/CEF to be authorised as an SPF?

 

The FSC may authorise a CIS or a CEF as an SPF if the fund will:

a. offer its shares, solely by way of private placements, to investors having competency, significant experience and knowledge of fund investment;

 

b. have a maximum of 50 investors and a minimum subscription of USD 100,000 per investor;

 

c. at all times, firstly be managed by a CIS manager; and secondly be administered by a CIS administrator;

 

d. comply with any such other conditions as may be imposed by the Commission.

 

 

3. Can an SPF invest in Mauritius?

 

Yes, investments can be made within as well as outside of Mauritius while benefitting from tax exemption provided in the Income Tax Act.

 

 

4. Can a Global Business Company (“GBC”) be authorised as an SPF?

 

A CIS/CEF holding a Global Business Licence can seek authorisation as an SPF if the Fund/Company is meeting the relevant requirements.

 

 

5. What are the on-going obligations of an SPF?

 

An SPF must comply with the provisions of the Financial Services Act, the Securities Act 2005 and the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 in so far as the provisions relate to a CIS and CEF.

 

In addition, an SPF must ensure that it abides by all provisions of the Financial Services (Special Purpose Funds) Rules 2021.

 

Furthermore, the submission of the Audited Financial Statements of an SPF must be accompanied by certificates from the SPF’s directors and auditors to confirm that the SPF is in compliance with the abovementioned rules and substance requirements referred to in point 8 below.

 

 

6. Can an SPF present its financial statements in a currency other than the Mauritius currency?

 

Yes. This is permissible subject to approval being granted by the Registrar of Companies in accordance with the provisions of the Companies Act 2001.

 

 

7. What happens if the CIS/CEF no longer fulfils the requirements/conditions under which it was authorised as an SPF?

 

Without prejudice to its powers under the relevant Acts, where a CIS/CEF, which was authorised as an SPF no longer, fulfils the requirements/conditions under which it is authorised, the FSC may withdraw its authorisation as an SPF.

 

 

8. What are the substance requirements of an SPF?

 

An SPF, its CIS manager and its CIS administrator shall carry out their relevant core income generating activities in, or from Mauritius, and shall:

a. employ directly or indirectly an adequate number of suitably qualified persons to conduct such core income generating activities; and

 

b. incur a minimum expenditure proportionate to the level of such activities.

 

 

9. Is there any new/additional application form to be filled-in by an SPF?

 

There is no new/additional application form to be filled-in by an SPF. An SPF will have to fill-in only the current application form and pay the applicable processing fee so as to be authorised as a CIS/CEF. Once authorised, an SPF will have to pay the annual fee applicable to the CIS/CEF authorisation and an additional annual fee of MUR 200,000 (USD 5,000 for a holder of a Global Business Licence).

 

 

10. Does an SPF benefit from tax incentives?

 

An SPF, as well as a certain category of investors in the SPF, will benefit from tax exemptions as provided in the Income Tax Act.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

Are you a practising GP/Family Doctor?

 

Are you thinking post Covid of ways to move online and or to reduce your overall tax burden?

 

If so, once can easily understand where you are coming from/what you are thinking…. If I can deliver all or most of my services online why live/pay tax in a high tax jurisdiction?

 

There are 2 aspects to this. The first is the issue of physical residence. The second is the issue of tax residence.

 

First you need to identify places where you could reside in that are nil tax or tax friendly. Then you’d need to check out their residency programs and whether you’d qualify for residency rights.

 

There are a number of jurisdictions where one can live exotically and free from tax.  Many of the nil tax havens you’ve probably heard of or read about in novels… You may even have holidayed in some of them! They include:
• The Cayman Islands
• St Kitts and Nevis
• Dubai
• Monaco
• The Bahamas
• Bermuda
• Vanuatu
• The Turks & Caicos Islands
• Anguilla

 

Countries with no Income Tax

 

The below mentioned countries generally speaking do not levy a tax on income regardless of where the income is/was sourced:

• UAE
• Qatar
• Oman
• Kuwait
• Cayman Islands
• Bahrain
• Bermuda
• The Bahamas
• Saudi Arabia
• Brunei Darussalam

 

Countries That Don’t Tax Offshore Income

 

Another option is to live/base yourself in a country which has a territorial tax system (ia country which only taxes you on locally sourced income) and run your business income through a (tax free) Offshore company. Hong Kong is an example of such a place. Singapore is another. Panama would also be in the discussion as would the UAE be. Other examples include:

Costa Rica

Gibraltar

Hong Kong

Malaysia

Nicaragua

Panama

Paraguay

San Marino

Singapore

Seychelles

 

In such a scenario all your business sales in the first instance would run through a tax-free Offshore Company. Thereafter you should only (maybe) have to report/pay tax locally on any salary paid to you by the Offshore Company.

 

To be able to live in such a place you’d need to obtain a residency permit or citizenship. We can assist you to obtain residency rights in Panama and the UAE. We can also assist you to apply for citizenship in Nevis.

 

Second Issue

 

The next thing you need to would be to take steps to ensure that you effectively exit the local tax system. From a taxing rights perspective in terms of which country has the rough to tax you the question isn’t where I am residing (or where do I have a residency permit for) but where am I resident for tax purposes.

 

We are often asked by individuals where (ie in what country/s) am I liable to pay tax?

 

The starting point it this: If you are regarded at law to be tax resident (ie resident for tax purposes) in a particular country you are liable to pay tax there on your (usually, worldwide) income.

 

The concept of tax residency however (ie what it takes to be classified as non-tax resident) varies from country to country. Depending on where you originate from you may pass the non-tax resident test of one country but fail the same test had you originated from the country next door.

 

Let me explain….

 

The most well-known tax residency test is in fact the oldest ie the days spent at home test. Historically, in most countries (USA excepted – see below), you were considered non-tax resident if you spent less than half the year inside your “home” or mother country.

 

Over the years, and particularly with the proliferation of “fly in-fly out” jobs (seen most prevalently in the oil/mining industries) a number of countries (in particular the more developed countries) have brought into play a multifaceted tax residency test. In other words notwithstanding that you might spend less than half the year on the ground in your mother country if you have a “substantial connection” with your mother country you may still be classified as tax resident of/in that country.

 

So what constitutes “substantial connection”?

 

In considering whether you still have a “substantial connection” to your mother country a number of factors are looked at including:

 

• Do you retain a residency/home in your mother country?
• Do you own any personalty in your mother country (eg a car, furniture/home contents/boat/leisure toys etc etc)
• Do you have a bank account in your mother country?
• Do you have investments or business interests in your mother country?
• Do you retain a professional or trade license (eg Lawyer/Plumber/Doctor/Teacher/Nurse/Engineer/Architect/Builder/Dentist etc) license in your mother country?
• Do you keep current a golf/tennis/leisure club membership in your home country?
• Do you regularly renew a driver’s license in your home country?
• Do you have children at school in your home country?
• Do you have a spouse/partner living full time in your home country?
• Etc etc etc

 

Chances are, as a minimum, what you will need to do in order to become non-tax resident in your mother country is:

 

(a)   Sell your home/residence in your mother country (or cancel any lease you might have over residential premises there)

(b)   Sell any business you own on the ground in the mother country

(c)    Sell all personalty owned/held in your mother country

(d)   Hand in (and not renew) any professional/trade license you may have in your mother country

(e)   Close down any bank/investment accounts you might have in your mother country

(f)     Write to your local IRS/Tax Office and advise that you have departed the country permanently and filed your last tax return.

 

For USA citizens however a unique situation applies. Generally speaking, if you are a US citizen you are required to declare worldwide income in and pay tax in America regardless of (a) whether you spend less than half the year there and (b) whether you have no substantial connection with the USA. (For Americans the only way to be classified as “non tax-resident” of the US is to hand in your passport and denounce your citizenship).

 

All that said we are not tax advisers or financial advisers. Before committing to move abroad we’d advise you to seek advice from a local Tax Lawyer and a local tax Accountant (ie both in the country where you are departing from and the country where you are going to).

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

Over the course of the past 20 years+ the reputation of the central Indian Ocean Islands Financial Centre of Mauritius has indeed blossomed.

 

Led by an innovative Financial Services authority and boasting political stability and low taxes – alongside a powerhouse and stable economy – Mauritius has become a popular jurisdiction for fund managers, institutional investors, entrepreneurs and private investors looking to set up Private Funds, Blockchain enterprises or Fiduciary structures. In recent years – thanks to vibrant new laws, quality service providers, value for money pricing and solid banking infrastructure – Mauritius has increasingly become a/the jurisdiction of choice for Fund Managers and Traders looking to set up traditional funds, start-up funds and alternative investment collectives.

 

If you are a Fund Manager or successful Trader looking to kick off a Hedge Fund or Private Fund structure this article will provide you with an overview of the various Fund structures on offer in Mauritius.

 

Key advantages of Mauritius

• Low tax – A Partial Exemption Regime is applicable to domestic and global business companies ie GBCs – 80% of foreign-source income from collective investment schemes (CIS), closed-end funds (CEFs), CIS manager or administrator will be exempted from income tax. And a tax rate of just 3%.
• No capital gains tax and no withholding tax on dividends and interest
• No exchange controls
• Innovative well drafted legislation and a British Legal/Court system
• Advantageous time zone for global markets (GMT +4)
• Low-cost jurisdiction for services
• Minimal red tape/Business friendly set up procedures
• Wide Range of Fund structuring options (Global CIS, Professional CIS, Specialised CIS and Expert Fund)

 

How to set up a Collective Investment scheme in Mauritius

 

An Investment Fund if incorporated/established in Mauritius is regulated as a “Collective Investment Scheme” – CIS.

 

A Collective Investment Scheme’s aim is to pool capital from accredited investors or institutional investors and to infuse such funding in a variety of assets, often with complex portfolio-construction and risk management techniques thus diversifying its investment risk whilst at the same time ensuring an absolute return objective.

 

Essentially, such a CIS is structured with an elastic capital and provides its subscribers the freedom to exit at any time based on the NAV (Net Asset Value).

 

Sub-categories of CIS:

• Professional CIS: A Professional CIS is a CIS which offers it shares solely to sophisticated investors or as private placements
• Specialised CIS: A Specialised CIS is one that invests in real estate, derivatives, commodities or any other product authorized by the Mauritius Financial Services Commission (FSC)
• Expert Fund: An Expert Fund is a Fund which is only available to expert investors. As per the Securities Act 2005 (‘SA 2005’), an expert investor means: a. an investor who makes an initial investment, for his own account, of no less than USD 100,000; or b. a sophisticated investor as defined in the SA 2005 or any similarly defined investor in any other securities legislation
• Public CIS: A CIS other than sub-categories (1), (2), (3) above, and which is fully regulated and meant mainly to be offered to the public (Such a CIS may be referred to as a “Public CIS”).

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

Are you an Online Trader (eg Trading cryptocurrency or Trading forex or Trading shares or Trading commodities/futures/options or etc)?

 

Have you developed a successful Trading strategy?

 

(Having experienced some success) are you now being asked by family and friends to trade their funds?

 

If the answer to all these questions (in particular, the latter question) is yes then you’re probably considering (or thinking about the possibility of) setting up some kind of Private Investment Fund.

 

Most “Onshore” jurisdictions make it extremely difficult for a career Trader to set up a Hedge Fund. You may be interested to know there are several ways to cost effectively set up a Fund type Company “Offshore” (including options that do not require any form of special license).

 

Here’s how this might be achieved:

 

• If your main aim is to obtain a Special License that will enable you to trade other person’s funds then a Broker’s License or a Securities Dealer’s license might be the way forward. For a summary of what a  Brokerage business might look like check out this file/link FX Brokerage Structures: https://www.dropbox.com/s/hrd783n205pdzwf/FX%20Brokerage%20Structures.pdf?dl=0

Popular Licensing Options here include:

-        A Seychelles Securities Dealers License – Check this file/link for an overview: https://www.dropbox.com/s/6pstxtedigpb0ep/Seychelles%20Securities%20Dealers%20License%20OVERVIEW.docx?dl=0

-        A Belize Broker’s License – Check this file/link for an overview: https://www.dropbox.com/s/vrofr9vhhgcwkd3/Belize%20Broker%27s%20License%20FACT%20SHEET.docx?dl=0

-        A BVI Brokers License – Check this file/link for an overview: https://www.dropbox.com/s/kkapiwyse8wyhwn/BVI%20Brokers%20License%20FACT%20SHEET.docx?dl=0

-        A Vanuatu Financial License – Check this file/link for an overview: https://www.dropbox.com/s/h15jmyga764vo7x/Vanuatu%20-%20Applications%20for%20Financial%20Licenses%20-%20Requirements.pdf?dl=0

 

• Alternatively you could set up a Private (non-licensed) Closed End Fund. Check this link/file for details of how this might be achieved:   https://www.dropbox.com/s/p92e6iveqgql4vf/Structuring%20Options%20for%20a%20Non%20Licensed%20Closed%20End%20Fund.doc?dl=0 ; or

 

• Another possibility would be to apply for a Mutual Fund License for the proposed business. The quickest, easiest and cheapest place to do this would be Seychelles. Check this link/file for details: https://www.dropbox.com/s/e3s6v1tp1sbfr2d/How%20To%20Set%20Up%20a%20Licensed%20Fund%20in%20Seychelles.pdf?dl=0

 

• Another possibility would be to utilise an IBC (International Business Company) which would be contracted to trade an investor’s money in the broker’s account under Power of Attorney. Check this link/file for details on how that can work: https://www.dropbox.com/s/8v0qmsta7f90evk/How%20To%20Trade%203rd%20Party%20Funds%20Using%20a%20PoA.docx?dl=0

 

• Semi licensed/regulated options include the BVI Incubator Fund & Mauritius Special Purpose Fund; Check these files/links for details:

https://www.dropbox.com/s/quu1kjc7emnpbys/How%20To%20set%20up%20a%20BVI%20Incubator%20fund.docx?dl=0

 

https://www.dropbox.com/s/89cm6g0mkje1tyo/Mauritius%20Special%20Purpose%20Fund%20FAQ.pdf?dl=0

 

• The simplest & most cost effective way to kick off a Startup Hedge Fund would be to set up a Panama PF-20 Fund. Check this file/link for details: https://www.dropbox.com/s/ypvfyb7bq1nmm28/Panama%20Private%20Funds.pdf?dl=0

 

Cost to set up a Licensed Entity range from circa $US15,000 (eg a for a Broker’s License) up to north of $25,000 (eg to establish a Licensed Mutual Fund).

 

To set up a non-licensed Closed End Fund can be done for as little as $3-5,000 (+ Bank Account set up). A BVI Incubator fund to set up costs around 15-18k. The most cost-effective Open Ended Fund Option would be a Panama PF 20 Fund which can be set up for a little as $4,000 (+ nominee Directors if required).

 

Non License Jurisdiction Suggestions

 

Given they are low regulation, boast peerless privacy laws and are cost effective places to maintain/setup such a Company (ie assuming you’d prefer to go down the non licensing road) commonly we would suggest Seychelles, Belize or Nevis as potential jurisdictions in/at which to incorporate “Offshore” such an Enterprise.

 

See here for details:

 

• Nevis – For detailed information click on this link: http://offshoreincorporate.com/st-kitts-and-nevis-offshore-companies/
• Belize – For detailed information click on this link: http://offshoreincorporate.com/belize-offshore-companies/
• Seychelles – For detailed information click on this link: http://offshoreincorporate.com/seychelles-offshore-companies/

 

Cost there to incorporate a Company would be:

 

• For a Nevis Company, including incorporation, registered/agent office service and one year’s basic admin: $1,475 . 2^nd and subsequent years $1,165
• For a Belize Company, including incorporation, registered/agent office service and one year’s basic admin: $1,000. 2^nd and subsequent years $690 (or $1,090 if nominees are required)
• For a Seychelles Company, including incorporation, registered/agent office service and one year’s basic admin: $1,075  2^nd and subsequent years $765

 

Another popular place to incorporate such a business is Hong Kong. Check this link which explains why it’s so popular:  https://www.dropbox.com/s/hfzo6gdlk5v0xci/Why%20Incorporate%20in%20Hong%20Kong.docx?dl=0

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

 

 

 

If you want to or need to add a new shareholder to your Offshore Company the process is simple and streamlined.

 

To add an additional shareholder/s for/to an IBC/Offshore Company:

 

(a)   You will need to tell us the name and address of the new shareholder and how many shares, and of what value and what kind of shares are to be issued to that person/entity (eg please issue 1,000 ordinary shares of one USD each to Mr John Smith of 1 Jones Street Jonesville, NY, USA)

 

(b)   You will need to provide us with KYC (ie Certified Proof of ID and residential address) per the requirements for/as regards the proposed new shareholder

 

(c)   We would need the Director/Chairman of the Company to sign s a Change of Shareholder minute/resolution.

 

(d)   A new share certificate will need to be issued

 

(e)    The share register will need to be amended

 

(f)    A share subscription form will need to be drafted and signed by the new shareholder.

 

(g)   We will also need the requisite fee settled in advance. See details below.

 

Procedures Once Documents Have Been Received

 

Once OCI’s fees have been settled and we have received the original (or certified copy) of the signed resolution and the original share subscription form duly signed, within 72 hours we will:

(i) email you (and prepare for couriering to you) the new share certificate/s; and

(ii) upgrade the Company’s Share register to note the new shareholder’s name; and

(iii) email you a Lawyer certified true copy of the upgraded Share register plus a new Certificate of Incumbency (if required); &

(iv) (the same day) package and take the above docs to DHL (or to the post office for airmailing as you may prefer) for dispatch by courier to you with the next available flight to your region.

 

Cost of attending to Change of Shareholder inclusive of the above is from $375 per shareholder inclusive of provision of Certificate of Incumbency if required (cost of courier if required is extra).

 

NOTE: If the new shareholder is a Company we’ll also need proof of the Company’s Incorporation + confirmation that the Company is in Good standing (eg a Certificate of Good standing issued by the Company Registry in the country wherein the Company is incorporated) + KYC per the requirements for the shareholders & directors (& beneficial owners) of the new shareholder Company.

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

In many jurisdictions if you no longer require a Company all you need to do in order to kill it off is stop paying the annual renewal fees and eventually it will be struck off the Register.

 

Closing down a company in Hong Kong however involves a certain number of formal steps and the overall process can take some months to complete. Depending on how the company is being closed, this process can also be expensive; hence the decision whether to cosle down and how to close down should be made after careful thought and consideration.

 

This article serves as a guide on the options available to close down a company in Hong Kong.

 

The most common reasons for closing a company are:

• Failure of the company to carry on business
• Company is no longer profitable
• Inability to pay its debts
• Falling out between shareholders
• Non-compliance with statutory requirements, including mis-management of company affairs
• Corporate restructuring of the group to which the company belongs

 

The process of closing down a company is referred to as “liquidation” in common terms. Companies can be liquidated either by “De-registration” or “Winding Up“. Although both the procedures will result in the dissolution of a company, the processes they entail are significantly different.

 

Deregistration is a relatively simple, inexpensive and quick procedure for dissolving defunct private companies who meet certain specific requirements. Winding up is the process of appointing a liquidator who will settle the accounts, pay off the company’s debts (if any), liquidate the assets of a company and distribute the surplus assets (if any) to members, ensuring that the company is completely dissolved.

 

Detailed below are the procedures involved in deregistration and winding up of a Hong Kong company.

 

De-registration of a HK Company

 

Requirements

The company must be a solvent private company incorporated under the Hong Kong Companies Ordinance, other than those companies specified in section 291AA(16) or registered under Part XI of the Companies Ordinance, and must meet the following requirements:

• All the members of the company agree to the deregistration
• The company has never commenced business or operation, or has ceased to carry on business or ceased operation for more than 3 months immediately before the application
• The company has no outstanding liabilities
• It has obtained a written notice of no objection from the Commissioner of Inland Revenue

 

Procedure

An applicant must submit to the Companies Registry:

• A duly completed form NDR1
• A Notice of No Objection from the Commissioner of Inland Revenue (original copy)
• Any further information/documents that the Companies Registry may request in connection with the application
• If the Companies Registry finds all documentation to be in order it will proceed to issue a Letter of Approval for the deregistration application within five working days.
• The Registrar will then publish a notice of the proposed deregistration in the Gazette. If the Registrar receives no objection, within 3 months of publishing the notice, it will proceed with the deregistration process by publishing a final notice in the Gazette declaring the company to be deregistered and the applicant or nominated person will be duly notified of the same.
• Upon the publication of the final notice the company will be dissolved.
• The whole process will be completed within 5 months.
• Upon dissolution of the company, all the company s property (including credit balances in the company s bank account) shall be deemed to be bona vacantia and shall vest in the Government of the Hong Kong Special Administrative Region. You are strongly advised to seek legal or professional advice to ensure the proper disposal of the company s property before making an application for deregistration of the company.
• You must notify the Business Registration Office of the Inland Revenue Department, in writing within 1 month of the date of cessation of business, to apply for a cancellation of Business Registration.
• Until the company is deregistered, the company is still required to adhere to compliances, including the filing of annual returns and notification of situation of registered office.

 

Winding up a HK Company

 

There are two paths to winding up a company in Hong Kong – voluntary winding up or compulsory winding up.

 

Voluntary winding up

 

Voluntary winding up of a Hong Kong company can be initiated either by members (shareholders) or creditors.

 

The voluntary winding up of a company begins by a special resolution being passed for the company to be voluntarily wound up and publishing this information in the Gazette within 14 days. The winding up is said to begin on the date on which the resolution is passed.

 

Members’ Voluntary Winding Up

 

A members’ voluntary winding up of a company can be carried out if the directors believe that the company will be able to pay its debts, in full, within 12 months after the commencement of the winding up.

 

To initiate such a winding up, a directors’ meeting must first be convened where a majority of the directors must make a statutory Declaration of Solvency. The Declaration of Solvency must also contain the statement of assets and liabilities, based on the most recent financial statements of the company. The Declaration must be delivered to the Companies Registry within seven days after the date on which it was made.

 

The directors should proceed to appoint a provisional liquidator, who is generally a solicitor or professional accountant and must give his consent to act as the provisional liquidator in writing. The notice of the appointment of the provisional liquidator and notice of the commencement of the winding up by virtue of delivery of the Declaration to the Companies Registry must be published in the Gazette within 14 days of the appointment of the provisional liquidator. The provisional liquidator must also notify the Companies Registry of his appointment within 14 days after the date of his appointment.

 

Within 28 days of delivering the Declaration of Solvency to the Companies Registry, the directors must convene an Extraordinary General Meeting (EGM). The purpose of the EGM is for passing a Special Resolution to wind up the company, and an Ordinary Resolution appointing the liquidators (and approving their remuneration). The company should, within 14 days of passing the special resolution for voluntary winding up, give notice of the resolution by advertising in the Gazette. The voluntary winding up is deemed to have commenced with the passing of the special resolution at the EGM. The liquidator, or provisional liquidator will proceed to wind up the affairs of the company and file the necessary notifications required under the Companies Ordinance.

 

When the liquidation process takes more than a year, the liquidator must hold a general meeting every year to keep the members informed of the winding up process. Once the company’s affairs are fully wound up, the liquidator must prepare a final account of the winding up, showing how the property of the company has been disposed of and how the winding up has been conducted. The account must be presented at a final general meeting. The meeting has to be called by advertising in the Gazette, one month prior to the scheduled date. A copy of the account, along with a return stating that the meeting was held, must be sent to the Companies Registry within one week after the meeting. The company will be dissolved three months after the Registry receives the documents or at a later date as set by a court order in Hong Kong.

 

Creditors’ Voluntary Winding Up

 

If the company cannot make a Declaration of Solvency, a creditors’ voluntary winding up will have to be executed. Soon after the meeting at which the resolution for a voluntary winding up is made, a creditors’ meeting should be convened. The company must advertise notice of this meeting in the Gazette and two Hong Kong newspapers (one English language paper and one Chinese). The directors must present a complete picture of the company’s affairs, along with a list of creditors of the company and the estimated amount of their claims. The creditors will then proceed to appoint a liquidator and may also appoint a committee of inspection whose role is to act in concert with the liquidator. The liquidation process is similar to that of a members’ voluntary winding up, as mentioned above.

 

Effects of Voluntary Winding Up

 

• With effect from the commencement of the winding up, the company must cease to carry on its business except insofar as it is required for the beneficial winding up.
• The directors’ powers will cease, except under circumstances where the liquidator has resolved that the directors should continue to have such powers.
• Any transfer of shares is void unless made to, or sanctioned by the liquidator, and the status of the members cannot be altered.

 

Compulsory Winding Up

 

The most common circumstances under which a Hong Kong Court can order a compulsory winding up of a company in Hong Kong are:

 

• The company is unable to pay a debt of HKD 10,000 or above
• The court is of the opinion that it is just and equitable that the company should be wound up
• The company has by special resolution resolved that the company be wound up by the court

 

A creditor, a shareholder or the company itself can file a winding-up petition against the company, by appointing a solicitor. The petition must be prepared in accordance with the Companies Winding Up Rules. The petition must be advertised in the Gazette at least seven clear days before the hearing date and once at least in two Hong Kong daily newspapers (one Chinese and one English). A sealed copy of the petition must be delivered to the registered office or principal place of business of the company and an affidavit verifying the petition must be filed.

 

Once a winding-up petition is filed in the court, the winding-up of the company shall be deemed to commence and a court hearing will take place. At the hearing, the court will make a winding up order (if it deems fit) and the Official Receiver becomes the provisional liquidator (unless a provisional liquidator has already been appointed prior to the making of the winding-up order), until a liquidator is appointed. The provisional liquidator will take over control of the company including its assets and accounting records and will proceed to investigate the company’s affairs.

 

If the property of the company is not likely to exceed in value HKD 200,000, the provisional liquidator is appointed as the liquidator. If the property of the company is likely to exceed in value HKD 200,000, the provisional liquidator will hold meetings of creditors and contributories for the purpose of appointing a liquidator and a committee of inspection. The liquidator continues to investigate the company’s affairs, realises and disposes off the company’s assets and pays dividend to the creditors (if possible). Once the company’s affairs are completely wound up, it will be dissolved.

 

Effects of Compulsory Winding Up

 

• Once a winding-up petition is filed in the court, the winding-up of the company shall be deemed to commence.
• Once the winding up commences any disposition of the property of the company, including any transfer of shares or alteration in the status of the shareholders of the company, unless the court orders otherwise, is void.
• The company or any creditor or shareholder may apply to the court to stay or restrain any pending action or proceeding against the company.
• If the petitioner believes that the assets of the company are in jeopardy, he may apply to the court, after the filing of the winding-up petition, for the appointment of a provisional liquidator to safeguard the assets of the company prior to the hearing of the petition.

 

Notification Requirements

 

A company must notify the following bodies as part of closing down its business:

• Companies Registry
• Inland Revenue Department
• Relevant Licensing Authorities

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

1.         INTRODUCTION

 

This Article relates to Seychelles limited partnerships (limited partnerships) registered under the Seychelles Limited Partnership Act 2003 as amended (the Act). This Article is not exhaustive, is intended as a general summary and is given only in respect of the position as at the date hereof (see footer). We do not provide legal or tax advice. We recommend that clients seek independent expert legal and tax advice prior to forming a limited partnership.

 

2.         HIGHLIGHTS

 

• Limited partnerships are required to have one or more general partners and one or more limited partners.

 

• A limited partnership is not an entity with separate legal personality and cannot own property in its own right. The Act provides that the property of a limited partnership shall be held by its general partner, or where there is more than one general partner, by the general partners jointly, as an asset of the limited partnership in accordance with the terms of its partnership agreement.

 

• The general partner is responsible for the administering and managing of a limited partnership. For example, the general partner is responsible for the signing of letters, contracts, deeds and other documents on behalf of the limited partnership. General partners are liable for any debts and obligations of a limited partnership if the liabilities exceed the assets of the limited partnership.

 

• At least one general partner of a limited partnership is required to be a Seychelles international business company incorporated under the International Business Companies Act 2016 or a company incorporated under the Companies Act 1972 and issued with a special licence under the Companies (Special Licences) Act 2003).

 

• Limited partners are not liable for limited partnership debts except in certain very limited cases.

 

• A general partner may also take an interest as a limited partner.

 

• A limited partnership is not permitted to carry on business in Seychelles except to the extent necessary for the carrying on of the limited partnership’s business outside of Seychelles.

 

• A limited partnership is not liable for Seychelles tax on its foreign sourced income. A limited partnership is exempt from Seychelles stamp duty in respect of: (i) a transfer of partnership assets; (ii) transactions in respect of partnership contributions, debt obligations and other securities of a limited partnership; and (iii) all other transactions relating to the business of n limited partnership.

 

3.         FORMATION AND REGISTRATION REQUIREMENTS

 

3.1       A limited partnership is formed by one or more general partners and one or more limited partners entering into a partnership agreement (which sets out the terms of the limited partnership and the partners’ respective rights and obligations, etc). To bring the partnership within the ambit of the Act, a limited partnership must be registered with the Registrar, which is achieved by the designated general partner filing a statement pursuant to section 9(1) of the Act (Statement of Particulars) setting out:

 

• the name of the limited partnership;
• the address of its registered office in Seychelles;
• the general nature of the business of the limited partnership;
• the full name and address of each general partner;
• a declaration that the limited partnership will not carry on business in Seychelles except so far as may be necessary for carrying on of the business of that limited partnership outside of Seychelles; and
• the name and address of the registered agent of the limited partnership.

 

3.2       The Registrar will issue a Certificate of Registration upon registration of the section 9(1) Statement of Particulars and on payment of the applicable registration fee (section 9(2) of the Act). The limited partnership’s partnership agreement is not required to be filed with the Registrar.

 

Name of limited partnerships

 

3.3       A limited partnership is required to have a name which shall include the words “Limited Partnership”, “L.P.” or “LP” and may include the name of any general partner or limited partner or any derivation thereof (section 6(1) of the Act).

 

Business restriction

 

3.4       Certain activities are regulated in Seychelles and a limited partnership may be required to obtain a licence from the proper authority if it wishes to carry on such activities (e.g. mutual fund business is regulated by the Seychelles Financial Services Authority (FSA) and an limited partnership wishing to operate as a mutual fund will need to apply for the requisite licence under Seychelles mutual fund legislation).

 

Tax exemptions

 

3.5       A limited partnership is not liable for Seychelles tax on its foreign sourced income. A limited partnership is exempt from Seychelles stamp duty in respect of: (i) a transfer of partnership assets; (ii) transactions in respect of partnership contributions, debt obligations and other securities of a limited partnership; and (iii) all other transactions relating to the business of a limited partnership (section 18 of the Act).

 

4.         GENERAL PARTNERS

 

4.1       Any one or more partners of an limited partnership may be resident, domiciled, established, incorporated or registered pursuant to Seychelles laws or of any other country, provided that at least one general partner of a limited partnership is required to be a Seychelles international business company incorporated under the International Business Companies Act 2016 or a company incorporated under the Companies Act 1972 and issued with a special licence under the Companies (Special Licences) Act 2003 (section 4(7) of the Act).

 

4.2       One or more general partners shall be responsible for the administering and managing the limited partnership and its business. The general partner is responsible for the signing any letters, contracts, deeds instruments and documents as general partner on behalf of the limited partnership (section 7(1) of the Act). Each general partner must at all time act in good faith in the interest of the limited partnership (section 4(3) of the Act).

 

4.3       Any property of the limited partnership which is transferred to a general partner or held on behalf of any one or more general partners shall be held by the general partner, and if more than one then by the general partners jointly as an asset of the limited partnership in accordance with the terms of the partnership agreement (section 7(2) of the Act).

 

4.4       Any debt or other obligations incurred by a general partner in the conduct of the limited partnership’s business shall be a debt or obligation of the limited partnership (section 7(3) of the Act). The general partner(s) shall, in the event that the assets of the limited partnership are inadequate, be liable for all the debts and obligations of the limited partnership (section 4(2) of the Act).

 

5.         LIMITED PARTNERS

 

5.1       A limited partner shall not take part in the conduct of a limited partnership’s business (section 7(1) of the Act). Subject to the terms of a limited partnership’s partnership agreement, a limited partner of a limited partnership may be a person resident in or outside Seychelles.

 

5.2       The limited partners shall not be liable to any debts and obligations of a limited partnership, except that if a limited partner takes part in the conduct of a limited partnership’s business in its dealings with persons who are not partners of the limited partnership, that limited partner shall be liable in the event of insolvency of the limited partnership for all debts and obligations of the limited partnership incurred during the period in which he or she so participated in the conduct of the limited partnership’s business, provided that he or she shall be rendered liable pursuant to the foregoing provision only to a person who transacts business with the limited partnership during such period with actual knowledge of such participation and reasonable belief that such limited partner was a general partner (section 7(4) of the Act).

 

5.3       Pursuant to section 7(5) of the Act, any of the following activities done by a limited partner do not constitute taking part in the conduct of a limited partnership’s business within the meaning of section 7 of the Act:

 

(a)        being a contractor for or an agent or employee of the limited partnership or a general partner, or by being an officer, director or shareholder of a corporate general partner;

 

(b)        consulting with and advising a general partner with respect to the limited partnership’s business;

 

(c)        investigating, reviewing, approving or being advised as to the accounts or business affairs of the limited partnership or exercising any right conferred under the Act;

 

(d)        acting as a surety or guarantor for the limited partnership, either generally or in respect of specific obligations of the limited partnership;

 

(e)        approving or disapproving an amendment to the partnership agreement; or

 

(f)         voting as a limited partner on any matter.

 

6.         SEYCHELLES REGISTERED AGENT AND REGISTERED OFFICE

 

6.1       A limited partnership must have a registered office situated in Seychelles for the service of process and to           which all notices and communications may be addressed, which shall be the same address as the principal place of business in Seychelles of its registered agent (section 6(2) and (3) of the Act).

 

6.2       As from 6 February 2022, a limited partnership shall at all times have a registered agent in Seychelles, which shall be a person    licensed to provide international corporate services under the International Corporate Service Providers Act (section 6A(1) and (2) of the Act). The registered agent has a non-fiduciary role and acts as a limited partnership’s point of contact in Seychelles. Filings to be made by a limited partnership with the Registrar must be submitted through its registered agent.

 

7.         CHANGE OF REGISTERED PARTICULARS

 

Notice to Registrar of change of Particulars (other than notice of person ceasing to be a general           partner)

 

7.1       If during the continuance of a limited partnership any change occurs in any particular contained in the             Statement of Particulars filed with the Registry pursuant to section 9(1) of the Act (i.e. a change in respect   of the name or address of each general partner or the registered agent, the general nature of the limited      partnership’s business or the registered office address), the general partner shall file a statement         specifying the nature of any change with the Registrar within 60 days of the change (section 10(1) of the             Act).

 

Notice to Registrar involving person ceasing to be a general partner

 

7.2       A statement of change signed in accordance with section 10(1) of the Act in respect of any arrangement       or transaction consequent upon which any person will cease to be a general partner in any limited   partnership shall, within 15 days of such arrangement or transaction, be filed with the Registrar and until   such statement is so filed, the arrangement or transaction shall, for the purposes of the Act and the   partnership agreement, be of no effect (section 10(2) of the Act).

 

8.         KEEPING OF PARTNERSHIP REGISTER required by the Limited Partnership Act

 

8.1       The designated general partner shall maintain or cause to be maintained at the registered office of the   limited partnership a register of partnership interests (the Partnership Register) containing the name       and address of each partner, the amount and date of contribution or contributions made by each partner    and the amount and date of any payment representing a return of any part of contribution of any partner         (section 11(1) of the Act). The Partnership Register should be kept in such form as the partnership’s             general partner thinks fit, including in electronic or other data storage form as the general partner thinks fit            (i.e. a PDF or Word copy is sufficient), but the general partner must be able to produce legible evidence            of its contents.

 

8.2       The Partnership Register must be updated within twenty-one business days of any change in the    particulars therein. The Partnership Register shall be made available for inspection and copying without   charge during business hours at the request of a partner and a certified copy of the Partnership Register         or any part thereof duly certified by the designated general partner shall be issued by a partner at his      request (section 11(2) of the Act).

 

9.         REGISTER OF BENEFICIAL OWNERS required by the Beneficial Ownership Act

 

9.1       In addition to the Partnership Registers required to be kept by the Act (see preceding paragraph), the Beneficial Ownership Act 2020 (the BO Act) and the Beneficial Ownership Regulations 2020 (the BO Regulations) require that the general partner of a limited partnership keep a Register of Beneficial Owners (see paragraph 9.2 below). For BO Act and anti-money laundering (AML) law purposes, pursuant to regulation 3 of the BO Regulations, the beneficial owner in relation to a limited partnership means an individual who:

 

(a)        ultimately owns or controls, whether directly or indirectly, ten percent or more of the partnership          ownership interests or voting rights of the partnership;

 

(b)        holds the right, whether directly or indirectly, to appoint or remove the majority of the general    partners of the partnership;

 

(c)        ultimately owns or controls, whether directly or indirectly, absolute decision or veto rights in the            conduct or management of the partnership; or

 

(d)        is entitled to the assets of the partnership in the event of the dissolution of the partnership.

 

9.2       A general partner of a limited partnership is required to keep at the principal place of business in Seychelles of its Seychelles general partner, a Register of Beneficial Owners (see section 5(1) of the BO Act and regulation 12(1) and the First Schedule of the BO Regulations), containing the following information:

 

(a)        the name, residential address, service address, date of birth and nationality of each beneficial owner of the partnership;

 

(b)        the nature and details of each beneficial owner’s interest in the partnership;

 

(c)        the date on which a person became a beneficial owner of the partnership;

 

(d)        the date on which a person ceased to be a beneficial owner of the partnership; and

 

(e)        where a nominee holds any interest in or control of the partnership on behalf of the beneficial                                     owner:

 

(i)         the name, residential address, service address, date of birth and nationality of each                                             nominee holding the interest on behalf of the beneficial owner and the particulars and                                     details of the interest held by the nominee; and

 

(ii)        the identity of the nominator (who nominates the nominee to hold interests on his, her or its                                   behalf), and where the nominator is a legal person, the identity of the individual who                                                 ultimately owns or controls the nominator (providing their name, residential address,                                                service address, date of birth and nationality)

 

9.3       The Register of Beneficial Owners may be maintained in magnetic, electronic or other data storage form (section 7 of the BO Act) but the general partner of the limited partnership must be able to produce legible evidence of its contents. Every general partner of the limited partnership shall maintain accurate and up to date information required under section 5(1) of the BO Act in the limited partnership’s Register of Beneficial Owners.

 

9.4       The registerable particulars of a limited partnership’s Register of Beneficial Owners must be submitted to the Seychelles Financial Intelligence Unit (FIU) which submitted information is not publicly accessible (see sections 5(6) and 13(4) of the BO Act). The filing of the registrable particulars with the FIU is required to be done by a limited partnership’s general partner in Seychelles.

 

9.5       A limited partnership’s Register of Beneficial Owners kept at its resident general partner’s office in Seychelles is not open to public inspection. The persons entitled to inspect a limited partnership’s Register of Beneficial Owners are a partner of the limited partnership and a person whose name is entered in the limited partnership’s Register of Beneficial Owners as a beneficial owner, limited to inspection of the person’s name in the Register (section 11(1)(d) and (e) of the BO Act).

 

10.       OBLIGATIONS RELATING TO BENEFICIAL OWNERSHIP

 

Declaration by person on becoming beneficial owner

 

10.1      Every person on becoming a beneficial owner of a limited partnership shall within 14 days from the date of becoming a beneficial owner, submit to the general partner of the limited partnership a Declaration of Beneficial Ownership containing the registrable particulars relating to the person (section 10(1) of the BO Act and regulation 14 and Second Schedule of the BO Regulations). “Registrable particulars” means the particulars to be registered under the BO Act in relation to a limited partnership including the particulars required by section 5 of the BO Act to be kept in a limited partnership’s Register of Beneficial Owners.

 

Notice of relevant change by beneficial owner

 

10.2      A relevant change in relation to a person occurs if: (i) the person ceases to be a beneficial owner in        relation to the limited partnership; or (ii) any other change occurs as a result of change in the registrable           particulars of the beneficial owner (section 10(8) of the BO Act).

 

10.3      If a relevant change occurs in relation to a beneficial owner of a limited partnership, the beneficial owner      shall within 14 days of such change give written notice to the general partner of the limited partnership            providing the following details for changes to be made to the limited partnership’s Register of Beneficial             Owners: (i) the relevant change; (ii) the date on which it occurred; and (iii) any information needed to update the Register of Beneficial Owners (section 10(3) of the BO Act).

 

11        KEEPING OF ACCOUNTING RECORDS

 

11.1      Each general partner of a limited partnership is required to keep or cause to be kept proper accounting records that: (i) are sufficient to show and explain the limited partnership’s transactions; (ii) enable the financial position of the limited partnership to be determined with reasonable accuracy at any time; and (iii) allow for financial statements of the limited partnership to be prepared (section 11A(a) of the Act). For the purposes of the Act, accounting records of a limited partnership mean documents relating to assets and liabilities of the limited partnership including receipts and expenditure, sales and purchases and other transactions (e.g., including bank statements, receipts, title documents, agreements and vouchers): section 2 of the Act.

 

11.2      Pursuant to section 11A(3) of the Act, as from 6 February 2022, a limited partnership shall:

 

(a)        prepare an annual financial summary to be kept at its registered office in Seychelles within 6        months from the end of the limited partnership’s financial year; and

 

(b)        where its accounting records are kept outside Seychelles, lodge, not less than on a bi-annual                             basis, the accounting records at the limited partnership’s registered office in Seychelles,                         provided that any accounting records. The FSA’s applicable Guidance Circular indicates that the                                  following shall apply:

 

• limited partnership accounting records relating to transactions or operations in the first half (January to June) of a calendar year must be kept in Seychelles by July of that year;

 

• limited partnership accounting records relating to transactions or operations in the second half (July to December) of a calendar year must be kept in Seychelles by January of the following year; and

 

• In respect of existing accounting records (i.e. accounting records relating to the years prior to year 2022) and accounting records relating to year 2022 for limited partnerships on the Register, accounting records relating to transactions or operations in the past 7 years to 31December, 2021 must be kept in Seychelles by 6 February 2022.

 

11.3      It shall be sufficient compliance with section 11A(3) of the Act (see paragraph 11.2 above) if a copy of the   accounting records and financial summary is kept in electronic form at the limited partnership’s registered         office in Seychelles (section 11A(4) of the Act). Where a limited partnership registered under the Act before       20 December 2021 keeps its accounting records outside Seychelles, it shall lodge its accounting records          relating to transactions over the past 7 years at the limited partnership’s registered office in Seychelles by 6          February 2022 (section 8 of the International Business Companies Act and Other Related Laws    (Amendment) Act 2021).

 

11.4      The financial year of a limited partnership shall be the calendar year, unless it is changed by the general partner and notified to the limited partnership’s registered agent within 14 days (section 11A(3A) of the Act).

 

11.5      While the accounting records are required to be kept at the registered office in Seychelles, they are not            required to be filed with the Registrar (except on legal request) and are not open to public inspection.

 

11.6      Where a limited partnership: (a) keeps a copy of its accounting records at its registered office; or (b)      keeps its original accounting records in Seychelles at a place other than at its registered office, the limited       partnership shall inform its registered agent in writing of the physical address of the place where the original accounting records are kept (section 11A(4A) of the Act).

 

11.7      Where there is a change in the place at which its original accounting records are kept, a limited partnership      shall, within 14 days of the change, notify in writing its registered agent of the physical address of the place        at which its original accounting records are kept (section 11A(4B) of the Act).

 

11.8      A general partner shall retain all accounting records for seven years, from the date of completion of the           transactions to which they relate (section 11A(5) of the Act).

 

12.       DISTRIBUTIONS

 

No distributions and no return of capital contributions to a limited partner may be made unless at the time of and immediately following such payment the limited partnership is solvent (section 14(1) of the Act). In the event that the limited partnership goes into insolvency within 6 months of any return of contribution to a limited partner, such return will be repayable by the limited partner with interest to the extent that such contribution or part thereof is necessary to discharge a debt or obligation of the LP that incurred during the period the contribution represented an asset of the limited partnership (section 14(1) of the Act).

 

13.       TRANSFER OR MORTGAGE OF PARTNERSHIP INTERESTS & REGISTER OF MORTGAGES OF            LIMITED PARTNERSHIP INTERESTS

 

13.1      Subject to the provisions of the limited partnership’s partnership agreement, a limited partner may assign either absolutely or by way of mortgage the whole or any part of his or her partnership interest and an assignee shall, to the extent of such assignment, become a limited partner, provided that such assignee shall not assume any liability of the assignor from him or her taking part in the conduct of business of the limited partnership which is prohibited the Act or for the return of contributions to the assignor following an insolvency of the limited partnership and provided further that, notwithstanding any term of the partnership agreement or any other agreement to the contrary, no such assignment shall relieve the assignor of any liability arising pursuant thereto (section 7(9)(a) of the Act).

 

13.2      If any limited partner has mortgaged any of his or her partnership interests, the limited partnership’s general partner has a duty to maintain or cause to be maintained a Register of Mortgages of such mortgaged interests. The register of mortgages of partnership interests shall be maintained at the registered office and shall record the identity of the mortgagor and mortgagee, the date of creation of the mortgage, the partnership interest or part thereof subject to mortgage and the date of receipt of notice of the mortgage (section 7(9)(b) of the Act). The register of mortgages of partnership interests shall be open to inspection by any person during all usual business hours (section 7(10) of the Act).

 

14.       LIMITED PARTNER’S RIGHT TO INFORMATION

 

Subject to any term of the partnership agreement to the contrary, each limited partner may demand and shall receive from the general partner true and full information regarding the state of the business and financial condition of the Limited Partnership (section 12 of the Act).

 

15.       RETURN OF CONTRIBUTIONS

 

15.1.     A limited partner shall not, on the dissolution of the limited partnership or otherwise, receive out of the          capital of the limited partnership a payment representing a return of any part of his contribution to the            partnership unless at the time of such payment the limited partnership is solvent (section 14(1) of the Act).    In section 14 of the Act, the word “receive” shall include the release of any obligation forming part of the     capital contribution and, in this context, liabilities to make repayments pursuant to section 14(2) of the Act             shall be read as including a reference to the due performance of such obligation (section 14(3) of the Act).

 

15.2      For a period of six months from the date of receipt by a limited partner of any payment representing a   return of contribution or part thereof received by such limited partner in circumstances where the           requirements of section 14(1) of the Act have not been met such payment shall, in the event of the   insolvency of the limited partnership within that period, be repayable by such limited partner with interest at        the legal rate to the extent that such contribution or part thereof is necessary to discharge a debt or    obligation of the limited            partnership incurred during the period that the contribution represented an asset of             the limited partnership (section 14(2) of the Act).

 

16.       DISSOLUTION & DE-REGISTRATION

 

16.1      A limited partnership shall not be dissolved by an act of the partners until a notice of dissolution signed by a general partner has been filed with the Registrar (section 15(1) of the Act). Notwithstanding the foregoing and any provision of the partnership agreement to the contrary, the death, insanity, retirement, bankruptcy, commencement of liquidation proceedings, resignation, insolvency or dissolution of the sole or last remaining general partner shall cause the dissolution of a limited partnership which shall then be wound up in accordance with the partnership agreement or, if any, applicable court order. Notwithstanding the foregoing, if within 30 days from the date of any of the aforementioned occurrences, one or more new general partners are appointed, the business of the limited partnership shall not be dissolved and wound up (section 15(3) of the Act).

 

16.2      Subject to the terms of a limited partnership’s partnership agreement, a general partner may at any time deregister a limited partnership by filing a written notice with the Registrar (section 16A of the Act).

 

17.       COMPLIANCE INSPECTIONS

 

Subject to section 25 of the Act, the Registrar may for the sole purpose of monitoring and assessing compliance with this Act, after giving reasonable notice to the general partner during business hours: (i) access the registered office of the limited partnership; (ii) inspect the documents required to be kept under this Act; (iii) during or after a compliance inspection request for explanation from the general partners of the limited partnership (section 24(1) of the Act). For the purposes of section 24(1) of the Act, where a document is not in the English or French language, the Registrar may request a translation of the records in the English or French language from the general partner of the limited partnership or from the registered agent (section 24(1A) of the Act).

 

18.       PRESERVATION OF RECORDS BY REGISTERED AGENT

 

A registered agent shall, in respect of each limited partnership (including a deregistered limited       partnership) to which it was or is acting as registered agent, preserve for at least 7 years: (i) the register         of mortgages and the register of limited partnership interests, from the date of deregistration of the limited     partnership; and (ii) the accounting records of the limited partnership in the possession of the registered        agent, from the date of completion of the transaction or operation to which they each relate (section 26(1)             of the Act). Where a registered agent ceases to hold a licence to provide international corporate services         under the International Corporate Service Providers Act, that person shall hand over all the records    specified under section 26(1) of the Act to the Registrar or any other person approved by the Registrar.       All records to be handed over under section 26(2) shall be preferably in digital form or in such form as            agreed upon between the Registrar and the registered agent (section 26(3) of the Act).

 

Summary & Conclusion

As a starting point when setting up a Seychelles LP, you’ll need to nominate one or more General partners and a Limited Partner/s.

 

In case you’re unsure as regards who is to fulfil what role you might like to note:

 

• An LP is not a Legal entity and cannot hold property in its own right.  The property of the LP is held by the General Partner/s
• The General Partner/s is/are responsible for the administration and management of the LP including signing agreements and resolutions on behalf of the LP
• The General Partner/s is/are liable for the debts of the LP if the debts of the LP exceed assets owned by the LP
• Limited Partners are generally speaking (subject to certain exceptions) not liable for the debts of the LP
• A General Partner may also take an interest as a Limited Partner
• At least one General Partner must be a Seychelles entity (we supply a Corporate Nominee as part of the package)
• As part of the registration process an LP must file a “Statement of Particulars” which must include the name/s of the General Partner/s and a summary of the LP”s proposed business activities

 

Price and Inclusions

 

OCI can assist you to set up a Seychelles LP. Included in the all-inclusive set up price of $1,500 for a Seychelles Limited Partnership are the following components:

• Services:
• Unlimited name availability inquiries
• Advice from an experienced International Corporate Lawyer on how to structure your Limited Partnership
• Preparation (overseen by a Lawyer) of application to register the Limited Partnership
• Preparation (overseen by a Lawyer) of the Limited Partnership agreement
• Preparation (overseen by a Lawyer) of the Statement of Particulars
• Attending to filing the Limited Partnership registration request with the registry
• Attending to payment of government filing fees
• One year’s Registered Agent’s service in the country of registration
• One year’s Registered Office service in the country of registration
• Provision of Seychelles resident General Partner (corporate or individual)
• Mailing address in the country of registration
• Delivery of registration pack by international courier (ie DHL/Fedex/TNT etc)
• Unlimited free legal consultations for 12 months

Documents included in your Registration pack:

•  
• Certificate of Registration
• Minutes of first meeting
• Statement of particulars
• Resolution to open a bank account for the Partnership
• Resolution to appoint a lawyer for the Partnership
• Resolution to appoint an accountant for the Partnership
• Notarised & Apostilled set of Registration/Partnership formation documents

Price (all inclusive): $US1,500

Annual fees from 2^nd year onwards are as follows:

• Registered Office Annual Fee: $600
• General Partner, resident of Seychelles (individual or corporate): $300

TOTAL 2^nd and subsequent years: $900

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: Information current at 2.7.22. OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

Whilst best known for its Internationally renowned Asset Protection Trusts the Cook Islands also boasts an interesting Private Foundation product. In this article we will take a close a look at the Cook Islands model of Foundation including the legal structure, key features and common uses.

 

Advantages and Uses

The Cook Islands Foundations Act 2012 was enacted in June 2012. It is a modern and innovative piece of legislation drawing from the experiences and features of foundation law in other financial centres, and adding Cook Islands specialist asset protection provisions.

 

Validity of a Foundation in the Cook Islands (“CI”)

• A CI Foundation is a separate legal entity from its founder.
• A CI Foundation is valid even if the law in the founder’s jurisdiction does not recognise or prohibits foundations.

 

Multipurpose Use

A CI Foundation can be used for charitable or non-charitable purposes, inheritance and estate planning, wealth management.

 

Protection from Creditors

• A two year statute of limitations on claims to set aside the foundation or attack the transfer of an asset to the foundation.
• Courts cannot recognise or enforce a foreign judgment against the foundation.
• Stringent fraudulent transfer rules that make it difficult for creditors to bring a claim for fraudulent transfer.
• A CI Foundation stands independent from the founder’s personal circumstances. The foundation cannot be void or voidable in the event of the founder’s bankruptcy, insolvency, or liquidation.

 

Cook Islands Foundations – Management

• Founder establishes rules that govern the operation of the foundation.
• Foundation is managed by a board, allowing for input from a number of relevant persons.

 

Foundation Supervisor or Enforcer

The CI Foundations Law recognises someone to oversee the board’s management of the foundation, an ‘enforcer’ or ‘supervisor’.

 

Privacy

Strict privacy laws against disclosure of the affairs of the foundation.

 

Cook Islands Foundations -Investment Opportunities

• A CI Foundation can derive earning from investments/broad investment powers may be authorised in the foundation rules.
• A CI Foundation cannot be used for regular trade or commercial activity.

 

Tax Exemption

A CI Foundation and its beneficiaries are exempt from paying tax in the foundation’s jurisdiction.

 

Application of Foreign Law to a Cook Islands Foundation

• The Foundations Act 2012 specifically provides that foreign laws (ie laws other than those of the Cook Islands) shall not apply to invalidate the establishment of the CIF or any dedication of assets to the CIF.
• In addition forced Heirship laws of another jurisdiction cannot be enforced.
• Foreign law will not apply notwithstanding that a dedication of assets to a CIF has the effect of avoiding, defeating (or potentially avoiding or defeating) a right, claim interest, obligation or liability conferred by that foreign law.

 

Cook Islands Foundation – Wealth Preservation Advantages

Certainty as to the time limitation periods in which creditors must commence actions in relation to “fraudulent transfers” against Founders of CIFs. In summary, a creditor must commence an action against a Founder within 12 months of the date of transfer of assets to the CIF and against the CIF itself within 24 months of the date of transfer of assets to the CIF, in order to have legal standing to argue a fraudulent transfer by the Founder.

 

The creditor bears the onus of proof to show that a transfer by a Founder was done with intent to defraud that creditor. The creditor must satisfy this onus of proof to a standard of “beyond reasonable doubt”.

 

A CIF will continue to exist notwithstanding that the Founder of the trust may be declared bankrupt.

 

In the event that a creditor is successful in arguing that a transfer to a CIF was done with intent to defraud creditors, the only remedy available to the creditor is an award of damages from the assets of the CIF.

 

Punitive damages cannot be recovered from a CIF.

 

The avoidance of forced heirship rights in the home jurisdiction of the Founder will not render a CIF void or voidable.

 

Special purpose domestic or offshore entities can be placed underneath the CIF and take advantage of the wealth preservation features offered by Foundations Act 2012.

 

Background

A foundation is formed by a person known as the founder (who may be either an individual or corporate body) who provides (through an “endowment”) the assets to be administered by the foundation. The foundation’s assets are to be administered through contractual, rather than proprietary, principles.

 

Unlike a trust, a foundation is a separate legal entity. It is managed by a council of members. A foundation can hold assets, enter into agreements with third parties and can sue or be sued in its own name. On the face of it a foundation is similar to a corporation. However, unlike a corporation, a foundation does not have any shareholders. A foundation can have beneficiaries, similar to a trust, or it can have purely charitable purposes. Contrary to trust beneficiaries, who have equitable rights, the beneficiaries of a foundation have contractual rights in relation to the assets of the foundation.

 

A founder may retain some control over the foundation’s assets through reserving certain powers under its rules. Powers that are commonly reserved include powers relating to the investment strategy of the foundation and the appointment or removal of beneficiaries. The founder may also be given the power to revoke the foundation.

 

Registration and Rules

The Act provides a registration regime for foundations in the Cook Islands. Each foundation shall have a foundation instrument which contains its basic details including name, objects, and the registered agent in the Cook Islands. The foundation instrument is filed with the Registrar.

 

A foundation must also have rules that comply with the Act. Under the Cook Islands Act, while there are certain matters that must be addressed in the rules, there is significant flexibility in how the rules in general are drafted. This allows client founders and their advisors to set out clearly how they want the foundation to operate, and how they want it to benefit the beneficiaries. The rules of the foundation are not required to be filed with the Registrar, but only held by the registered agent in the Cook Islands.

 

The rules of the foundation provide the substantive details of how the foundation will operate. The rules will include procedures as to the establishment of the council, the appointment of registered agent, the functions of any enforcer, and the rules as to endowment of further assets. The rules may also deal with how powers can be exercised by the council, and the distribution of assets of the foundation should it be wound up and dissolved.

 

Asset protection provisions

Many of the specialist and proven asset protection provisions contained in the Cook Islands International Trusts Act have also been brought into the Foundations Act, and apply to a registered Foundation and its founder.

 

The Act states that only Cook Islands law applies to any questions as to a foundation or the transfer of assets to a foundation. This is furthered by the exclusion of foreign law and the non-recognition of foreign judgments in relation to Cook Islands foundations. Therefore, as with Cook Islands International Trusts, a creditor of a founder is forced to commence proceedings against the founder and foundation in the Cook Islands High Court.

 

The Act then provides for a number of barriers to any such creditor bringing proceedings in the Cook Islands High Court. These include the all-important time limits. In particular the strict 2 year time limit for bringing an action against a foundation, as well as the deemed time limits where property is transferred to a foundation before a cause of action has accrued, or where property is transferred to a foundation more than 2 years after a cause of action has accrued.

 

Other important asset protection provisions for foundations include the standard of proof beyond reasonable doubt, the exclusion of punitive damages, and the requirement that all remedies against a founder, and all rights of appeal, have been exhausted.

 

Migration, Dissolution and Termination

An overseas foundation can be moved to and registered in the Cook Islands. This allows existing foundations to take advantage of the flexibility and protections contained in the Cook Islands Foundations Act. The equivalent of the Registrar in the overseas jurisdiction in which the foundation is established must provide written confirmation that the foundation is able, under the law of that jurisdiction, to be registered as a Cook Islands foundation. The overseas foundation must also comply with the requirements of its home jurisdiction to be registered. Upon registration in the Cook Islands, the overseas foundation is to be treated as a Cook Islands foundation. Furthermore, such registration does not in any way affect the identity or continuity of the foundation’s personality.

 

Conversely, the Act provides that a foundation cannot transfer its registration to another jurisdiction unless allowed under the foundation’s instrument and rules. A foundation also cannot transfer if it is bankrupt, a receiver or administrator is appointed, or proceedings have been commenced relating to the solvency of the foundation. A foundation cannot be removed from the register unless it has first notified its creditors of its intention to do so.

 

The Act provides for a number of situations in which a foundation is to be terminated and dissolved by its council members. The foundation rules can provide for events upon which the foundation is to terminate. A foundation may also be terminated upon bankruptcy of the foundation, the completion, failure or lapse of the foundation’s purpose, and upon the making of an order by the High Court for the winding up of the foundation. The High Court may order the winding up of the foundation upon the application of any of the foundation’s council members, founder, beneficiaries, enforcer or creditors, or upon the application of the Registrar.

 

Cost:

Set up $4,500

From 2^nd year $2,900

 

Would you like to know more? Then please Contact Us:

 

www.offshoreincorporate.com

 

info@offshorecompaniesinternational.com

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.