On the 6th of August 2021 amendments to the Foundations Act (Cap 270) were published in the Seychelles Official Gazette and enacted as and from the same date.
Amendments mainly addressed two areas:
1) Improvement and modernizing existing Foundations Act provisions, and
2) Ensuring OECD and EU Code of Conduct Group requirements related to exchange of
information are efficiently addressed in the local legal framework
Accounting Records Keeping
The obligation to keep accounting records have been in place since the first Foundations
Act, 2009. Foundations were requested to keep accounting records for at least 7 years
after the end of the period to which it relates. Foundations were given the option to keep
accounting records outside Seychelles, while notifying the Registered Agent of the
address, where the originals are kept.
The new amendments require each Foundation
(a) to prepare an annual financial summary to be kept at its registered office in Seychelles
within 6 months from the end of the Foundation’s financial year; and
(b) where its accounting records are kept outside Seychelles, lodge, not less than on a biannual basis, the accounting records at the company’s registered office in Seychelles, provided that any accounting records, whether outside Seychelles or not, shall be presented to the Seychelles authorities on request. Key points to note:
- Electronic records are acceptable, while the Foundation shall inform its Registered Agent of the address where the originals are kept.
- “Bi-annual basis” means January and July of every year.
- “Financial year” is the calendar year, unless it is changed by the resolution of councillors.
- A Financial Summary is required to be kept at registered office. It is NOT required to submit the Financial Summary to any authority, unless there is legal request received from the Seychelles competent authorities.
- A grace period for every Foundation to keep their accounting records in Seychelles within 6 months from the date of enactment of the 2021 Amendments (IE by 6th February 2022).
Penalties for non-compliance with requirement to keep accounting records are up to $USD10,000 on the Foundation and its councillor, who knowingly permit a contravention. It is not yet, however clear, if all the accounting records (for the past 7 years) must be delivered by 6th February 2022. (There is currently a dispute between the Regulator and the industry on that matter, which we hope will be resolved shortly).
The law does not have retrospective effect when it comes to lodging accounting records with a Foundation’s Seychelles registered agent, but it clearly states that the records must be presented on authority’s request.
The Regulator also is yet to come up with form of Financial Summary, as well as written guidelines regarding the implementation of the obligations relating to accounting records.
Required actions if you have formed or are managing a Seychelles Foundation:
1) To arrange and organize your foundations’ accounting records for the past 7 years. To be
prepared to furnish accounting records to the Registered Agent upon request, if not already
done so.
2) To mark 2 important deadlines for each calendar year: 31st of July (for furnishing the
accounting records for transactions of the first half of a year); and 31st of January (for
furnishing the accounting records of the second half of a year).
3) To prepare accounting records for the past 7 years for a foundation that goes into voluntary dissolution / striking-off / de-registration/ discontinuation and provide them to OCI
before such procedures are completed.
Registered Agent records preservation obligations
Registered agents must preserve the following records of foundations (including dissolved,
struck-off, continued outside Seychelles) under the administration, for at least 7 years:
registers of councillors, beneficiaries, founders, registered agents, supervisory persons,
attorneys (agents), and accounting records in the possession of the registered agent. When a registered agent ceases business, such records shall be provided to the FSA or to any other person approved by the FSA (preferably in digital format).
Deemed Dissolution period
Automatic dissolution (for non-payment of annual fees and failure to satisfy the requirements of the Foundations Act) reduced from 10 / 3 years to 1 year from date of striking-off.
Court Restoration
An application to restore the name of a struck off or dissolved foundation to the Register may be made to the Court within one year of the date of the striking off and within five years of the date of dissolution.
The above application can be made to the Court by:
(a) a creditor, councillor, founder, protector or liquidator of the Foundation; or
(b) any person who can establish an interest in the Foundation to be restored to the Register.
The court shall not make an order restoring a Foundation to the Register, unless it is satisfied that:
(a) the foundation will have a registered agent (a licensed ICSP has agreed to act as registered agent of the Foundation); and
(b) the Foundation is in compliance with its obligations (i) under the Foundations Act relating to accounting records, registers of councillors, beneficiaries, founders, registered agents, supervisory persons, attorneys (agents); and (ii) under the Beneficial Ownership Act, 2020 relating to register of beneficial owners.
Administrative Restoration
An application to restore the name of a struck off or dissolved foundation to the Register may be made to the Registrar within one year of the date of the striking off and within five years of the date of dissolution.
The above application can be made to the Registrar by the Foundation itself or by its
councillor, beneficiary, founder, supervisory person.
The Registrar shall not restore the name of a foundation if the Registrar is not satisfied that
the foundation is in compliance with its obligations:
(a) under the Foundations Act relating to accounting records, registers of councillors,
beneficiaries, founders, registered agents, supervisory persons, attorneys (agents); &
(b) under the Beneficial Ownership Act, 2020 relating to register of beneficial owners.
Introduction of certain fees and penalties increase
The following Government fees have been introduced by the Foundations (Amendment) Act, 2021 with effect from 1st January 2022:
1) Court restoration: for filing with the Registrar of a sealed copy of an order of the court for
the restoration of the name of a Foundation to the Register: US$500
2) Administrative restoration by Registrar:
- $US300 (if the application for restoration is made within 6 months after striking off
the Register);
- US$500 (if the application for restoration is made more than 6 months after striking
off )
The majority of penalty fees for non-compliance have been increased to a penalty not
exceeding US$10,000.
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.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.
