The Republic of Seychelles has recently passed certain amendments to its International Business Companies Act Legislation. This article is designed to summarize key aspects of the amendments. The amendments will be of particular interest to current Seychelles IBC owners as well as clients considering incorporating in Seychelles.
Hitherto, Seychelles International Business Companies (IBCs) were incorporated under the International Business Companies Act 2016 (the Act), which has been amended by the International Business Companies (Amendment) Act 2021 (the Amendment Act).
Part A below sets out the main highlights and Part B goes into detail. We would particularly draw your attention to the new accounting records requirements for IBCs: see paragraphs A and B of Part A and paragraphs 34 to 42 of Part B below.
PART A – IBC AMENDMENT HIGHLIGHTS
A. Bi-annual sending of accounting records to registered office – With effect from 6 February 2022, every company on the Register to keep, on a bi-annual basis, its accounting records at the company’s registered office in Seychelles (section 175(1A) and (1B) of the Act). This means the company shall at least twice annually send updated accounting records to be kept at its registered office in Seychelles. We will provide an update when the Seychelles Financial Services Authority (FSA) has issued its final version Guidance Circular, but they have indicated (in their draft Guidance Circular) that the following shall apply:
(a) IBC 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;
(b) IBC 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;
(c) 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 companies on the Register, accounting records relating to transactions or operations in the past 7 years to 31 December, 2021 must be kept in Seychelles by 6 February, 2022;
(d) 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 and are not open to public inspection;
(e) It shall be sufficient if the accounting records are kept at the company’s registered office in electronic form. Where a company keeps a copy of its accounting records (rather than the originals) at its registered office, the company is required to inform its registered agent in writing of the physical address of the place where the original accounting records are kept; and
(f) Per section 2 of the Act, accounting records, in relation to a company, means documents in respect of: (i) the company’s assets and liabilities; (ii) the receipts and expenditure of the company; and (iii) the sales, purchases and other transactions to which the company is a party (which includes, without limitation, bank statements, invoices, receipts, title documents, agreements, vouchers, etc).
B. Annual financial summary required for large companies and non-large non-holding companies – With effect from 6 February 2022, a large company (i.e. with an annual turnover above Seychelles Rupees 50,000,000 (approx. US$3,000,000 as at August 2021)) or a non-large company that is not a holding company (i.e. not a company which only holds interests in other companies or assets), is required to prepare an annual financial summary to be kept at its registered office in Seychelles within 6 months from the end of the company’s financial year (section 175(1B) of the Act). Note: For client companies that already prepare annual accounts (audited or unaudited), these will suffice to comply with the “annual financial summary” requirement, provided the annual accounts are sent to the registered agent in Seychelles for keeping at the company’s registered office.
C. Mandatory company name suffix – The Act has been widened to permit the name of a company (other than a protected cell company) to end with the words: “Limited Liability Company” or “Company”, or with the abbreviation “LLC” or “Co”, as alternatives to the existing mandatory company name endings of the words: “Limited”, “Corporation”, “Limited” or “Incorporated”, or the abbreviation “Ltd”, “Corp”, or “Inc” (section 25(1) and (2) of the Act).
D. Written consent to be a director, alternate director or reserve director – The following new requirement has been introduced (making obligatory a pre-existing common practice): A person shall not be appointed as a director or alternate director of a company, or nominated as a reserve director, unless the person has consented in writing to be a director or alternate director or to be nominated as a reserve director, except the written consent requirement shall not apply to a director, alternate director or reserve director appointed or nominated prior to the commencement of the International Business Companies (Amendment) Act 2021, namely, 6 August 2021 per section 134(7) and (8) of the Act).
E. Deemed dissolution of struck off companies after 1 year – Section 275 of the Act is amended with effect from 1 January 2022 to provide that, where the name of a company that has been struck off the Register under section 272 of the Act (such as for non-payment of annual fees) remains struck off continuously for a period of 1 (one) year (instead of 7 years), it is dissolved with effect from the last day of that period.
F. Restoration application to the Registrar (non-Court) – A new section 276(1C) has been introduced with effect from 1 January 2022, reducing the time-limit for an application to the Registrar (to restore the name of a struck off or dissolved company) to: (i) within one year of the date of the striking off notice published in the Gazette under section 272(4) of the Act; or (ii) within five years of the date of dissolution.
G. Restoration application to the Supreme Court of Seychelles – Section 277(2) of the Act has been amended with effect from 1 January 2022 to reduce the time-limit for an application to the Court, for an order to restore the name of a struck off or dissolved company under section 277(1), to: (i) within one year of the date of the striking-off notice published in the Gazette under section 272(4) of the Act; or (ii) within five years of the date of dissolution of a company.
H. Eligibility to be liquidator under Sub-Part II of Part XVII of the Act – Section 284 of the Act has been widened to allow for a company (whose members intend to voluntary wind up and dissolve a solvent company under Sub-Part II of Part XVII of the Act) to appoint a company or an individual as liquidator to proceed with members’ voluntary winding up and dissolution application. Subject to the disqualification provisions in section 284, a liquidator may be resident anywhere in the world and is not required to be a qualified accountant or insolvency practitioner.
For full details in regards to the changes click on this link: https://www.dropbox.com/s/dvd4likvetcd6wg/SEYCHELLES%20IBC%20ACT%20CHANGES%20OCTOBER%202021.docx?dl=0
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