Article on The Seychelles Financial Services Centre in Finance Publications Offshore

11 Jun 2010
 

The Seychelles Financial Services Centre - A Balancing Act

Miss Kim Yue Kye Head of CKLB Fiduciary (Seychelles) Limited

 










The Seychelles

Seychelles is an archipelago nation of 115 islands located in the Indian Ocean just south of the Equator, and 1500 kilometres east of Kenya. The Seychelles boasts some of the world's most beautiful beaches and pristine nature. The capital Victoria is located on Mahe, the main island.

The Republic of Seychelles gained independence from Britain in 1976, but remains a member of the British Commonwealth and has a very stable political environment. It has a population is approximately 85,000, with a mix of races and religions.

The main sectors of the economy of Seychelles are the fisheries, tourism and the offshore financial services.

The Seychelles offshore financial services

Seychelles is a relatively new comer to the offshore world. But it has a well regulated and rapidly growing offshore financial services sector. It is not a member of the European Union and does not appear on the OECD 'tax haven blacklist'. This has helped Seychelles remain a legitimate and attractive offshore jurisdiction.

In Seychelles, there is no exchange control regulations and therefore complete free flow of financial transactions.

The Seychelles is located in the GMT +4 hours time zone which makes it ideally placed to provide services to all of Europe, Africa, the Middle East and Asia within normal working hours.

The Seychelles International Business Authority ("SIBA") is charged with overseeing the quickly growing financial services industry. Seychelles has one of the fastest Registries of the International Business Companies in the world. The popularity of the jurisdiction has seen new record settings during the past few years. The number of companies formed in 2005 was around 7100 and grew to a record figure of 13750 in 2008 and 12400 in 2009. It seems that the Seychelles has succeeded in the development and progress of its financial services, however, the jurisdiction will certainly be rigorously tested in this new era of compliance, especially with its star product being an IBC. So far it appears that there has been a good balance and the natural progression of the jurisdiction in its maturity can only benefit the island.

New legislations such as the Mutual Fund & Hedge Fund Act 2008, Securities Act 2007 and Insurance Act 2008 were recently introduced. These are meant to be the catalysts to move Seychelles from just another offshore jurisdiction to a full fledged Offshore Financial Center (OFC). Company formation, trusts and trustee services, foundations, establishment and administration of funds and captive insurance business are part of the services offered on the island to the international market.

There are two types of companies that may be set up in the Seychelles by international players, namely, the Seychelles IBC and the Company Special Licence (CSL).




The Seychelles International Business Company ("IBC")

The IBC is the most popular type of company available in the Seychelles with a competitive annual licence fee of USD100, which is fixed for life. The Seychelles IBC offers similar features as the BVI IBC. Among the essential features are confidentiality practices, cost effectiveness and ease of administration.

The Seychelles International Business Companies ("IBCs") are governed by the International Business Act 1994 ("IBC Act"). The Seychelles IBC is a tax exempt corporate vehicle which provides for greater flexibility in terms of the activities that may be carried out and the manner in which the company can be run. It is ideally suited for private wealth structuring, i.e. for holding private assets and segregating risks. It is also a useful vehicle for trading activities and the provision of consultancy services. Seychelles has strict Money Laundering legislation and is properly regulated by the Seychelles International Business Authority (SIBA) whilst adequate confidentiality legislation protects users of IBC's.

Incorporation

An IBC can be incorporated within 1-2 business days and shelf companies are also available. It must at all times have a Registered Office and a Registered Agent in the Seychelles. It is not mandatory to appoint a Secretary.

Directorship / shareholder

An IBC must have at least one director who need not be resident in Seychelles and may be a corporate director. Nominee shareholders are allowed.

There is no statutory requirement for an Annual General Meeting and meetings can be conducted telephonically.





Company name

The name of a limited IBC may be in any language, but must be accompanied by a translation in English or French. A company name must not be identical or similar to a company already incorporated. The name should also not suggest the patronage of or suggest any connection with Seychelles or the Government of Seychelles.

Trading restrictions

An IBC cannot carry on business in the Seychelles. Having a bank account or maintaining professional contact with lawyers, accountants, trust companies or holding meetings of directors and shareholders in the Seychelles are not considered as carrying on business in Seychelles.

An IBC shall not carry any banking, insurance, re-insurance or trust business or a business of providing registered office for companies.

Share capital

There is no minimum share capital required and the share capital can be denominated in any currency. Shares may be issued with nominal or no par value and bearer shares are also allowed. An IBC may amend its Memorandum & Articles of Association to increase or decrease its authorised capital. The Registrar must be informed of any increase or decrease in authorised capital within 30 days.

Accounts

Annual filing of accounts are not required although an IBC shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the company. IBCs are exempted from taxation on business activities or transactions carried outside of the Seychelles.




Licence fees

An annual licence fee of USD100 is payable at incorporation and every subsequent year to the Registrar before the anniversary date of incorporation of the IBC. Late payment will result in penalty fees as follows:
- 10% penalty fee if payment is made after the due date
- 50% penalty fee if payment is made 90 days of the due date
It is possible to restore a company after it has been struck off the Registrar upon payment of the applicable reinstatement fees.

Corporate books and records

Every Seychelles IBC must keep statutory and other records at the registered office of the Company or at such other place as the directors may determine and the company shall inform the Registrar of the address of the other place.

Redomiciliation

A company incorporated under the laws of a jurisdiction outside the Republic of Seychelles may continue as a company incorporated under the IBC Act notwithstanding any provisions in the laws of jurisdiction under which it was incorporated.

The Company Special Licence

The Company Special Licence is a resident company taxable in the Seychelles at a low rate and is able to benefit from double taxation treaties between Seychelles and various treaty partners. The company must however be controlled and managed in the Seychelles with the necessary substance to be in a position to access the treaty benefits.

 



 
 
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