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Offshore: Seychelles

Seychelles has emerged as an increasingly popular offshore choice. That's particularly true with regard to mutual and hedge funds, which can be constituted as a company, an international trust or limited partnership.

 

One factor contributing to the rise of Seychelles as a top fund location is the republic’s commitment to bank secrecy. The names of beneficial owners, directors and shareholders are not part of public record.

 

Additionally, a Seychelles IBC benefits from low set-up costs; an exemption from all local taxes and stamp duty; and no disclosure of minimum capital requirements. Critics have accused Seychelles of not doing enough to combat harmful activities such as money laundering.  However, Seychelles has expressed a firm commitment to change by working to improve its legal framework and practices in regards to tax matters.

 

Types of Seyshelles Companies

  1. Seychelles IBC

  2. Special License Company

  3. Seychelles International Trust

  4. Seychelles Limited Partnerships

 

Seychelles IBC - an International Business Company - is the most popular and versatile type of offshore corporation available in Seychelles. Similar to other classic offshore companies, Seychelles IBC is designed to engage in international business. Being an IBC, it is subject to minimum red-tape. While being obliged to keep internal records and registries in good order, a Seychelles IBC does not nave to submit any financial reports to public file. There is also no mandatory audit requirement.

Seychelles IBC is similar to the most popular international business company, the BVI IBC, and in some respects even exceeds that benchmark model of offshore corporation. Since the introduction of the Seychelles International Business Companies Act in 1994, over 100`000 Seychelles IBC`s have been registered, with more than 600 new offshore companies being registered every month.

The formation, tax benefits and general structure of a Seychelles IBC is regulated by the Seychelles International Business Companies Act 1994. A full text of the Seychelles IBC Act 1994

 

 

Seychelles Special License Company - abbreviated "CSL" - is a new entity introduced by the Seychelles Companies (Special Licenses) Act 2003. While it is more complex and more expensive than the traditional IBC, a CSL has a number of great advantages.

 

The most attractive feature of the Special License Company is its ability to bypass foreign blacklisting by being a low-tax company (as opposed to a zero-tax company, like IBC). A CSL is also able to access and use the growing number of double tax avoidance treaties concluded by Seychelles. These treaty benefits are not accessible to IBCs. Unlike an IBC, a CSL is formally considered tax-resident in Seychelles, which in turn allows for easier conduct of its business abroad, attracting less suspicion and scrutiny.

 

The CSL is formed under the general provisions of the "domestic" Seychelles Companies Act 1972. Its special tax regime and other features are prescribed by the Seychelles Companies (Special Licenses) Act 2003.

 

 

Seychelles International Trust - Trusts in Seychelles are governed by the Seychelles International Trusts Act of 1994.  Amendments to the original act were made in 2011 by the International Trusts (Amendment) Act of 2011, which served to increase the desirability of Seychelles as an international trust jurisdiction by introducing greater flexibility into Seychelles International Trusts.

 

The government of Seychelles drafted the Act after a thorough study of best practices in other top trust jurisdictions, and incorporated all of the best features of other trust legislation, while also including various modifications and innovations that allowed for greater flexibility and stronger asset protection. As a result, Seychelles law is an exemplar of premier asset protection trust legislation.

 

Seychelles International Trusts are commonly used in conjunction with the Seychelles International Business Companies. By using a trust to hold shares in the IBC, an additional layer of legal protection is provided for the owner. Moreover, this can enable beneficiaries to defer or avoid any possible tax on the profits of the IBC for an indefinite period.

 

 

Seychelles Limited Partnerships - Historically Limited Partnerships dates back with the 3rd century BC. It is presumed that in this time in Roman Empire Limited Partnerships where vehicles formed similar to today’s corporations, but with the requirement for one or more partners with unlimited liability. Today Limited Partnership is well defined and by definition is a relationship between one or more general partners and one or more limited partners engaging to conduct a business jointly with a common goal to make a profit.

 

Under the Limited Partnerships Act, 2003, Limited Partnerships are formed in order to carry out business outside Seychelles. Exception exists only as far as when business must be conducted in Seychelles, necessary for the carrying on of the business of limited partnerships outside the Seychelles.

 

ADVANTAGES OF SEYCHELLES IBC

Following is a synopsis of the most important advantages and features of the Seychelles International Business Company (IBC).


Zero tax

A Seychelles IBC, by the definition of the law, is not subject to any tax or duty on income or profits. A shareholder of a Seychelles IBC is also not subject to any tax on his income derived from the IBC. These provisions are enshrined into Article 109.(1) of the Seychelles IBC Act.

 

In a similar fashion, a Seychelles IBC is also also exempt from any stamp duties on all transactions relating to its business, in particular on any transfers of property to or by the company, and on any transactions in respect of the shares, debt obligations or other securities of the IBC.

 

Essentially, a Seychelles IBC is a completely tax-free offshore corporation, insofar as it complies with a few simple rules of operation. The main requirement is that a Seychelles IBC should not pursue business within the territory of the Seychelles (except, of course, it may enter into business with any other Seychelles IBC`s). The law provides that all exemptions for a Seychelles IBC shall remain in force for a period of twenty years from the date of incorporation of the IBC.

 

In order to qualify as an IBC, a Seychelles company must satisfy the following criteria:

 

  1. It may not carry on business in Seychelles.

  2. It may not own real estate in Seychelles.

  3. It may not do banking, insurance and registered agent business without special license.

 

However, a Seychelles IBC may still engage into any of the following:

 

  1. It may maintain Seychelles-based bank accounts and deposits.

  2. It may maintain books and records within Seychelles.

  3. A Seychelles IBC may maintain professional relationship in Seychelles with attorneys, accountants, trust and management companies, investment advisers or other similar persons.

  4. It may hold meetings of its directors in Seychelles.

  5. It may lease a property in Seychelles to use as office from which to communicate with members and where books and records can be kept.

  6. It may hold shares, debt obligations or other securities in another Seychelles IBC or in a Seychelles domestic company.

  7. A Seychelles IBC may also own a vessel or and aircraft registered in Seychelles.

  8. Shares in a Seychelles IBC may also be held by a person resident in Seychelles.

 

 

Disclosure of information

The identities and personal details of the beneficial owners, directors and shareholders are NOT part of public record for a Seychelles IBC. At registration of a new IBC, the Registrar of Companies does not require any data whatsoever on who is the actual beneficial owner of the new company. This information is only known to the licensed Registered Agent of the company and is kept on internal file by the company. The internal corporate files of the IBC, like the Register of Members, Register of Directors and all Minutes and Resolutions, are kept at the offices of the Registered Agent.The only documents of a Seychelles IBC that are held on public record are the Memorandum of Association and the Articles of Association. These documents do not contain any indication as to the actual shareholders or the beneficial owners of the company.

 

There are strictly limited legal circumstances when a domestic government authority in Seychelles (namely, the Financial Investigation Authority or the Seychelles Revenue Commission) may request a registered agent to disclose information that is on file of a particular IBC. Such disclosure may only happen as part of an ongoing investigation, and no blanket "fishing operation" disclosures are allowed.

 

The Republic of Seychelles is an independent country. As such, it is not sharing or reporting information to any overseas "principal", or organization. Seychelles is not subject to the EU Savings Tax Directive, unlike some other offshore financial centres, which are related to the EU member states (primarily, to the UK and its overseas territories). The offshore financial services sector contributes significantly to the country`s GDP. There is an inherent interest with the government and with the general public to maintain and develop the country`s status as a competitive offshore financial centre.

 

FORMATION AND STATUTORY REQUIREMENTS

SEYCHELLES IBC

 

Provisions against confiscation

Where any foreign governmental authority, by way of nationalisation, expropriation, confiscation, force or duress, or by imposition of any confiscatory tax, assessment or other governmental charge, takes or seizes any shares or other interest in a Seychelles IBC, a Seychelles court decision may be obtained ordering the company to disregard the attempted seizure and continue to respect the rights of the shareholder of the Seychelles IBC.

 

 

No paid-up capital required

A Seychelles IBC is not required to have any minimum paid-up capital in order to start its business operations. Any amount of authorized capital can be stated in the IBC formation documents, as required by the owners. (Authorized capital is a notional amount of capital that the company is allowed to draw from its shareholders in consideration for the company shares.) The amount of the authorized capital can be freely determined at incorporation by the owners of the IBC and there are no mandatory timeframes as to when such capital must be paid up by the shareholders. All in all, the capital structure of a Seychelles IBC can be extremely flexible and can accommodate all variety of business circumstances and needs.

 

 

Flexible corporate structure

A Seychelles International Business Company has an independent legal personality and possesses the same powers as a natural person.

 

A Seychelles IBC requires a minimum of only one shareholder, and one director, both of whom may be the same person. There is no requirement to have any local directors or shareholders and foreign individuals or corporate bodies can be shareholders or directors of a Seychelles IBC. Apart from the director, the company does not have to appoint any other officers.

 

The shareholders, directors and officers of a Seychelles Business Company may be individuals or corporations and of any nationality. The shareholder´s or director´s meetings need not be held in the Seychelles and there is no requirement for a regular Annual General Meeting.

 

Meetings can be held by telephone or other electronic means; alternatively, directors as well as shareholders may vote by proxy.

 

The corporate structure of the Seychelles International Business Company can be designed in accordance with the widest variety of requirements.

 

 

Type and form of shares

A Seychelles IBC may issue registered shares only, and any of these may be designated as voting shares, non-voting shares, shares having more or less than one vote per share, shares that may be voted only on certain matters or upon the occurrence of certain events, shares that may be voted only when held by persons who meet specified requirements, no par value shares, unnumbered shares, common shares, preferred shares, redeemable shares and shares that entitle participation only in certain assets. A Seychelles IBC may not issue bearer shares.

 

NAME REQUIREMENTS AND TYPE OF COMPANY

Name requirements for Seychelles IBC`s

A Seychelles IBC may not be registered under a name that is identical to the name of an existing Seychelles company. The registration of a new IBC may also be refused if its name so nearly resembles the name of another company as to be calculated to deceive, except where the (other) company gives its consent.

 

The "restricted names" for a Seychelles IBC are those that contain the words "Assurance", "Bank", "Building Society", "Chamber of Commerce", "Chartered, "Cooperative", "Imperial", Insurance", "Municipal", "Trust", "Foundation", or a word conveying a similar meaning, or any other word that, in the opinion of the Registrar, suggests or is calculated to suggest the patronage of or any connection with Seychelles or the Government of Seychelles or with any other country or the Government of that country. The Registrar may permit the incorporation of a company under a name that includes the word "Seychelles" if the Registrar thinks there is a good reason for doing so.

 

The Registrar may also refuse the registration of any particular name if, in the opinion of the Registrar, such name is indecent, offensive or, in the opinion of the Registrar is otherwise objectionable or misleading.

 

 

The name-endings denoting the type of company

The name of a limited company, shall end with a word or abbreviation denoting a corporate body or limited liability. The most popular name-endings include any of words like "Limited", "Corporation" or "Incorporated"; the words "Societe Anonyme" or "Sociedad Anonima"; the abbreviation "Ltd", "Corp", "Inc", "GmbH", "AG", "OY" or "S.A."; or several other word or words, or abbreviations thereof. The actual choice of available corporate endings of the name of a Seychelles IBC is very wide, including abbreviations in many European languages. The full list of those endings and abbreviations can be found in Part III, Section 11(1) of the Seychelles International Business Companies Act.

 

ABOUT SEYCHELLES

Geography

Seychelles is located in East Africa. 

 

The Seychelles is an archipelago of 115 islands in the Indian Ocean off East Africa, known for its beaches, coral reefs, diving, nature reserves and rare wildlife such as giant Aldabra tortoises. Mahé island, with an international airport, is a key transport hub, home to capital Victoria, the mountain rainforests of Morne Seychellois National Park and white-sand beaches including Beau Vallon and Anse Takamaka.

 

Capital: Victoria

Currency: Seychellois rupee

Population: 89,173 (2013) World Bank

Continent: Africa

Official languages: French, English, Seselwa

 

 

Politics and Foreign relations

The Seychelles president, who is head of state and head of government, is elected by popular vote for a five-year term of office. The cabinet is presided over and appointed by the president, subject to the approval of a majority of the legislature.

 

The unicameral Seychellois parliament, the National Assembly or Assemblée Nationale, consists of 34 members, 25 of whom are elected directly by popular vote, while the remaining nine seats are appointed proportionally according to the percentage of votes received by each party. All members serve five-year terms.

 

The Supreme Court of Seychelles, created in 1903, is the highest trial court in Seychelles and the first court of appeal from all the lower courts and tribunals. The highest court of law in Seychelles is the Seychelles Court of Appeal, which is the court of final appeal in the country.

 

Seychelles is a member of the African Union, the francophone Indian Ocean Commission (IOC), La Francophonie, the Southern African Development Community (SADC) and theCommonwealth.

 

 

Ecomony

Since independence in 1976, per capita output has expanded to roughly seven times the old near-subsistence level. Growth has been led by the tourist sector, which employs about 30% of the labour force, compared to agriculture which today employs about 3% of the labour force. Despite the growth of tourism, farming and fishing continue to employ some people, as do industries that process coconuts and vanilla.

 

As of 2013, the main export products are processed fish (60%) and non-fillet frozen fish (22%).

 

The prime agricultural products currently produced in Seychelles include sweet potatoes, vanilla, coconuts and cinnamon. These products provide much of the economic support of the locals. Frozen and canned fish, copra, cinnamon and vanilla are the main export commodities.

 

Since the worldwide economic crises of 2008, the Seychelles government has prioritised a curbing of the budget deficit, including the containment of social welfare costs and furtherprivatisation of public enterprises. The government has a pervasive presence in economic activity, with public enterprises active in petroleum product distribution, banking, imports of basic products, telecommunications and a wide range of other businesses. According to the 2013 Index of Economic Freedom, which measures the degree of limited government, market openness, regulatory efficiency, rule of law, and other factors, economic freedom has been increasing each year since 2010.

 

The national currency of Seychelles is the Seychellois rupee. Initially tied to a basket of international currencies it was depegged and allowed to be devalued and float freely in 2008 on the presumed hopes of attracting further foreign investment in the Seychelles economy.

 

 

Education

Until the mid-19th century, little formal education was available in Seychelles. The Catholic and Anglican churches opened mission schools in 1851. The Catholic mission later operated boys' and girls' secondary schools with religious Brothers and nuns from abroad even after the government became responsible for them in 1944.

 

A teacher training college opened in 1959, when the supply of locally trained teachers began to grow, and in short time many new schools were established. Since 1981 a system of free education has been in effect requiring attendance by all children in grades one to nine, beginning at age five. Ninety percent of all children attend nursery school at age four.

 

The literacy rate for school-age children rose to more than 90% by the late 1980s. Many older Seychellois had not been taught to read or write in their childhood; adult education classes helped raise adult literacy from 60% to a claimed 100% in 2014.

There is a total of 68 schools in Seychelles. The public school system consists of 23 crèches, 25 primary schools and 13 secondary schools. They are located on Mahé, Praslin, La Digue andSilhouette.

 

Additionally, there are three private schools: École Française, International School and the Independent School. All the private schools are on Mahé, and the International School has a branch on Praslin.

 

There are seven post-secondary (non-tertiary) schools: the Seychelles Polytechnic, School of Advanced Level Studies, Seychelles Tourism Academy, University of Seychelles Education, Seychelles Institute of Technology, Maritime Training Center, Seychelles Agricultural and Horticultural Training Center and the National Institute for Health and Social Studies.

 

The administration launched plans to open a university in an attempt to slow down the brain drain that has occurred. University of Seychelles, initiated in conjunction with the University of London, opened on 17 September 2009 in three locations and offers qualifications from the University of London.

 

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