Seychelles legislative updates
Lady Justice may be blind – but it has become obvious to Offshore jurisdictions that the "Alphabet Watchdogs" aren't. Seychelles has always adopted a stance of "cautious compliance" and getting the balance right.
As a result of pressure from the OECD, FATF, IMF and others, the following legislative amendments to the International Business Companies Act, 1994 are already in place :
2011 – Location of accounting records. The accounting records must be kept at the registered office or such other place as the directors think fit. Where the accounting records are kept somewhere other than the registered office, the registered agent must be informed of that other place. The notification should be in the form of a resolution of directors – you may have noticed that we have included this provision in our annual reports. The accounting records should be sufficient to show and explain the company's transactions enable the financial position of the company to be determined with reasonable accuracy at any time, and allow for accounts of the company to be prepared. They should also give a true and fair view of the company's financial position and explain the various transactions. In the event that a company prepares annual financial statements it may but is not required to, file a copy of the statements with the Registrar.
2013 – Repeal of legislation relating to bearer shares. All companies which had issued bearer shares were required to exchange those bearer shares for registered shares. All registers of members had to clearly reflect this change. It also became mandatory for a register of members to be kept in Seychelles.
2013 – Annual reports were introduced. This amendment requires all companies to file an annual report with the registered by 31 December each year. This report confirms that:
- the company is keeping accounting records, the address of such records, (as well as of the minutes and resolutions of the company) and that such records can be made available through its registered agent;
- the share register located at the registered office is complete and updated.
Reporting of Non-Compliance
The FSA regularly issues guidelines and guidance notes relating to compliance by service providers with the legislation in place. One of these guidelines sets out the requirements relating to the reporting of non-compliant entities. The reporting dates for 2016 are March and September. From 2017 onwards, reporting will take place in March, June, September and December of each year. The non-compliance reporting relates to location of accounting records, register of directors, register of members and annual reports.
The FSA has a penalty regime which it has strictly applied. The standard penalty for non-compliance is US$100, plus US$25 per day for the company and for each director, for the period of non-compliance. The FSA also have the power to strike-off a company for non-compliance.
Proposed new IBC Act
There have been a number of amendments made to the IBC Act since its adoption in 1994. The authorities have therefore decided to consolidate all these amendments in one new IBC Act. They will also take this opportunity to include provisions to meet the growing list of requirements of the OECD, FATF, IMF etc., with particular emphasis on beneficial ownership information. There has been extensive consultation with industry, and it is expected that the new IBC Bill will be enacted in before the middle of 2016.
The definition of "beneficial owner" is still under discussion between the Regulator and the offshore industry representatives. As it stands, the definition is as follows:
A "beneficial owner" means any individual (excluding a nominee) who:
Ultimately owns (directly or indirectly and whether alone or jointly with another person or entity) more than 25% of the shares in the company;
Exercises (directly or indirectly and whether alone or jointly with another person or entity ultimate control over more than 25% of the total voting rights in the company;
Is entitled (directly or indirectly and whether alone or jointly with another person or entity) to appoint or remove a majority of the directors of the company; or
Is otherwise entitled to exercise or actually exercises control over the company or its management.
If a person becomes a member on behalf of other persons, he must give notice to the company of the details of that beneficial owner. Similarly, he must give notice if the beneficial owner changes. A company may also request beneficial owner information from any member, and the member must comply with the request. There are exemptions for companies listed on a recognised exchange or subsidiaries of such companies.
The register of beneficial owners WILL NOT be a public register, and will remain in the office of the registered agent.
When this new Act does come into operation, every company incorporated under the old 1994 Act will be deemed to be re-registered under the new Act. There is no "active" re-registration process, although an application for a certificate of re-registration may be made. There is also no requirement to adopt new Memorandum and Articles of Association.
At the moment, the minimum number of directors / shareholders is one. There is a new provision proposed in the IBC Bill that where the sole member is also the sole director, he may appoint a reserve director. This will assist in succession planning, and is something which is already in force in the BVI.
It is also proposed that the appointment of the first director must be made within nine months of the date of incorporation. At present there is no such requirement in place.