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INTERNATIONAL BUSINESS COMPANIES ACT, 2016 Enacted on 10th August 2016 In force as of 1st December 2016

On 10th August 2016, an entirely new International Business Companies Act,2016 (“the Act”) came into effect in Seychelles. The new Act is a comprehensive rewrite of the predecessor IBC Act 1994 aimed at modernising Seychelles company law and further enhancing Seychelles’ status as a international business and financial centre. This means that while in some areas the new Act carries forward the requirements of the predecessor IBC Act 1994, it also introduces important differences to watch out for.

We recommend you to read and analyse the below information to see if the changes will affect day-to-day administration of your IBCs as well as various aspects of life of your Seychelles structures. Shall you have any questions in relation to the new law we will be glad to assist you.

Main Amendments:

Topic amended 1994 2016

Types of companies 1. Limited by shares 2. Limited by

Guarantee (with and without share capital)

3. Limited Life Companies

Added extra: 4. Protected Cell Companies

Conversion of companies from one type to another

Not possible Companies Limited by shares to Limited by Guarantee

PCC to Non-cellular Non-cellular to PCC Resident Company to IBC IBC to Resident Company

Company Name Extensive list of Mandatory words: Ltd, SA, GMBH, S.r.l., OOO, BV, S.A., etc.

Allowed endings: Limited (Ltd) Corporation (Corp) Incorporated (Inc)

Re-Use of Company Names

Not possible Possible: After 7 years of the change of name (or earlier

with permission of the company whose name is sought to be used)

After 7 years from the date of dis-continuation

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At any time after dissolution of IBC whose name is to be re-used

Business Activity A company shall not a) Carry on business in

Seychelles b) own an interest in

immovable property situated in Seychelles

c) Not insurance or re-insurance business

d) Not banking business under Financial Institutions Act, 2004

e) Not corporate services provider, trustee under ICSP Act, 2003

A company shall not – (a) subject to subsection (3), carry on business in Seychelles; (b) own an interest in immovable property situated in Seychelles, or a lease of immovable property situated in Seychelles otherwise than as referred to in subsection (3)(f); (c) carry on banking business (as defined in the Financial Institutions Act) in or outside Seychelles; (d) carry on insurance business (as defined in the Insurance Act) –

(i) in Seychelles; or (ii) outside Seychelles unless it is licensed or otherwise legally able to do so under the laws of each country outside Seychelles in which it carries on such business;

(e) carry on business providing international corporate services, international trustee services or foundation services (as defined in the International Corporate, Trustee and Foundation Service Providers Act) except –

(i) to the extent permitted under the International Corporate, Trustee and Foundation Service Providers Act; and (ii) in the case of carrying on such business outside Seychelles, if the company is licensed or otherwise legally able to do so under the laws of each country outside Seychelles in which it carries on such business;

(f) carry on securities business (as defined in the Securities Act) –

(i) in Seychelles; or (ii) outside Seychelles unless it is licensed or otherwise legally able to do so under the laws of each country outside Seychelles in which it carries on such business;

(g) carry on business as a mutual fund (as defined in the Mutual Fund and Hedge Fund Act) unless it is licensed or otherwise legally able to do so under the Mutual Fund and Hedge Fund Act or under the laws of a recognized jurisdiction (as defined in the Mutual Fund and Hedge Fund Act); or (h) carry on gambling business (as defined in the Seychelles Gambling Act), including interactive gambling business, -

(i) in Seychelles; or

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(ii) outside Seychelles unless it is licensed or otherwise legally able to do so under the laws of each country outside Seychelles in which it carries on such business.

Share Issue Not mandatory

No consent of member on allotment of shares

Combination of par value and no par value shares was allowed

Mandatory. A company shall have at least one member at all times upon appointment of first director

Consent of Shareholder to accept newly allotted shares if they increase Shareholder’s liability is

required Combination of par value and no par value shares

is not allowed if they are of different classes

Members No specific provisions for minors and incapacitated to be eligible to hold shares

Minors and incapacitated can be shareholders of the company, provided one or more persons (“representative”) are legally entitled to, and are willing

to, represent the interests of the minor or incapacitated adult in respect of exercising any voting or other rights attached to the shares for and on behalf of the minor or incapacitated adult.

Dealing with Shares The amount payable for par value shares shall not be less than the par value

Shares of one class cannot be converted into shares of another class without first being redeemed

Not possible to convert par value into no par value shares

No pre-emptive rights provisions

No Forfeiture of shares provisions

No Surrender of shares provisions

Very limited Redemption of shares provisions

No Transmission of shares provisions in case of death and incapacity of shareholder

Payment for par value shares can be below aggregated amount of value of shares, subject to approval by members and Court

Shares can be freely converted by resolution of members without the need to be firstly redeemed provided M&AA set out the method of conversion

It is possible to convert par value into no par value and vice versa

Pre-emptive right provisions are included though is not mandatory (subject to M&AA)

Forfeiture of shares provisions are introduced for cases when the shares are not paid

Surrender of shares with no right to receive payment for shares canceled

Detailed provisions for Redemption of shares either

o On request f IBC, or o On request of shareholder

Transmission of shares of death of member (or incapacity) provisions are introduced

Transfer of shares Transfer of shares can be done by oral expression

If Instrument of Transfer is in writing

Instrument of Transfer – only in writing To be signed by both parties unless otherwise

specified in M&AA. But always by both parties if transferred shares are not fully paid

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it can be signed by transferor only

Director has right to refuse registration of transfer of shares if shares are not fully paid

Register of Members The Register of Members has to be kept at Registered Office. Penalty for non-compliance 100USD + 25USD per day

Records on the Register of Members to be kept indefinitely

The Register of Members has to be kept at Registered Office. Penalty for non-compliance 500USD + 50USD per day

Record of a former member can be deleted from the Register of Members after 7 years from the date when he ceased to be a member

Inspection of Register of Members/Directors/ Charges

Director and Member can aphorize attorney to inspect Registers

The company may refuse a request for inspection if the purpose is not proper one. Aggrieved person can apply to Court within 90 days

Director and Member can inspect Registers at any time in person

If the company refused inspection within 21 days, it is liable to a penalty of 5,000USD on conviction. Aggrieved person can apply to Court within 90 days

Charge over the assets

Registration of a Charge in company’s

Register of Charges is optional s well as filling of the same register to the Registrar

Partial release is not possible

Filling of Register of Charges to the Registrar is allowed only by RA

Register of Charges shall be kept at Registered Office. Filling with the Registrar is optional.

It is possible to release the charge partly if the charge has ceased to affect part of the property

Lawyers practicing in Seychelles can also file registration of charge with the Registrar for and on behalf of Chargee

Share Certificates Share Certificates shall be signed by Directors or Officers

Signed by Director, or Any other authorized person, or Sealed by company seal without any signature

Directors appointment

No time limit for appointment of first director. First director can be appointed at any time

No provisions for eligibility of person to become a director

No Reserve Director provisions

The first director of IBC shall be appointed by subscribers within 9 months from the date of incorporation

Eligibility provisions are introduce. Person cannot be appointed as director if he/it:

o is a minor; o is an incapacitated adult; or o is an undischarged bankrupt;

a body corporate which is dissolved or has commenced winding up;

a person who is disqualified, under this Act, any other written

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law or by an order of the Court, from being a director; or

a person who, in respect of a particular company, is prohibited by the memorandum or articles from being a director of the company

It is possible to appoint Reserve director in a company where individual is acting in capacity of sole member and director.

o Reserved Director will become a Director upon death or incapacity of a Director.

o Reserved Director shall be reflected in the Register of Directors

Alternate Director Alternate Director has right to vote on the Board meeting only in the absence of Director, but has not responsibilities towards the company

No need to reflect Alternate Director in the Register of Directors

Alternate Director has the same rights, powers , duties and responsibilities for his actions as a Director of the company

Alternate Director details shall be entered in the Register of Directors

De Facto Director No such definition Introduced definition of De Facto Director: “a person who has not been formally appointed as a director of a company but who occupies the position of director, or who manages, directs or supervises the business and affairs of the company, shall be treated as a director of the company” The Authority is yet to clarify his status vis-à-vis directors duties and obligations

Delegation of powers by Directors

No delegation provisions (1) The board of a company may delegate to a committee of directors, a director or employee of the company, or to any other person, any one or more of its powers, except that the directors have no power to delegate the following powers –

(a) to approve distributions by the company, including to make a determination under section 70(1) or 71(1) that the company will, immediately after a proposed distribution, satisfy the solvency test; (b) to amend the memorandum or articles; (c) to designate committees of directors; (d) to delegate powers to a committee of directors; (e) to appoint or remove directors; (f) to appoint or remove an agent; (g) to approve a plan or merger, consolidation or arrangement; or (h) to approve the company’s voluntary winding up

under Sub-Part II or Sub-Part III of Part XVII. (2) A board that delegates a power under subsection (1) is responsible for the exercise of the power by the

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delegate as if the power had been exercised by the board, unless the board –

(a) believed on reasonable grounds at all times before the exercise of the power that the delegate would exercise the power in conformity with the duties imposed on directors of the company by this Act and the company’s memorandum and articles; and (b) has monitored, by means of reasonable methods properly used, the exercise of the power by the delegate.

Register of Director Shall be kept at Registered Office

Shall be kept at Registered office and filled to the Registrar:

o Within 30 days from appointment of first director

o Within 30 days from the date of any changes

Existing (active) companies shall complete the filling within 12 months (before 1st December 2017)

The Register of Directors will not be available for public for 2 years from the date of commencement of the Act (until 1st December 2018)

Failure to file Register of Directors (or any changes in it) trigger penalty of 500USD + 50USD for each day of non-compliance

Registered Agent ceasing to be eligible to act (surrender or revocation of license)

No provisions Registered Agent (RA) shall inform all his companies within 30 days of becoming ineligible to act

IBC has 90 days to appoint a new RA

Change of Registered Agent

Within 14 days from the date of resolution

Penalties on IBC for failure to register a change: 100USD +25USD per day

14 days for registration of change, but subject to: o Authorization of outgoing RA o No outstanding fees to outgoing RA o Completion of all Due Diligence

obligations to outgoing RA. Penalty on failing party (either IBC or outgoing

RA) : 100USD +25USD per day Annual Return (AR) A statement that the

company is keeping accounting records, Registers, and that the accounting records can be provided on request of Authorities in Seychelles

To be submitted to Registered Agent by 31st December each year

Last quarter companies have

Statement includes : o Address where accounting records are

kept o Address where the minutes and

resolutions are kept o Obligation to provided the above records

without delay on request of Authorities in Seychelles

Deadline is 31 December IBC can submit AR any time during the year but

not within 6 months after the last AR Penalty for non-submission : 500USD + 50USD

per day

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extension until 31 December next year

Penalty for non-submission 100USD + 25USD per day

Inspection of accounting records by directors

No provisions Directors may request the company to furnish accounting records.

Timeframe – 14 days from the date of request, Penalty on company: up to 2,500USD

Continuation of company from Seychelles

Done by way of notice to Registrar

No dis-continuation documents issued by Registrar

No fees payable

Application shall be submitted to Registrar Company cannot discontinue if it has outstanding

fees and any penalty or fine required to be paid under the Act;

Company cannot discontinue if the laws of the foreign jurisdiction do not permit such continuation; The above shall be confirmed by Declaration of Director or Legal Opinion

Certificate of Discontinuation is issued by the Registrar, for a fee of 50USD

Continuation of company into Seychelles

Continuation can be done notwithstanding provisions of any foreign law

Requirements to meet for a company to be continue into Seychelles: (i) the foreign company is solvent; (ii) the foreign company is not in the process of being wound up, dissolved or struck off the register in its jurisdiction of incorporation; (iii) no receiver or administrator (by whatever name any such person is called) has been appointed, whether by a court or in some other manner, in respect of any property of the foreign company; (iv) there is no outstanding arrangement between the foreign company and its creditors that has not been concluded; and (v) the law of the foreign jurisdiction in which the foreign company is incorporated does not prohibit its continuation as a company in Seychelles

Declaration of Director to confirm all the above is required

Protected Cell Companies (PCC)

Registered only under Companies Act 1972 (local companies regime)

Seychelles Taxes apply in full

Can be registered as IBC under IBC Act 2016 No Seychelles taxes Permitted activity:

(a) the company is (or when incorporated will be) licensed by the Authority as a mutual fund under the Mutual Fund and Hedge Fund Act; (b) the company is (or when incorporated will be) an issuer of listed securities subject to the listing rules of a Seychelles Securities Exchange or recognized overseas securities exchange within the meaning of the Securities Act; or

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(c) the company is of any other description or carries on (or when incorporated will carry on) such other activity as may be approved by the Authority.

Disqualification of Directors

No provisions A person can be disqualified from being Director by decision of Court . General unfitness criteria are introduced.

Application can be done by Registrar, Minister, Liquidator, Member, Creditor

Maximum term of disqualification – 5 years Disqualification order can be changed , revoked,

appealed Register of Disqualified Directors will be

available for public for a fee of 25USD Struck Off for other reasons than non-payment of annual fees

The Registrar could strike the company off the Register for the following reasons: The company (a) no longer

satisfies the requirements of the Act for an international business company;

(b) fails to comply with a request for information from the Seychelles Revenue Commission;

(c) fails to pay any penalty imposed by the Registrar under the Act; or

(d) conducts business or other activities which are, or are likely to be, contrary to the written laws of Seychelles or detrimental to the reputation of Seychelles,

Time frame – 150 days from the first

The Registrar may strike the company off the Register for the following reasons a) it is satisfied that the company –

(i) has ceased to carry on business or is not in operation; (ii) is carrying on business in Seychelles in contravention of section 5(2) of this Act; (iii) has been used for fraudulent purposes; (iv) may jeopardize the reputation of Seychelles as a financial centre; or

(b) the company fails to – (i) file any notice or document required to be filed under this Act; (ii) comply with section 164 (Company to have registered agent); (iii) comply with a request made pursuant to this Act or other written law of Seychelles by the Seychelles Revenue Commission, the Financial Intelligence Unit or the Registrar for a document or information; (iv) keep a register of directors, register of members, register of charges, register of beneficial owners or accounting records required to be kept by it under this Act or any other records required to be kept by it under this Act; or (v) subject to paragraph (c), pay any penalty fees imposed by the Registrar under this Act;

Timeframe– 90 days from first Notice of Registrar to the company

Company is deemed to be dissolved after 5 Years of being struck off

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Notice to the company

Company is deemed to be dissolved after 10 years of being struck off

Restoration of companies which were struck off for non-renewal reasons

Company can be restored within 10 years from the date of struck off

Company can be restored within 5 years from the date of struck off

Restoration of companies which were struck off for other reasons than non-payment of annual fees

Company can be restored by Court within 3 years from date of Struck-off for non-compliance reasons

Not possible to restore a company after it was voluntary liquidated

Company can be restored by Court within 10 years from date of Struck-off for non-compliance reasons

Company can be restored by Court if it was voluntary liquidated within 5 years from the date of liquidation

Liquidator No provisions for eligibility of person to become a Liquidator

Criteria are established for a person to become a Liquidator. The following individuals are disqualified from being appointed, or acting, as the liquidator of a company –

(a) a disqualified person under Part XVI or an individual subject to an equivalent disqualification under the laws of a country outside Seychelles; (b) a minor; (c) an incapacitated adult; (d) an undischarged bankrupt; (e) an individual who is, or at any time in the previous two years has been, a director of the company; (f) an individual who acts, or at any time in the previous two years has acted, in a senior management position in relation to the company and whose functions or responsibilities have included functions or responsibilities in relation to the financial management of the company; (g) an individual who is a sole member of the company; and (h) an individual who is a close family member of an individual specified in paragraph (e), (f) or (g).

Voluntary Liquidation

30 days for publication of Notice of commencement of Liquidation. Penalty of 50USD per day for failure to publish a Notice

Filing of Notice of commencement of liquidation shall be done within 21 days from the date of Resolution

Publication of commencement of liquidation shall be done within 40 days from filling the above notice. No penalties.

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No consent of Liquidator is required for his appointment

Fee 100USD

Penalty of Director is introduced if he conducts business during liquidation process – up to 10,000USD

Written consent of Liquidator is required in order to be appointed

Liquidation can be rescinded before Notice of Completion is submitted to the Registrar

Fee: 50USD upon commencement, and 75USD upon completion

Liquidation of Insolvent Company

No provisions, governed by Insolvency Act

New provisions are included for Insolvency Liquidation

Creditors can actively participate in appointment of Liquidator and distribution of assets

Fraudulent trading No provisions For fraudulent trading - up to 100,000USD or up to 5 years of imprisonment on conviction

Applicable to all persons who is knowingly a party to the carrying on of the business in that manner

Registrar Possible to file Register of Members/Beneficial Owners

Registrar has now power to waive penalties Penalties which are calculated on daily basis are

capped by 2,500USD CGS fee are the same regardless who is applying

for it Inspection Fee – 10USD Copying fee – 1USD per page

Register of Beneficial Owners (BO)

No provisions for BO Register

To be kept at the Registered Office To be updated within 30 days of the change To be inspected by BOs Penalty for non-compliance

o on the company if the company didn’t

take necessary steps to establish BO; o on BO if a person did not submit

information on time

Transitional Provisions

Every former Act company shall be deemed to be automatically re-registered as an international business company under the new Act

Every former Act company shall have a period of twelve months from the Act commencement date to comply with – (a) section 126(2) (notice of location of minutes and resolutions of members); (b) section 157(2) (notice of location of minutes and resolutions of directors); and (c) section 179 (register of charges).

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It is not mandatory for a former Act company to amend its memorandum or articles to comply with the new Act but to the extent of any inconsistency between – (a) a former Act company’s memorandum or

articles; and (b) the new Act, the new Act shall prevail.

It should be noted that updated IBC Guidelines are expected shortly to be released by Financial Services Authority to clarify new procedures related to various aspects of IBC life: incorporation, filling registers, liquidation, renewal, etc., of which we will advise you accordingly. And last but not least, due to changes of existing government fees as well as introduction of new ones our fee schedule will be amended as follows: Government Fee 1994, USD 2016, USD Difference,

USD Registration of a certified copy or extract of a resolution, amending the memorandum or articles of a company (i) filed within 30 days after the date of the resolution; (ii) filed more than 30 days after the date of the resolution

All Amendments to be filled within 30 days of resolution for a fee of 50USD

50 100

0 +50

Filing a restated and amended memorandum or articles of a company (exclusive of fee for filing a certified copy or extract of the amendment approval resolution

Could be filled together with Extract at no extra cost

50 +50

For filing of a copy register of directors of a company

N/A No fee for a ‘first filing’; US$25 for each subsequent filing

No fee for a ‘first filing’; US$25 for each subsequent filing

For filing application to register a charge 50 125 +75 For filing an application to register a variation of a registered charge

50 75 +25

For filing an application to register a variation of a registered charge

50 75 +25

For the registration of a notice of continuation outside of Seychelles

N/A 50 +50

Inspection of Register of Disqualification Orders N/A 25 +25 For filing (i) a copy or extract of a resolution that a company be voluntarily wound up, or (ii) a copy or

100 50 -50

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extract of a resolution rescinding a company’s

voluntary winding up or (iii) a copy of the compulsory winding up order For filing of liquidator’s notice that a voluntary

liquidation or compulsory of a company has completed (inclusive of issue of certificate of dissolution by Registrar)

N/A 75 +75

An inspection of the Register of International Business Companies; of the file of a company

100 10 -90

Per page for obtaining a copy of any document available on inspection

15 per document

1 per page

For the filing of a copy of a register of members, register of charges or register of beneficial owners (optional)

N/A 10 +10

For the filing of annual financial statement (optional)

N/A 50 +50