SEYSEYCHELLES

Technology and Innovation Offshore Guide

OVERVIEWSEY

With its main industries resting on the tourism, fishing and the offshore service sectors, Seychelles is emerging as the second best country in information and communication technology (ICT) development in the African region as per the International Telecommunication Union’s ICT Development Index, with a mobile penetration of almost 100%. Further plans to develop the ICT sector are equally in view as the geographically isolated position of Seychelles makes connectivity a key issue.

As part of the efforts to develop the ICT sector, the government of Seychelles has published a National ICT Policy that seeks to promote the use of ICT in all sectors affecting the economy of the country. Further, as such developments are crucial for the financial sector, during Mobile Money Global 2012, the world’s largest independent mobile money transfer conference and expo, the Central Bank of Seychelles announced its project to launch a total countrywide mobile payment solution in Seychelles. The objective of the conference was to provide a countrywide mobile payment service in Seychelles and to put Seychelles at the forefront of technological advancements globally. The project was ultimately put into place with the assistance of ProgressSoft as the solution provider, partnering with the main stakeholders namely the Central Bank, the Government, all commercial banks and mobile network operators (MNOs) in Seychelles.

Another technological development in the banking sector is the launch of the Seychelles Electronic Funds Transfer (SEFT) system by the Central Bank in collaboration with ProgressSoft, commercial banks and the Seychelles Credit Union (SCU). SEFT is a domestic funds transfer system used to expedite money transfers by the banking institutions safely and efficiently through an online communication channel. The system was recently upgraded to be in line with the Central Bank’s objective to modernise Seychelles’ payment systems and the upgraded version includes additional features such as online access to registered customers to effect payment.

SEYCHELLES

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AT AGLANCE

JERSEY

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GUERNSEY

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ISLE OF MAN

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MAURITIUS

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BERMUDA

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SEYCHELLES

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CAYMAN ISLANDS

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GLANCEAT A

KY The Appleby Technology and Innovation Offshore GuideIOM

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As the pace of technological change accelerates, so too does the legal and regulatory landscape.

Our “At a Glance” matrix provides a snapshot of the current legal and regulatory position in eight of the world’s largest offshore jurisdictions across a number of different technology sectors. The full chapters then expand upon those responses to provide a single, comprehensive resource to help you identify the most suitable offshore jurisdiction for your technology project.

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BRITISH VIRGIN ISLANDS

GLANCEAT A

KY The Appleby Technology and Innovation Offshore GuideSEY

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FINTECH BDA BVI KY GUE IOM JER MAU SEY

Existence of a “sandbox” or other regulatory neutral initiative?

Digital “incubator” or hub?

Examples of FinTech use cases?

Local AML requirements based on those of the FATF?

Electronic signatures valid?

INITIAL COIN OFFERINGS (ICOs) BDA BVI KY GUE IOM JER MAU SEY

ICOs separately regulated?

ICOs subject to the local AML regime?

Can an ICO be conducted without a physical presence in the jurisdiction?

Can a crypto-to-crypto exchange be established?

Can a crypto-to-fiat exchange be established?

Licence or registration required for crypto-to-fiat transfers?

Local banks willing to provide accounts for ICO projects?

Gambling platforms permitted?

DATA PRIVACY BDA BVI KY GUE IOM JER MAU SEY

Separate data protection framework?

INTELLECTUAL PROPERTY BDA BVI KY GUE IOM JER MAU SEY

Is copyright protection available?

Can trade marks be registered?

Are patents registrable?

Are trade secrets protected?

TAX BDA BVI KY GUE IOM JER MAU SEY

Tax exemptions available for corporate entities?

Individual investors exempt from income taxes?

DOING BUSINESS BDA BVI KY GUE IOM JER MAU SEY

Access to local government and regulators?

Ability to establish a local presence and hire staff?

Direct flights to onshore hubs

As the pace of technological change accelerates, so too does the legal and regulatory landscape.

Our “At a Glance” matrix provides a snapshot of the current legal and regulatory position in eight of the world’s largest offshore jurisdictions across a number of different technology sectors. The full chapters then expand upon those responses to provide a single, comprehensive resource to help you identify the most suitable offshore jurisdiction for your technology project.

TOKENISED FUNDS BDA BVI KY GUE IOM JER MAU SEY

Can a tokenised fund be established?

Tokenised funds subject to the local AML regime?

Can service providers outside the jurisdiction be used?

depends on

nature of service

depends on

nature of service

4The Appleby Technology and Innovation Offshore GuideSEY

The Central Bank of Seychelles is responsible for licensing and regulating banking business in the Seychelles and the Department of Information Communications and Technology in the Ministry of National Development (DIC) provides information systems to support decision-making in government and the delivery of government services in terms of efficiency and effectiveness. Although the FinTech market is at an early developing stage with FinTech companies considering whether to become established in Seychelles, it is anticipated that the Central Bank of Seychelles together with the DIC shall be the main regulators for the FinTech sector as it develops in Seychelles. The role of the Central Bank is to advise the Government on banking, monetary and financial matters, including the monetary implications of proposed fiscal and credit policies or operations and to promote a sound financial system in Seychelles.

There are no such zones or initiatives currently established in Seychelles.

1. 2.ARE THERE ANY “SANDBOX” OR OTHER REGULATORY NEUTRAL ZONES?

WHO IS RESPONSIBLE FOR REGULATING FINTECH COMPANIES?

A.FINTECH

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The Appleby Technology and Innovation Offshore Guide A. FinTechSEY

The market is still dominated by traditional banking in Seychelles but there is a lot of interest in the FinTech industry among entrepreneurs. Most of the banks and other financial institutions have been forthcoming in adopting financial technology for providing money transfer and payment services in Seychelles. The Seychelles National Payment System Vision and Strategy 2016-2020 released by the CBS stresses on the need to set up adequate technological and regulatory infrastructure to improve the payment systems structure in Seychelles and provides for the steps that are being taken by the CBS in this direction.

There are no legal barriers to entry in Seychelles for foreign companies. However, a foreign company looking to conduct business in Seychelles would be required to set up a domestic company in Seychelles. It would also be required to obtain the approval from the Seychelles Investment Board (SIB) for licensing purposes. The licence would depend on the business that the foreign company seeks to do in Seychelles. Further, a foreign company shall also require government sanction in order to rent or lease any immovable property in Seychelles for the purpose of conducting business in Seychelles.

The International Trade Zone Act 1995 and the International Trade Zone Regulations 1995 provide for the establishment of international trade zones, which are demarcated by a declaration of the Minister for Finance Trade and Investment and can be for one business entity or a group of entities. The Seychelles International Trade Zones (SITZ) are regulated by the Financial Services Authority (FSA). There are several tax and other benefits provided to businesses in the SITZ. However, in April 2018, an amendment to the International Trade Zone Act 1995 was proposed which seeks to limit the scope of export services that may be provided within the SITZ.

EXAMPLES OF FINTECH USE CASES?ARE THERE ANY BARRIERS TO ENTRY FOR FOREIGN COMPANIES?

IS THERE A DIGITAL “INCUBATOR” OR HUB?

6The Appleby Technology and Innovation Offshore Guide A. FinTechSEY

The Anti Money Laundering Act 2006 (AML Act) and the Anti Money Laundering Regulations would be applicable to FinTech businesses in Seychelles.

7.WHAT AML REQUIREMENTS APPLY TO FINTECH BUSINESSES IN SEYCHELLES?

6.WHAT FORMS OF LEGAL ENTITY ARE AVAILABLE FOR TECHNOLOGY COMPANIES?

The main types of entities existing under the laws of Seychelles are:

— A domestic company, which is incorporated under the Companies Act 1972 (Companies Act) and is required to have a minimum of two shareholders and directors, with 100% foreign ownership allowed. The government sanction shall be applicable where business premises in Seychelles are required by the company. A tax rate of 25% is applicable on the first SCR 1 million of profits and 33% above SCR1 million. Financial institutions are incorporated under the Companies Act and licensed by the Central Bank pursuant to the Financial Institutions Act.

— An international business company, which is incorporated under the IBC Act. A minimum of one shareholder and director is required, while business is conducted outside Seychelles and is tax exempt.

— A special licensed company, which is incorporated under the Companies Act and is governed by the Companies with (Special License) Act (CSL Act). It is tax resident in Seychelles and is taxable at a rate of 1.5% on its worldwide income.

The Electronic Transactions Act, 2001 (ETA) puts electronic signatures on an equal footing with “wet ink” signatures.

8.ARE ELECTRONIC SIGNATURES VALID?

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1.HOW ARE ICOs REGULATED?

The legal regime for regulation of cryptocurrencies is still underdeveloped in Seychelles and ICOs are not specifically regulated. However, although an ICO is not defined as a ‘security business’ as per its definition under the Securities Act, a facts and circumstances analysis of digital assets (such as bitcoin, ethereum, etc), if permitted to be traded online with a Seychelles resident may bring ICOs within the regulatory sphere of the Securities Act.

B.INITIAL COIN OFFERINGS (ICOs)

2.ARE ICOs SUBJECT TO THE LOCAL AML REGIME?

The main principle of the AML regime in Seychelles is that reporting entities should follow and apply the provisions of the law which reflect the Financial Action Task Force’s (FATF) international standards to prevent detect and combat money laundering and terrorist financing. The AML Act defines a “reporting entity” as those persons that carry out certain businesses and activities which can be either financial or non-financial in nature. Reporting entities include banks (including offshore banks), credit unions, bureaux de change (including hotels), insurance companies, money transfer companies, securities companies, trust and company service providers, etc. A company seeking to conduct an ICO in Seychelles shall also fall under the AML regime in Seychelles.

8The Appleby Technology and Innovation Offshore Guide B. Initial Coin Offerings (ICOs)SEY

5.IS A MONEY SERVICES LICENCE REQUIRED FOR CRYPTO-TO-FIAT CONVERSION THROUGH AN OTC DESK?

There are no existing regulations for the for crypto-to-fiat exchanges in Seychelles.

4.CAN A CRYPTO EXCHANGE BE ESTABLISHED?

There are no regulations for crypto-to-crypto exchanges in Seychelles.

While there are no existing regulations for to crypto-to-fiat exchanges in Seychelles, it would be preferable to obtain the opinion of the Central Bank of Seychelles with respect to such an exchange.

3.IS A PHYSICAL PRESENCE REQUIRED IN SEYCHELLES TO CONDUCT A TOKEN SALE?

There are no regulations with respect to conducting token sales in Seychelles.

9The Appleby Technology and Innovation Offshore Guide B. Initial Coin Offerings (ICOs)SEY

8.ARE ANY LEGAL OR REGULATORY CHANGES EXPECTED?

There are no laws or regulations in the pipeline with respect to cryptocurrencies and ICO’s presently.

7.ARE GAMBLING PLATFORMS PERMITTED?

Yes, both physical and online gambling platforms are permitted, and regulated under the Seychelles Gambling Act, 2014.

6.CAN AN ICO PROJECT ESTABLISH A LOCAL BANK ACCOUNT?

There is no specific prohibition under Seychelles law against opening of a local bank account by an ICO Project.

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1.ARE TOKENISED FUNDS REGULATED IN SEYCHELLES?

No, there are no regulations for tokenised funds in Seychelles.

C.TOKENISED FUNDS

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The Data Protection Act in Seychelles is not yet in force. The Computer Misuse Act, 1998 makes it a criminal offence for any person to secure unauthorised access to a computer, program or data held in a company.

The Electronic Transactions Act provides for certain offences namely: tampering with a computer source document; failing to furnish information; acting in breach of confidentiality and privacy; and fraudulently dealing with the digital signature certificate. The provisions of this legislation are also applicable to an offence committed outside Seychelles by any person if the act or conduct constituting the offence involves a computer, computer system or computer network located in Seychelles.

D.PRIVACY AND DATA PROTECTION

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1.COPYRIGHT

The Seychelles Copyright Act, 2014 expressly includes computer programs within the definition of “literary and artistic works” and therefore protects them during the life of the author and for 50 years after his or her death.

The Copyright Act provides for only two instances where reproduction and adaptation of computer programs is permitted: (i) for use of the computer program with a computer for the purpose and extent for which the computer program has been obtained; or (ii) for archival purposes and for replacement of the lawfully owned copy of the computer program in the event that the said copy of the computer program is lost, destroyed or rendered unusable.

Financial technology is potentially copyrightable. As mentioned above, under the new copyright laws in Seychelles, copyright will automatically subsist in works such as computer programs.

Computer source code is protected under the Electronic Transactions Act. It is an offence under this act for anyone to knowingly or intentionally conceal, destroy or alter or intentionally or knowingly cause another to conceal, destroy or alter any computer source code used for a computer, computer program, computer system or computer network, when the computer source code is required to be kept or maintained by law for the time being in force. Computer source code means the listing of programs, computer commands, design and layout and program analysis of computer resource in any form.

Open source code is otherwise not separately regulated in Seychelles.

E.INTELLECTUAL PROPERTY

2.TRADE MARKS

The main IP rights available to protect branding are registered trademarks. FinTech companies will generally own a combination of an established brand or trade name (which can include logos or icons) protected as registered trademarks.

Trade mark rights under the new Industrial Property Act, 2014 (designed to comply with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) compliance for World Trade Organisation Accession) give registered owners the right to prevent others using identical or confusingly similar marks to their registered mark.

13The Appleby Technology and Innovation Offshore Guide E. Intellectual PropertySEY

4.TRADE SECRETS

The Industrial Property Act 2014 prohibits any unfair competition concerning undisclosed information and provides that any act or practice that, in course of industrial or commercial activities, in relation to industrial property rights results in the disclosure, acquisition or use by others of undisclosed information without the consent of the person lawfully in control of that information (rightful holder) and in a manner contrary to honest business practices shall constitute an act of unfair competition.

The disclosure, acquisition or use of confidential information by others without the consent of the rightful holder may, in particular, result from:

— industrial or commercial espionage; — breach of contract; — breach of confidence; — inducement to commit industrial or commercial espionage, by

breach of confidence or contract; or — the acquisition of confidential information by a third party

who knew or was grossly negligent in failing to know that this acquisition entailed one of the foregoing acts.

There are civil as well a criminal remedies provided in case of infringements of rights under the Industrial Property Act 2014.

3.PATENTS

Patents in Seychelles are awarded under the Seychelles Industrial Property Act, 2014. For FinTech companies, software is not, of itself patentable, although processes or methods performed by running this software may potentially be patentable. Such processes or methods would need to be new, involve an inventive step and be industrially applicable to be patentable.

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An IBC incorporated under the International Business Companies Act 2016 is exempt from income tax in Seychelles. A special licensed company, incorporated under the Companies Act and governed under the CSL Act, is liable to business tax at a rate of 1.5% on its worldwide income. Beneficial owners are advised to seek independent tax advice in relation to any tax implications in their jurisdiction. The usual business tax rate for a domestic company is 25% on the first SR1,000,000 of taxable income and 33% on the remainder. There are currently no specific tax conditions or attributes designed for FinTech entities in Seychelles.

F.TAX MATTERS

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The Appleby Technology and Innovation Offshore GuideSEY

2.VISAS AND WORK PERMITS

Seychelles has Visa on Arrival for visitors which is extendable to up to three months. If it is intended that any management staff (including owner/directors) shall be non-Seychellois, as a requirement under the Seychelles Immigration Decree, they must obtain a gainful occupation permit (GOP) in order to work in Seychelles. There are certain guidelines for the recruitment of non-Seychelles workers and a quota for entitlement and procedures to go through for certain sections of the industry issued by the Ministry of Labour and Human Resource Development (MLHR).

TRADE LICENCES

Companies under the FinTech sector may require a licence from the Central Bank of Seychelles in order to operate in Seychelles. Exchanges for cryptocurrencies may be under the purview of the Financial Services Authority and may require a licence under the Securities Act.

G.DOING BUSINESS IN SEYCHELLES

1. 3.TRANSPORTATION LINKS

Seychelles is easily accessible via flights with a number of airlines operating daily flights to and from Seychelles, though direct flights to onshore hubs are limited.

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© Appleby Global Group Services Ltd 2019.Published in the Isle of Man. All Rights Reserved.

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Production credits:Report design by Infinite Global. Photo by JC Gellidon on Unsplash. Icons from Flaticon by Freepik and monkik.

+ 248 4295 289 jally@applebyglobal.com

Counsel | CorporatePartner | Corporate

+230 203 4301 mmoller@applebyglobal.com

Juliette Ally Malcolm Moller

Technological innovation is transforming businesses, markets and our everyday life. Appleby’s multi-disciplinary global technology and innovation group comprises experts from each of our 10 offices to help businesses meet the new challenges and support clients across a broad range of emerging technologies, including:

— Blockchain

— Virtual Currencies, Token Sales and Initial Coin Offerings

— Financial Technologies

— Digital Technology and E-Commerce

— Intellectual Property

— Unmanned Aircraft Systems

— IT and Communications

— Data Protection and Information Management