Governed by the Seychelles International Business Companies Act 1994 (“SIBA”), the Seychelles has now become a well-known and respected jurisdiction in the global financial services market. Strategically located in the Indian Ocean between the east coast of Africa and India, the Seychelles has become a popular choice for international business for international trade, commerce and investment activities. Further to this, the Seychelles offshore financial services industry has experienced a significant increase over the past 10 years due to its versatile and competitive legislation.
Further to the above, Seychelles has enjoyed substantial success over the past few years and this is illustrated by the substantial number of registrations of companies that have incurred – 12,408 in 2009 and 84,378 in 2010.*
With recent developments to the Protected Cell Companies Act 2003, and the Limited Partnerships Act, 2003, Seychelles is ensuring on modernising its laws to make itself even more appealing to investors. With a choice of various types of companies/trusts, and with International Business Companies having a 0% tax rate and Special Licence Companies having a business tax rate of 1.5%, and all companies being exempt from exempt from withholding taxes on dividends, interest and royalties, the Seychelles have become one of the most appealing jurisdictions.
Seychelles companies are also flexible concerning the capitalization, shares, shareholders and directors, in particular:
● There are no minimum or maximum capital requirements for a Seychelles company
● Shares can be issued with or without par value
● Directors and shareholders may be natural persons or corporate entities
Further to the above, there are different types of entities that can be established in the Seychelles, including an
International Business Company, Special License Company, Protected Cell Company, Mutual Fund, Limited
Partnership, Mutual Fund, an International Partnership and a Foundation, all of which are described in more detail
International Business Companies (“IBC”)
An IBC is a limited company, exempt from all forms of taxation and have been licensed with the exclusive aim of conducting international business outside of the Seychelles. IBCs are commonly used for:
● Holding Companies
● Asset Protection
● International consultancy companies
● Companies involved in international trade
Contrary to the above, the SIBA specifically prohibits an IBC from conducting business as a bank, insurer, reinsurer,
or trustee (all three types of offshore businesses are regulated by special legislation).
Further, an IBC is prohibited from conducting business with residents of the Seychelles and owning interest in real property in the Seychelles. An IBC can however conduct meetings of shareholders and/or directors in the Seychelles, own shares in other Seychelles Companies, own government or central bank securities, possess vessels which are registered in Seychelles and have its shares held by a resident of the Seychelles. It is imperative to also note that an IBC must have its registered office in the Seychelles and that there is a requirement to have at least one corporate director, of any nationality, and resident of any country.
Special License Companies (CSL)
The Companies (Special Licenses) Act 2003 ensures that this entity is considered a tax resident under Seychelles laws. It has a low tax status, calculated at 1.5%. The attraction for the use of a CSL, in conjunction with Double Tax Treaty agreements that the Seychelles has ensured to complete, provides foreign investors with a method to reduce their tax exposure in their respective country.
The key features of a CSL include:
● Accounts, returns and beneficial ownership information must be filed, but these are not made public ;
● There is a requirement of a minimum of 2 directors. These however need not be residents of the Seychelles; and
● A Seychelles resident secretary is required
Protected Cell Companies (“PCC”)
Protected Cell Companies (PCC) allow companies with specified activities to separate into identifiable cells without having to assume a separate legal entity. Cells within a PCC are protected against liabilities incurred by cells of the same company, and are therefore attractive for activates such as Collective Investments, umbrella funds and captive insurance structures.
Trusts are governed by the International Trust Act, 1994, whereby various types of trusts may be set up, such as charitable, revocable or irrevocable discretionary trusts. Some key features of such trusts include:
● Accumulation of income is permitted;
● The settlor may choose the proper law of the trust;
● The names of the settlors and the beneficiaries are not disclosed, except if the beneficiaries are citizens of
the Seychelles, or in the event that disclosure is ordered by the Court under the Anti-money Laundering Act;
● The trust may own property/assets worldwide, but must not own property/assets in the Seychelles; and
● It may hold shares and maintain bank accounts in Seychelles.
Limited Partnerships are registered under the Limited Partnership Act 2003, and are subject to the Seychelles Commercial Code. The Code provides for a general partner, who must be a Seychelles resident, and one or more limited partners. Limited Partnerships are commonly used for joint ventures.
The Mutual and Hedge Funds Act 2007 provides a new legal framework to the licensing of mutual and hedge funds in the Seychelles. Seychelles law permits for companies, unit trusts and/or partnerships to be licensed as mutual funds. There is the choice of Private Funds (which usually has no more than 50 investors), Public Funds (which are offered to the public for subscription) and Professional Funds (where licences are restricted to professional investors, individuals and whereby there is the requirement to make an investment of not less than US$100,000 or its equivalent).
Governed by the Seychelles’ Foundations Act 2009, a Foundation is established by a charter made in writing and signed by one or more founders. Upon the issuance of a certificate of registration by the SIBA and upon registration, a Foundation is a separate legal entity. A Foundation is exempt from business tax and requires a fee payable to the SIBA upon registration, and annually following its registration.
The incorporation of procedure for a Seychelles entity is a relatively simple procedure. The cost of incorporation of a
company is EUR 2,500 and for a trust/foundation EUR 4,500. The maintenance fees for a company are EUR 1,800 per year and for a trust/foundation EUR 2,000.
Seychelles has maximized its appeal and effectiveness as a favorable jurisdiction by also ensuring the conclusion of
a considerable amount of tax treaties including the following:
● South Africa
Tax Information Exchange Agreements in force:
● The Faroes
From its low tax advantages, to the corporate, trust and foundation structure combined with the modernization of its laws and several tax treaties now in place, Seychelles has inevitably become a favorable choice for investors. The new Laws that have been enacted in order to ensure the appeal to investors wishing to establish funds and Collective Investments has also intensified the Seychelles attractiveness.
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