In the National Assembly- IBC Bill 2021 approved by a vote of 33 in favour |28 July 2021
The National Assembly yesterday spent most of its afternoon seating considering the International Business Companies (Amendment) Bill 2021 which was subsequently approved.
Leader of government business, Hon. Bernard Georges requested leave to suspend order 69.1 to allow for the International Business Companies (Amendment) Bill be debated before the National Assembly earlier than the seven days required following its first reading.
Whilst presenting the bill, Minister for Finance, Economic Planning and Trade Naadir Hassan noted that the bill aims to improve the Financial Service Authority’s (FSA) supervision in regards to the obligations of the international business companies (IBCs) registered in our jurisdiction.
“In turn, this will help Seychelles in regards to access to information and align Seychelles to international standards,” added Minister Hassan.
The majority of these amendments follow a global forum report by the Organisation for Economic Cooperation and Development (OECD) published in 2020. In this report, Seychelles declined in status from largely compliant to partially compliant.
“This report detailed a number of recommendations on how Seychelles can improve its legal framework and implementation of these standards. The grade provided by the OECD is amongst one of the criteria used by the European Union to place countries on its list of non-cooperative countries.”
Any country that receives the grade of partially compliant is automatically added to the EU’s list of non-cooperative countries.
The bill proposed amendments to section two of the IBCs Act to include the definition of private trust companies that will be introduced in the International Corporate Service Provider (Amendment) Bill.
It also proposed amendments to the definition of ordinary company to include companies registered under the Companies (Special Licenses) Act.
Section 25 was also amended to allow companies to make use of Limited Liability Company or Companies (LLCs) as suffixes when registering their company name.
Prior to yesterday’s amendments, the law made provision for companies to only make use of the suffixes Limited (Ltd), Corporation (Co.) and Incorporated (Inc.).
Meanwhile, Section 26 of the IBC Act, which places restrictions on company names, was amended to prevent international companies from having the same name as a local company.
Mr Hassan noted that this particular amendment seeks to avoid confusion in regards to companies with similar names, especially since it has been legal for international companies to conduct business in Seychelles since 2019.
Amendments were further made to sections 55 and 73 of the IBC Act to allow companies to sell their shares at a better rate than the original price.
Section 73 also now makes provisions for a company to repurchase shares that were not paid in full as long as memorandum and articles of the said company allows for such an action. This is also with the condition that the company only pays back the investor the amount they had already paid for the share, rather than the value of the share itself.
Relating to proxies, section 107 has been amended to allow the shareholder or their representative to inspect the shareholders’ registry, and a shareholder or their representative has 90 days to contest in court if a company such an inspection.
The same provision had been made for Section 127 in regards to the inspection of minutes and resolution of members.
The series of amendments continued to make provisions in section 131 to automatically consider anyone managing or supervising the operations of a company as a de facto director in instances where there is no director.
As amended, section 132 is to be separated in two parts ‒ 132 and 132(a) ‒, to provide more clarifications in regards to committees of the board of director and the agency.
In line with international regulations, section 134 has been amended to ensure that an individual cannot become the director of company without written consent.
“It is important to note that this obligation will apply solely to directors that are appointed as from the date this amendment is approved,” added the minister.
Section 150 was amended to specify which information is required to appear in the register of directors, depending on whether the director is an individual or entity.
In regards to appointments of registered agents, amendments to sections 162, 165 and 169 now make provisions for a company to pass an ordinary resolution when the memorandum and articles of a company does not make provisions to appoint or change a registered agent or office.
A new addition to the Act is section 169 (a) to mandate that a company should preserve information relating to their companies at least up to seven years.
This obligation applies to companies that have been dissolved or struck off.
“When a company stops all of its operations, it will have to hand over all of these information to the FSA so as to ensure that information are readily available to authorities outside of Seychelles, especially revenue commissions,” further provided Minister Hassan.
Section 175 has been amended to compel companies to keep hold of their accounting records in Seychelles to minimise risks, facilitate access to these records and facilitate inspections conducted by the FSA.
“This is in line with recommendations made in last year’s global forum report by OECD. It is important to note that this report noted the low level of access to financial information at only 12%,” said Minister Hassan.
The IBC Act had previously permitted companies to keep their accounting records outside of the Seychelles as long as the companies provided the information when requested by the local authorities.
However, past experiences have shown that these financial records were not being provided.
Now, the amended legislation will permit for financial records to be kept as an electronic document in Seychelles, updated at least twice a year but the company will however have to keep the registered agent or office aware of the address where the original records are being kept.
FSA expects to provide guidance on how these financial record obligations are to be implemented.
Section 274 was yesterday amended to reduce the time period for dissolution of companies after they have been struck off from seven years to one year.
This change is to reduce the number of companies that have been struck off the register.
Section 276 was being amended to vest FSA with the power to reinstate certain categories of companies that were dissolved back onto the register.
All companies that have dissolved will be able to place their application for reinstatement to the FSA with the condition that they were not implicated in illegal practices such as fraud.
The series of amendments under this legislation also includes an increase in sanctions to a maximum of US $5,000 for offences under sections 125 and 126 and a maximum of US $10,000 for offences under sections 104 and 106.
The International Business Companies (Amendment) Bill 2021was approved by a vote of 33 in favour, none against and no one abstained.\