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	Untitled Document International Focus Gibraltar – Online Edition British Virgin Islands Business Companies The repeal of the International Business Companies Act of the British Virgin Islands on 31st December 2006 is drawing close and now is a good time to consider the appropriate action to take for IBC portfolios managed in Gibraltar. The adoption of updated memorandum and articles of association and formal conversion under the BVIBC provisions will ensure continuity and consistency with current BVI legislation. It is also an opportunity for offshore directors of IBC’s to show that they are functioning as a responsible board – vital for securing offshore tax residence. Specific detail of the BVIBC legislation has been the subject of a previous edition of Jordan’s International Focus (copies of which are available upon request) but as the transitional provisions draw to a close and the IBC Act is repealed in its entirety on 31 December 2006, to follow are a number of observations concerning the conversion of IBC’s to BVIBC’s. The process for conversion is straightforward. A resolution of the members or directors is required to convert the company and adopt new memorandum and articles of association (although the memorandum may impose restrictions in this respect and must be checked). A certified extract of the resolution is filed together with the prescribed application form. Filing must be undertaken by the registered agent. If the IBC has provisions within the articles of association to issue bearer shares (often common in older companies) and wishes to remove this provision to avoid the increased license fees, it is necessary to make this particular amendment prior to applying for the conversion, creating a two stage process. For those opting for automatic conversion, an option available pursuant to s248(4)(1) of the BVIBC Act , there are a number of points to note: Registration will be effective from 31 December 2006 The Registrar will not issue a certificate of re-registration unless the company applies and pays the required fee A new number will be allocated to the company The certificate will make reference to the fact that the company was automatically re-registered The memorandum and articles will be deemed to have been amended to the extent required to comply with the BVIBC Act If the company has the ability to issue shares to bearer, the associated increase in license fee is not effective until 1 January 2008 and then at a reduced level of increase of $250.00 The implementation of the BVIBC Act has had no adverse consequences on the BVI financial services centre and BVI companies remain as popular as ever. To date, over 33,000 BVIBC's have been incorporated! The Seychelles The Seychelles is becoming an increasingly popular incorporation centre. Company formation numbers are growing year on year with anticipated numbers for 2006 of over 8,000 – a 100% increase on 2004. A variety of factors can be attributed to this growth. The Seychelles has no relationship with the EU and thus is not subject to EU initiatives (although they have embraced FATF and international standards of due diligence and anti-money laundering provisions). The Seychelles Companies Registry is remarkably efficient, issuing certificates of incorporation within hours of lodgment. The Seychelles have maintained very low annual license fees, and equally low redomiciliation costs which have attracted companies to migrate from other jurisdictions. There are a number of proposed amendments to the Seychelles companies legislation through both the IBC Amendment Bill 2006 and CSL Amendment Bill 2006. Included in the IBC Bill are: Provisions for companies limited by guarantee and hybrid companies (limited by shares and guarantee) Permission to use a country name in the company name Ability to reserve company names beyond the present 30 day limit Resignation facility for registered agents An increase in the post-striking off restoration period from three to ten years Optional registration of mortgages and charges and provision for an optional register of charges The CSL Amendment Bill affects ‘special license’ companies, i.e. those tax resident in the Seychelles and entitled to benefit from the Seychelles growing number of double taxation treaties. The Seychelles has double taxation treaties with the following countries: China Botswana South Africa Mauritius Indonesia Thailand Oman A further 30 treaties are in various stages of progress. Interesting examples include Cyprus and Malaysia that are awaiting ratification. Treaties proposed or under negotiation with EU countries include Belgium, Malta, Portugal and Sweden. The CSL Amendment Bill includes the following features: Reduction of minimum shareholder requirement from two to one Obligation for company secretaries to be fully licensed in the Seychelles Creation of the ability for a CSL to convert to an IBC Extension of the guaranteed concession period from ten to twenty years It is clear that The Seychelles offer a very viable alternative to the BVI (and other territories dependant on an EU member country) for clients to whom EU dependency is a concern. By retaining competitive fee levels and the continuing improvement of legislation, the Seychelles present growth rate seems set to continue. UK Company Law Reforms The Companies Bill presents the first major change in UK company law since 1985. The draft Bill was published in November 2005 and is scheduled to come into force during 2007. The reforms have been driven by the UK Government’s desire to reduce bureaucracy for small companies and also serve to implement a number of EU Directives into UK law. The Government also wish to ensure that the United Kingdom remains a prime location to establish a business and one aspect of this is to offer simple and principally electronic formation and administrative facilities. Some significant proposed statutory changes are set out below: Single person company Presently, two people must be involved in a company and generally this is a director and secretary. The Bill will allow a single person company whereby the director and shareholder may be the same person and the office of company secretary abolished. Directors Sole corporate directors are not permitted - the Bill provides that at least one director must be an individual and over 18 years of age. Corporate directors are permitted if acting alongside an individual director. Directors may file service addresses on the public file without the need to obtain a confidentiality order. The Bill introduces a statutory code of a director’s duties that set out the obligations and responsibilities of directors. This is a controversial provision given that many lawyers argue that common law duties are clearly understood and codification will serve only to create uncertainty. Company Secretary The office of company secretary is abolished for private companies (it remains for public limited companies). However, most of the duties of the company secretary remain and these will be vested in the directors. The requirement to hold annual general meetings is abolished (presently possible through elective resolution) although the company may opt to hold an AGM if they so wish. The annual return remains mandatory as does the retention of company registers. Although the office of company secretary will no longer exist, many companies are likely to retain the role and indeed, depending for example, on the position taken by the banks who frequently require certifications by the secretary, it may actually be preferable to appoint a company secretary. Constitution The Bill indicates a prescribed form memorandum of association with unrestricted objects simply comprising a statement that the subscribers wish to be formed into a company. The articles will become the main constitutional document in a simplified form and replacing Table A. It will be possible to adopt modified forms. Share Capital Authorised share capital is to be abolished. Companies will simply be able to issue additional shares as and when required. The procedures simplify the mechanism for converting share capital from one currency to another. Migration of Registered Office The migration of registered office between European countries is currently the subject of a European consultation. The Bill contains powers for further company law reform to be made through secondary legislation, and the enactment of powers to allow the migration of the registered office between member states has been given as an example of how these powers may be used. For further information on any of the above topics, please contact Evia Soussi in Gibraltar, Tel: +350 75446 or John Swann in the UK, Tel +44 (0) 117 918 1427 Jordans Limited Jordans have traditionally served the local professional community with both Gibraltar and foreign registered companies. Our local Gibraltar office offers a bespoke incorporation package to local practitioners and this typically includes the preparation and filing of full post incorporation documentation to ensure that the company is fully operational upon delivery. Jordans (Caribbean) Limited was established in Tortola, BVI in 1999 and provides full incorporation and management services from the Caribbean. Jordans (Seychelles) Limited was established in Mahé, Seychelles in 2007 and incorporates both Seychelles IBC and CSL companies. Both facilities enable our Gibraltar Office to offer fast and cost effective local services.

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	Click contact name to email Gibraltar Evia Soussi + 350 75446 Jordans (Gibraltar) Limited Suite 3C Eurolife Building 1 Corral Road PO Box 569 Gibraltar Tel : +350 75446 Fax : +350 79902 Registered in Gibraltar no. 16556 Licensed by the financial services commission no. fsc 00170B UK John Swann +44 (0)117 918 1427 Jordans Limited 21 St Thomas Street, Bristol BS1 6JS Tel: 0117 923 0600 Fax: 0117 923 0063 DX 78161 Bristol Email Location Map

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