Jackie Hunkins provides an outline of the regulatory and legislative framework within Nevis’s financial sector.
NEVIS OFFERS GREAT opportunities for investors – it has a stable economic and political climate and a strong financial services sector, it has a 98 per cent literacy rate and the workforce is well-educated, diligent and friendly. Nevis also offers business incentives such as tax breaks of up to 15 years. There are no personal income taxes, net worth taxes, gift tax, sales tax, turn-over tax or estate duty tax. Nevis has a pleasant tropical climate, particularly during the cool months from December to March.
The island has a state of the art telecommunications system and a sound infrastructure that allows for the efficient conduct of business. These and other attributes provide a solid foundation for investment and development.
Nevis was one of the first jurisdictions in the Eastern Caribbean to appreciate the benefits of diversifying its economy with the introduction of international financial services. In the 1980s, with the gradual decline of the sugar and agricultural industry, the government of Nevis sought to diversify the economy by introducing international financial services with a focus on asset protection and management. The first product introduced was the international business company (IBC) under the Nevis Business Corporation Ordinance 1984. Ten years later in 1994 the Nevis Island government sought to further develop the industry through the introduction of legislation for limited liability companies (LLC), offshore banking, and international exempt trusts.
Today, Nevis has six major sought after powerful asset protection tools: IBCs, LLCs, international exempt trusts, offshore banking, international insurance, and multiform foundations.
The regulatory environment
Nevis recognises that no international financial services centre can thrive without internationally acceptable levels of regulation. As such, over the past five years the jurisdiction has introduced a progression of legislations and regulations aimed at strengthening its regulatory framework. In 2000, the Federation of St. Kitts and Nevis enacted the Financial Services Commission (FSC) Act, the aim of which was not only to establish a Financial Services Commission, the ultimate regulatory authority for financial services in the Federation of St. Kitts and Nevis, but also to appoint a regulator who has direct responsibilities for the effective regulation, supervision and inspection of all international financial services in Nevis.
The office of the regulator is in the Nevis Financial Services Regulation and Supervision Department and functions under the Ministry of Finance. The main responsibilities of the Department include issuing appropriate guidelines and advisories to regulated businesses; receiving reports which regulated businesses are required to submit; making recommendations to the Commission on matters arising from these reports; taking certain permissible actions that are of an investigative nature in respect of any incidence of noncompliance, misconduct or illegality of regulated persons or businesses; processing and reviewing applications for various international financial services licences prior to submissions for approval; conducting off-site surveillance and onsite examinations of regulated business to ensure that they adhere to statutory and other requirements; and liaising with other regulatory bodies and international agencies in the exercise of its duties.
The Regulation and Supervision Department also works in close collaboration with the Nevis Financial Services Development and Marketing Department, the legal department and the private sector to develop existing and new laws for the industry in accordance with the evolving international standards and requirements. For instance, efforts are being made to amend the Guidance Notes on the prevention of money laundering to bring it in compliance with the 2003 revised 40 Recommendations of the Financial Action Task Force and the Nine Special Recommendations on Combating Terrorist Financing.
Notwithstanding these functions, the regulator is accessible and maintains an ongoing and constructive dialogue with the private sector. The regulator and the Regulation and Supervision Department ensure that corporate service providers in Nevis become more aware of their obligations to their business and the jurisdiction, and ensure that the necessary training facilities are in place for the service providers and the industry.
The first core product – NBCO
In 1984 the Nevis Business Corporation Ordinance was enacted to provide for the incorporation of Nevis IBCs. Today, there are approximately 30,000 IBCs registered on the island.
A Nevis IBC can engage in any lawful business activity and there is no need to note the particular objects for which it is incorporated. It can be used for international finance and investment, real estate holding, estate planning and asset protection. The IBC is not permitted to engage in banking, insurance, mutual fund management, trust, public investment management or any associated activity without proper licensing.
The minimal requirements of Nevis IBCs are listed:
Under the Ordinance all Nevis IBCs are free from taxation. There are no taxes on income, dividend or distribution of a Nevis company which are not earned on the island. Corporation will not be subject to any corporate tax, income tax, withholding tax, stamp tax, asset tax, exchange controls, or other fees or taxes based upon or measured by assets or income originating outside of Nevis.
The Ordinance permits the use of nominee shareholders, officers and directors, who may be of any nationality and who may reside anywhere. A managing director may be appointed to guide the IBC’s activities. The corporate secretary may be a corporation or an individual. Companies may serve as directors and alternate or substitute directors may be appointed. All shareholders and directors may act by unanimous consent, without a meeting and are allowed to issue proxies in writing. When there is a change in shareholders, directors or officers, this change does not have to be reported to the Registrar of Companies in Nevis.
Nevis IBCs may amend their Article of Incorporation, merge or consolidate with foreign corporations or other Nevis corporations, or file Articles of Dissolution.
There is no requirement to file or disclose the annual financial returns of a company. Additionally, the identity of beneficial owners and shareholders are not required to be filed in any public record.
Shares may be registered or in bearer form. Shares with par value may be denominated in any currency. The use of bearer shares has been immobilized. However, where bearer shares are issued, the registered agent shall seek authorisation from the Registrar of Companies to be the custodian of the bearer shares and shall keep and maintain a record of each bearer share certificate issued by the corporation for which it acts as a registered agent.
Any corporation formed in another jurisdiction may easily re-domicile to Nevis. By the same token, a Nevis IBC can transfer domicile to another jurisdiction.
The Ordinance also allows for the emergency transfer of domicile to Nevis in the event of some emergency condition in the existing domicile. The Ordinance provides that the assets of a Nevis LLC are protected from creditor suits, court judgments or government seizures through the limitation of creditors to a charging order. A claimant must put up a US$25,000 bond before he is allowed to file a suit against a Nevis IBC.
The registration process of a Nevis IBC is easy. You must firstly utilise the services of a registered agent/corporate service provider. You would normally submit the name of the desired IBC to the registered agent. The registered agent could instantaneously reserve the name by using the Nevis online registration module or by making a call to the registry. Once the name has been reserved, the IBC can be formed by filing articles of incorporation with the Registrar of Companies. If the incorporation documents comply with the law, a certificate of incorporation will be issued. It takes approximately 24 hours to form a Nevis IBC.
Jackie Hunkins, Director, Development of Marketing Department, Nevis Finance, Nevis