A Review of the Seychelles Companies (Special Licence) Act, 2003 by John Esther
In December 2003, Seychelles enacted the Companies (Special Licence) Act, along with the Corporate Service Providers Act, the Protected Cell Companies Act. The Act provides for a special licence (“CSL”) to be issued to a Seychelles domestic company incorporated under the Companies Act 1972, subject to the provisions of the Companies (Special Licence) Act 2003 (“the CSL Act”). Consequently, the CSL is not in fact a new entity but a domestic company, the requirements of which is modified by provisions of the CSL Act, under which it is issued with its special licence. Under this licence the CSL benefits from a certain measure of shielding from public scrutiny, whilst being fully transparent to the authorities, and benefits from various fiscal concessions. Schedule 1 of the Act provides a list of purposes for which a licence may be issued, although provisions exist for other purposes to be considered. However, the objects of the company have to be specific and limited to the approved purposes. The Act provides for all applications to be submitted to the Authority, currently Seychelles International Business Authority, which processes and retains documents not meant to be in the public domain. Incorporation is actually with the Registrar of Companies, who issues the certificate, whilst SIBA issues the special licence, upon receipt of confirmation of registration. From the applicant’s perspective, the process appears seamless: all correspondence is with the Authority. A CSL must have at least two individuals, who will act as directors, and a resident secretary, who will accept service on behalf of the company. There are no provisions for corporate directors. Meetings by shareholders and directors may be conducted by telephone or any other electronic means, provided that each is able to hear and recognise each other. All resolutions may be consented to in writing, telex, cable or e-mail. Annual returns are required to be submitted to the Authority.
An International Business Company (IBC) incorporated in Seychelles or a company incorporated outside Seychelles may continue as a Special Licensed Company. In order to do so it must submit to the Authority articles of continuation, written either in English or in French, and certified by the Secretary which must contain -
the name of the company and the name under which it is to be continued
the jurisdiction in which it is incorporated
the date on which it was incorporated
the amendments to its memorandum and articles, or their equivalent, that are to be effective upon the registration of the articles of continuation.
Continuation outside Seychelles is also permitted, subject to any limitations in the memorandum and articles of association.
The CSL Act provides for the following fees –
application for incorporation: US$ 200.00
annual license fee: US$ 1000.00
annual return filing fee: US$ 200.00
The CSL is liable to Seychelles corporation tax, levied under the Business Tax Act at the rate of 1.5% on its world-wide income. This treatment is different from the traditional approach of taxing only Seychelles-sourced income. There is no withholding tax on dividends, interest or royalties. A CSL will enjoy this low rate of tax for a period of ten years from the date of incorporation, and thereafter unless a written law in the future provides otherwise. The CSL is resident in Seychelles for tax purposes. This is to be contrasted with the nil tax status of the IBC, which is a non-resident for tax purposes. It is expected that the Commissioner of Taxes will establish criteria that need to be satisfied for the CSL to be issued with a tax residency certificate. These criteria will probably include a requirement to prove that management and control is exercised from within Seychelles, and that the principal bank account through which transactions are routed is maintained in Seychelles. However, it would appear that these would, at the outset not be imposed as conditions precedent to the issue of the certificate, but rather be guidelines as to what is desirable. Unlike the Seychelles IBC, which is prohibited from carrying on business in Seychelles, the CSL may carry on permitted business inside as well as outside Seychelles (and thereby increase the “local benefit” factor – not only licence fee revenue, but in terms of local employment, forex banking, local board and services, etc). It may choose to maintain an office in Seychelles, from which its operations are directed, as a means of satisfying the management and control criterion. If it opts to do so, it will receive duty exemption on the furniture and office equipment that it imports for the office, as well as social security concessions for its employees.