After the approval of the National Assembly to the amendments proposed to several legislations related to the Financial Services, the President of the Republic, Mr Wavel Ramkalawan assented to these new amendments, and they have been gazetted on the August 6th, 2021.
Several amendments to the International Corporate Service Providers (ICSP) Act, which controls organisations, known as Corporate Service Providers, authorised to offer services to businesses operating in the offshore sector, have been proposed. New amendments, in particular, introduce the Private Trust Companies, which are a result of the new Trusts Act and amendments to the International Business Companies Act.
New Amendments to existing Legislations
Another amendment gives the Financial Services Authority (FSA) the power to prorate or reduce the license fee that a CSP pays to obtain its first license. This is to ensure that the CSP is not at a disadvantage based on the time of year the application is made; for example, the CSP will pay the full fee in January, but will receive a pro-rated fee if they apply in July or December.
The new Trust Act replaces the old International Trusts Act of 1994, which was one of the first laws passed, together with the International Business Companies Act of 1994 and the International Trade Zone Act of 1995, to kick-start the offshore industry in Seychelles.
There had been no significant changes to this statute in the last 25 years, thus, necessitating the introduction of a new Act to modernise the product and maintain Seychelles’ competitive advantage over other countries offering the same service. Other notable new amendments are the Trust Protectors, Power of settlors, financial documents must be held in Seychelles, information preservation, and so on.
New amendments to the Companies (Special Licenses) Act (CSL Act) are being made in an effort to strengthen the FSA’s oversight of these companies as well as the business climate in which they operate. Because there were no sanctions in place previously, the Authority was unable to compel these enterprises to pay their license fees.
Furthermore, the industry believed that many conditions were impractical for them to follow, such as the three-month deadline for submitting their annual report and financial statements. Other new amendments concern the application for a special license, the special license’s validity, and the processes for cancelling or surrendering the special license, among other things.
The Foundations Act allows foundations to register with the Financial Services Authority (FSA). In this context, a foundation is equivalent to a hybrid trust and company. A foundation is a separate legal body that is formed when a “founder” gives his assets to that foundation for the benefit of his beneficiaries. The new amendments follow the publication of the Global Forum (OECD) Report in April 2020, in which Seychelles was downgraded from “Largely Compliant” to “Partially Compliant.”
These guidelines concern the transparency and exchange of tax-related data. The amendments include requiring the Foundations to keep their accounting records, as well as the records of their councillors, agents, and beneficiaries, in Seychelles. Failure to meet the Foundations’ commitments will result in a penalty of up to $10,000.
The International Business Companies Act (IBC Act) has also undergone numerous changes. One of the new amendments is the need that service providers keep records of all IBCs for a minimum of seven years. The information contains the registers and accounting records that companies are expected to retain. The information also includes companies that have been dissolved and “struck off.” When the service providers stop operating, the information will be handed over to the FSA. This will guarantee that information sought by foreign authorities is always available.
Their financial records will also be retained in Seychelles. New amendments require the Court and the FSA to only restore a company if they are satisfied that the company is in compliance with its obligations relating to accounting records, register of members, register of directors, and register of beneficial owners. This ensures that struck-off companies restored by the Court and the FSA correct any previous violations of record-keeping obligations. The Foundations Act and the Limited Partnerships Act have both been amended in the same way.
Finally, the Limited Partnerships Act of 2003 was amended in a few ways. Similar to the IBC Act and Foundations Act, a new requirement has been added for the Limited Partnership’s Registered Office to be the principal address of their agents or CSP in Seychelles. It is now mandatory for the Limited Partnership to choose a licensed CSP as their registered agent in Seychelles.
The new amendments make it possible for Seychelles to comply with international norms for the exchange of information on tax problems involving financial products. Other financial services jurisdictions have adopted good conduct and the best international standards, and these amendments will enable Seychelles to keep up with them.