Swiss
lawyers introduced St. Vincent and the Grenadines
(SVG) to the international financial services
sector in 1976. Three years later the country
gained independence from Britain and embarked
on the process of nation-building –
setting up the foundations of an independent
nation state. When the country was more
mature it was able to take a second look
at the international finance industry in
1996 and take the policy decision to move
this sector into the forefront of the national
economy. The international finance legislation
was overhauled and a package of financial
laws was introduced. Regulated and licensed
agents and trustees, known in SVG as Registered
Agents, provide international financial
services.
The
Offshore Finance Authority was created by
Parliament to institute a new system to
manage, directly control and supervise the
offshore financial services industry in
the country. Its role was clearly defined
by its governing statute – The Saint
Vincent and the Grenadines Offshore Finance
Authority Act, 1996. The business of The
Authority is under the direction of a five-member
board of directors.
In
November, 2003, the Offshore Finance Authority
was re-named as the International Financial
Services Authority (IFSA).
IFSA
has the following specific responsibilities:
-
To administer and oversee the process
of licensing Registered Agents, Private
Trustees, Financial Fiduciaries, and
Registered Trustees and regulate the
activities of Registered Agents and
their services to ensure compliance;
-
To administer and oversee the licensing,
regulation and supervision of International
Banks;
-
To appoint, and to supervise the activities
of, the Offshore Finance Inspector;
and
-
To oversee the activities of the Registrar
of IBCs and the Registrar of International
Trusts.
In
2011, the IFSA is expected to fall under
the umbrella of the Financial Services Authority,
a single regulatory organisation, in an
effort to enhance and strengthen the regulatory
and supervisory capacity of the jurisdiction.
St. Vincent and the Grenadines now has a
small, carefully vetted and properly regulated
international private banking sector. As
of December 31, 2010, four banks were licensed
to conduct international operations from
St Vincent and the Grenadines. The regulatory
body, the IFSA, has concentrated its efforts
on ensuring that only banks with a real
presence, and sound business operations
and policies, operate in SVG. There are
no shell banks licensed in St. Vincent and
the Grenadines. All banks have been and
will be subject to further on-site examinations
by the authorities every 12-18 months.
In
2008, amendments to The Banking Act repatriated
control over international banks to the
International Financial Services Authority
(IFSA).
St. Vincent and the Grenadines Forms of
Offshore Operation
Offshore
entities may take the following forms (click
on a form for a description of the legal
regime under which it is constituted):
Banks,
insurance companies, mutual funds, trust
management companies and other financial
institutions use an appropriate corporate
form from the above list; in addition
they are subject to registration or licensing
as described in Offshore
Business Sectors.
St.
Vincent and the Grenadines Taxation Of
Offshore Entities
Exempted
companies and exempted limited partnerships
receive a statutory guarantee on formation
against the imposition of any taxes for
a 20-year period.
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St.
Vincent and the Grenadines Regulation Of
Banking
All banks are either granted Class I or
Class II offshore banking licences. A Class
I bank must establish and maintain a capital
fund with fully paid-up capital of not less
than USD1,000,000 or its equivalent in another
currency, and Class I banks are required
to hold a deposit or invest the sum of USD500,000
or its equivalent in another currency, in
such a manner as the Authority may prescribe.
A Class II bank must establish and maintain
a Capital fund with fully paid-up capital
of USD500,000 or its equivalent in another
currency. In addition, Class II banks are
required to hold a deposit or invest the
sum of USD100,000 or its equivalent in another
currency in such a manner as the Authority
may prescribe.
Under
the International Banks Act, 1996 and associated
regulations an international bank must have
a place of business within St. Vincent and
designate a licensed registered agent resident
in the jurisdiction. They must also have
local employees An offshore bank must have
a minimum of two directors who must be natural
persons (rather than a corporate entity)
and at least one must be resident in St.
Vincent. Director appointments are subject
to the approval of IFSA. Only registered
shares may be issued, and these may not
be transferred or disposed of without prior
permission of the regulator.
Annual
audited accounts must be submitted to the
regulator, and the auditors must be engaged
at the time of the application. The annual
accounts must be submitted within three
months of the close of the business year,
unless an extension has been approved. An
application for registration must include
the names of all shareholders, the names
of all bank officers or managers and evidence
must be supplied that the applicant or some
person connected with the bank has banking
experience. The application must include
the name of the applicant’s lawyers
and their written agreement to serve.
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St.
Vincent and the Grenadines Regulation Of
Trusts
Trust
deeds are registered in a confidential government
trust registry. A registered trust under
the International Trust Act, 1996 will not
be rendered unenforceable because it was
invalid under the laws of the settler or
grantor’s domicile or residence. Purpose
trusts, which are created for a specific
purpose but without named beneficiaries,
are allowed. A foreign judgment against
a registered international trust, or its
settlor or beneficiaries, is not enforceable
in Saint Vincent if the judgment was based
on law inconsistent with the act.
Actions
against registered international trusts
must be commenced within two years from
date of creation of the trust. A complaining
creditor may satisfy his claim against the
property of a registered international trust
only if that creditor can show both that
the settler/grantor’s principal interest
in creating the trust was to defraud him,
that the disposition of property to the
trust rendered the settler/grantor insolvent.
Creditors must deposit USD25,000 (at the
time of writing) with the courts of Saint
Vincent prior to commencing an action against
a registered international trust or its
property. If the creditor is unsuccessful
in the claim, the money may be used to pay
the costs and expenses of the trust in defending
the action.
Traditional
fraudulent conveyance laws (Statute of Elizabeth)
are not applicable to registered international
trust. Unauthorised disclosures of trust
information are punishable under criminal
laws. The bankruptcy or insolvency of the
settler/grantor under the laws of his residence
or domicile will not affect a registered
international trust, under the legislation.
An international trust may own one or more
Saint Vincent international business companies.
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St.
Vincent and the Grenadines Regulation Of
Mutual Funds
Mutual
funds are regulated by the Mutual Funds
Act, 1997 as amended by the Mutual Funds
(Amendment) Act 1998, and regulations issued
in 1999. The act provides for the licensing
of both domestic and offshore mutual funds.
Licenses are granted either as a private
and accredited fund or as a public fund.
A public fund can offer any shares it issues
for subscription or purchase to any interested
member of the general public. All public
funds registered must publish a prospectus
and file it with the International Financial
Services Authority. There are no capital
adequacy requirements or minimum subscription
limits placed on public funds. Public funds
must maintain accounting records and financial
statements. Public funds that intend to
do business with residents must also submit
an offering document synopsis to the IFSA.
Private
and accredited funds either must have no
more than fifty investors, or issue shares
on a private basis. An accredited fund issues
shares only to accredited investors, with
an initial investment of not less than USD25,000.
An accredited investor is one who has a
net worth in excess of USD1 million.
Mutual
funds can be formed as an incorporated company,
a partnership or a unit trust. Umbrella
funds, open ended, closed ended and integral
funds are permitted. Administrators and
managers must apply to the regulator for
a license to carry on business as administrators
or managers. A natural person, any mutual
fund, company, trusts or trustee may apply
for a license to carry on business as administrators
or managers. Applicants must show evidence
that they have the expertise and resources
to carry out a mutual fund business.
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