St. Kitts and Nevis Table of Statutes
This
is a non-exhaustive list of the main St
Kitts and Nevis statutes affecting offshore
and non-resident business. The statutes
are listed in alphabetical order –
click on the statute for a fuller description
of the statute, the legal regime it forms
part of, or in some cases the text of
the law.
Banking
Act 1991
Captive Insurance Companies Act 2006
Citizenship Act 1984
Companies
Act, 1996 (St Kitts and Nevis)
Confidential Relationships Act of St Christopher
& Nevis, 1985
Financial Services
(Regulations) Order, 1997 (St Kitts and
Nevis)
Fiscal Incentives Act 1974
Foundation Act 2003
Hotel Aids Ordinance
Income
Tax Ordinance (St Kitts and Nevis)
Limited Partnerships Act 1996 (St Kitts
and Nevis)
Merchant Shipping Act 2002
Nevis Business Corporation Ordinance,
1984
Nevis Insurance Act 2009
Nevis International Exempt Trust Ordinance,
1994
Nevis International
Insurance Ordinance, 2004
Nevis
International Mutual Funds Ordinance,
2004
Nevis Limited Liability Company Ordinance,
1995
Nevis Multiform
Foundations Ordinance, 2004
Nevis Offshore Banking Ordinance, 1996
Trusts
Act 1996 (St Kitts and Nevis)
Under
the Financial Services Order, 1997, which
imposed a licensing and supervisory regime
for all offshore financial services businesses,
the National Assembly established a Financial
Services Department headed by a Director
General, whose responsibilities include
monitoring the financial sector and examining
the affairs or business of any authorized
person to make sure of compliance with
the law and determining whether the person
being investigated is in a sound financial
position and carrying on business in a
satisfactory manner. In the Department's
hierarchy are: (1) the Office of Superintendents,
with Superintendents for Deposit-Taking
and Investments, Insurance and Assurance,
and Trust and Corporate Business; and
(2) the Office of Registrars, composed
of Registrars for Companies, Limited Partnerships
and Trusts.
The
law also sets minimum financial resources
required by applicants to engage in deposit-taking,
insurance and assurance, trust business,
investment business, corporate, and holding
companies. The minimums do not apply if
a lawyer or accountant applies for permission
to carry on corporate business.
"Finance business" is defined
in the Order as being:
-
deposit-taking business; (e.g. bankers,
financiers, etc.)
-
investment business; (e.g. stockbrokers,
operators of collective investment schemes,
etc.)
-
insurance business; (e.g. insurers)
-
assurance business; (e.g. insurance
agents, insurance brokers, insurance
managers, etc.)
-
trust business; (e.g. professional trustees,
protectors, etc.)
-
corporate business, (e.g. nominee shareholders,
professional directors, etc).
Domestic
businesses are however specifically excluded
from the Order and must be licensed under
the Banking Act or the Insurance Act.
The
Nevis Mutual Funds Ordinance was enacted
on November 16th, 2004.
The
Multiform Ordinance allows among other
features for the transformation of a trust
into a foundation and for consolidation
of entities. Two other pieces of legislation,
namely the Service Provider, Corporate
Management and Trustee (Licensing) Ordinance
and the Nevis Segregated Accounts Companies
Ordinance, are currently being drafted.
Two
bills strengthening the jurisdiction's
offshore legislation were passed into
law by the Nevis Island Assembly at its
meeting on January 26, 2009. These were
the Nevis Limited Liability Company Ordinance
and the Nevis International Insurance
ordinance.
Speaking
after the bills' adoption, Legal Advisor
to the Nevis Island Administration, Patrice
Nisbett told the Department of Information
that the amendments to the International
Insurance Ordinance tightened some issues
in the legislation surrounding reinsurance
companies’ share capital.
“[The
previous legislation] created certain
confusion in the sector. We sought to
deal with that confusion by specifically
amending the section which dealt with
the issue of share capital for re insurance
companies, and lowered the threshold requirement
from USD200,000 to USD75,000," he
said.
It
is intended that the changes will ultimately
make the jurisdiction more competitive.
Speaking
on the amendments made to the Limited
Liability Ordinance 2009, he explained
what parliament sought to address: “We
were putting in place a provision for
a prescribed fee for persons who wish
to search the register of limited liability
companies. Also when foreign companies
or foreign limited liability companies
wish to re-domicile in the jurisdiction
of Nevis, the Nevis Island Administration
after consultation with the service providers
came to a consensus, whereby they had
indicated to us that they would wish that
at least a 60-day period in terms of a
certificate of good standing should be
made available to the Registrar of Companies,”
he said.
It
would be mandatory for that particular
company wishing to domicile in Nevis to
provide the Registrar of Companies with
a certification from the original jurisdiction
stating that the company now wishing to
re-domicile in Nevis no longer existed
in that foreign jurisdiction. The legislation
also requires certain prerequisites or
obligations of the foreign company wishing
to redomicile.
Another
bill proposed but not enacted at the time
was the Nevis Business Corporation Amendment
Ordinance 2009, which introduces a provision
that deals with the protection of minority
shareholders of corporate structures.
Nibett
explained: “The legislation as it
stands now has no protection to deal with
the issue of oppression by the majority
shareholders upon minority shareholders,
so in our jurisdiction we have sought
to put in place a provision to deal with
this eventuality. We have had a number
of instances in our jurisdiction, the
complaint has been made to us and we have
listened, we have now drafted a provision
that we feel is a balanced provision and
its reflective of the situation.”
“We
believe that when this piece of legislation
is eventually passed it will correct the
necessary defect that is existing in this
particular legislation with regards to
the issue of minority holders versus majority
shareholders and the effect that they
may have in terms of winding up and existing
entity."
St. Kitts and Nevis Banking Law
Domestic
banking is regulated by the Banking Act
1991 and non-domestic banking falls under
the Financial Services (Regulations) Order
1997. Nevis has its own Offshore Banking
Ordinance 1996.
Two
types of banking licenses are granted
under the Federation's 1997 Financial
Services (Regulations) Order. 'Unrestricted'
licenses require minimum financial resources
of ECD1,350,000 (USD500,000), while for
'restricted' licenses the level is only
ECD135,000 (USD50,000).
A
licensee must within 3 months of the end
of each of his financial years:
- prepare
annual accounts in accordance with generally
accepted accounting principles, audited
by an independent auditor;
- deliver
to the Director General the annual accounts
together with written confirmation from
an independent auditor that the annual
accounts have been prepared as required
under the preceding paragraph and whether
or not the auditor's certificate for
such accounts is unqualified and if
qualified, the nature of the qualification;
- deliver
to the Director General a certificate
of compliance issued by an independent
auditor that the information set out
in the application for an authorisation,
as modified by any subsequent notification
of change, remains correct and gives
an accurate summary of the business
of the authorised person.
Fees
for banking licences are as follows:
- on
filing of first application (not refundable)
- for all applications, USD1,000;
-
on granting or renewal of authorisation
for an unrestricted business, USD8,000,
and
- for
a restricted business, USD4,000.
The
Confidential Relationship Act, 1985 for
St. Kitts and Nevis offers complete confidentiality
should foreign authorities seek private
banking and financial records. Prison
terms are mandatory for violation of the
statute.
The
Nevis Offshore Banking Ordinance 1996
defines offshore banking as follows:
- Receiving
of foreign funds through the acceptance
of foreign money, deposits payable upon
receipt demand or after a fixed period
or after notice;
- The
sale or placement of foreign bonds certifcates,
notes or other debt obligations or other
securities, or
-
Any other similar activities involving
foreign money or foreign securities,
and
-
Either in whole or in part using foreign
funds so acquired for loans, advances
and investments whether in Nevis or
elsewhere.
Licences under the Banking Ordinance are
issued to eligible companies or qualified
foreign banks. An eligible company must
be a wholly owned subsidiary of a local
bank regulated by the Eastern Caribbean
Central Bank that is licensed under the
Banking Act to do business in Nevis. A
qualified foreign bank is a foreign bank
that is licensed under the Banking Act,
or is foreign bank with minimum capitalization
and assets, as prescribed by the Minister,
that is not licensed under the Banking
Act but is licensed to do domestic banking
in its jurisdiction of incorporation.
An eligible company must be incorporated
under the Companies Act as a company limited
by shares, and must have objects or business
activity restricted to offshore banking
from within Nevis. It must have at least
one director who is a citizen of St. Kitts
and Nevis with a residence in Nevis. The
minimum Authorised Capital must be at
least ECD2 Million, of which not less
than ECD1 Million has been Subscribed
and Paid Up in cash, such cash being deposited
in an account maintained by the Permanent
Secretary at the Eastern Caribbean Central
Bank.
Not
later than four months after the close
of its financial year, a licensee must
forward to the Permanent Secretary copies
of its balance sheet and profit and loss
account and the full and correct names
of the directors of the licensee. The
balance sheet and the profit and loss
account must bear on its face the certificate
of an auditor.
The
Minister may by order exempt a licensee
in respect of its business from all or
so much of any duty payable under the
Customs Act in respect of any goods imported
by the licensee in respect of its business
as the Minister deems expedient, if the
licensee in respect of its business satisfies
the Minister that the goods concerned
are not being made or manufactured in
Nevis, are essential as equipment or fixtures
for doing business from within Nevis and
are not merely goods that will be used
up or expended in the ordinary course
of business.
Where
the Minister is satisfied that a licensee
must use the services of specially qualified
persons in order to do its business effectively
from within Nevis and that (a) it is unable
to acquire those services in Nevis, and
(b) it is unable to retain or hire those
services from outside Nevis without special
tax benefits being made available the
Minister may authorise an offshore benefit
provision for the employment of those
specially qualified persons.
An offshore benefit provision is one whereby
a prescribed percentage of an employee's
or contractor's salary or fees from a
licensee (a) is exempt from any duty or
tax in Nevis; (b) may be paid in a foreign
currency; (c) may be paid in some other
prescribed manner in another currency
or otherwise; notwithstanding the provision
of any other law to the contrary.
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St.
Kitts and Nevis Insurance Law
See Offshore
Business Review – Insurance
for a more general treatment of captive
insurance companies.
Non-domestic
insurance and assurance businesses must
be licensed under the Insurance Act.
The
Federation's 1997 Financial Services
(Regulations) Order set the following
minimum net assets for applicants wishing
to engage in the insurance business:
long-term and general insurance business,
ECD810,000 (USD300,000), reduced to
ECD540,000 (USD20,000) for long-term
but not general insurance, and further
lowered to ECD270,000 (USD100,000) for
general but not long-term insurance.
In
July, 2004, the Nevis Ministry of Finance
and Development in Nevis announced the
passage of the Nevis International Insurance
Ordinance. The Ordinance is divided
into six sections, and provides for
the licensing and regulation of general
insurance, captive insurance and reinsurance
companies. It is compulsory for insurance
companies to have a physical presence
in Nevis, whether via a resident manager
or a fully trained registered agent,
with adequate knowledge and experience
of the insurance industry.
In
2006, lawmakers on Nevis approved an
amendment to the jurisdiction's insurance
law that clarified and tightened up
certain sections of the legislation
to combat fraud. The Nevis International
Insurance (Amendment) Ordinance, 2006
updated the Nevis International Insurance
Act of 2004, and, according to then
Premier Vance Amory, was drafted to
"eliminate loopholes which could
be exploited by persons who do not really
care what they do in international business."
In
June 2006, St Kitts and Nevis passed
a captive insurance law, known as the
Captive Insurance Companies Act 2006.
According to Prime Minister and Minister
of Finance Denzil Douglas, the new captive
insurance vehicle will be "extremely
competitive", with low licence
fees for small captives.
There
is a license fee of ECD8,100 for the
year of registration and a renewal fee
for each year thereafter of ECD8,100.
However,
the licence fee for a 'small captive
insurance company' is ECD2,160 for the
year of registration and ECD2,160 annually
thereafter.
A
'small captive insurance company' means
a captive insurance company with annual
net written premiums, or, if greater,
direct written premiums, not exceeding
ECD4,050,000.
A
small captive insurance company may
apply for a license in a prescribed
simplified form. See
Offshore
Business Sectors for a more detailed
summary of the captive insurance legislation.
Nevis
enacted new insurance legislation in
2009. See Table
of Statutes.
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St.
Kitts and Nevis Trust Law
The
St Kitts and Nevis Trusts Act 1996 was
a replacement for the 1961 Trustee Ordinance
modeled after the 1925 English Trusts
Act, and contains modern asset protection
provisions. Trusts and their beneficiaries
receive the same tax waivers as companies,
with the similar proviso that all transactions
must be confined to non-residents for
the trust to enjoy exempt status. Trusts
may have a protector but, with the exception
of unit, spendthrift and charitable
trusts, the protector needs acceptable
professional qualifications. Both the
settlor and trustees can be beneficiaries
of a trust.
St
Kitts and Nevis trusts are exempt from
income, withholding, capital gains and
stamp taxes as long as all transactions
are confined to non-residents, and subject
to a statutory declaration of exempt
status accompanied by an annual registration
fee of USD200.
Section XV of the Act makes it clear
that beneficiaries do not lose their
exemption if trustees are active in
the Federation owning or leasing property
for an office or residences for beneficiaries,
holding meetings, conducting banking,
signing employment contracts, and arranging
for goods and services.
Every
trust must maintain an office in the
Federation for service of papers. At
least two trustees must be appointed,
unless one trustee is a corporation
or only one trustee was originally appointed
under previous legislation. One trustee
must either be a Federation resident
or carry on business from an office
within the Federation. Trustees' duties
include registering the trust with the
Registrar of Trusts (who may also be
the Registrar of Companies).
Trusts
do not have to be audited, unless trust
terms call for this. The annual statement
filed by trustees need not include any
financial information. Strict confidentiality
rules for trustees prevail. In response
to a written request, trustees may in
a "reasonable time" provide
information about the trust's financial
situation and management to the Eastern
Caribbean Supreme Court, Government
inspectors, and, subject to the terms
of the trust, the settlor, protector,
a beneficiary, and a charitable beneficiary.
Every
non-charitable trust is restricted to
a 100-year life span. No restriction
is imposed on charitable trusts. Trust
terms should specify how long the trust
might accumulate income.
Asset
protection provisions, covered in Part
V of the Act dealing with a settlor's
rights and responsibilities and applicable
to all trust, shield the settlor against
forced heirship, compulsory division
of matrimonial property, and creditors'
suits. A creditor who wants to bring
a court action against trust property
must first purchase a 25,000 East Caribbean
dollars ($9,250) bond from a Federation
financial institution and deposit it
with the Minister of Finance to cover
all costs should the action prove unsuccessful.
The
proper law of the trust is the law of
the jurisdiction expressed by the trust's
terms as the proper law; or, failing
that, implied from the trust's terms;
or failing either, the jurisdiction
with which the trust at the time it
was created had the closest connection.
The
Federation's 1997 Financial Services
(Regulations) Order set the following
fees for applicants wishing to engage
in the trust business:
- on
filing of first application (not refundable)
- for all applications, USD200;
-
on granting or renewal of authorisation
for an unrestricted business, USD2,000;
- and
for a restricted business, USD1,000.
Nevis
offshore trusts are formed under the
Nevis International Exempt Trust Ordinance
of 1994, as amended to September 2000.
The Trust Ordinance includes special
provisions to enhance the use of Nevis
as a preferred jurisdiction for the
establishment of Asset Protection Trusts.
Highlights
of the Trust Ordinance include:
- Exemption
from all forms of Nevis taxation
and exchange controls provided that
transactions take place only with
non-residents;
- The
trustee may be either a trust company
licensed to do business in Nevis
or a company incorporated under
the Corporation Ordinance;
- The
proper law may be the law of Nevis
or the law of another jurisdiction;
- The
rule against perpetuities does not
apply;
- Forced
heirship rules are specifically
excluded;
- Spendthrift
and charitable trusts are permitted;
- There
is a USD25,000 bond requirement
prior to the commencement of an
action or proceeding against trust
property;
- There
is no registration requirement other
than for the Trust's name, name
of Trustee and the registered office
address;
-
Settlor and Beneficiary must be
non-residents and may be the same
person;
- One
trustee must be a Nevis offshore
company or a trust licensed company;
- Protectors
are allowed for and may be the same
person as the Settlor and Beneficiary
of the Trust;
-
An IET is valid and enforceable
notwithstanding that it may be invalid
according to the law of the Settlor's
domicile or residence or place of
current incorporation;
- The
Trust is not considered fraudulent
if settled up to 2 years after the
date of the creditor's cause of
action;
- The
creditor must prove the intent of
the debtor to defraud with "clear
and convincing" evidence;
-
The Statute of Queen Elizabeth is
excluded.
The
Nevis registrar maintains a register of
international trusts and a register of
qualified foreign trusts. Where a trust
provides for the law of Nevis to be the
governing law of all or any aspects of
that trust an application for entry on
the register as an international trust
shall be made to the registrar within
45 days of the date on which the trust
is created, settled or established. Where
a trust provides for the law of a jurisdiction
other than the Island of Nevis to be the
governing law of all aspects of that trust
an application for entry on the register
as a qualified foreign trust shall be
made to the registrar within 45 days of
the date on which the trust is created,
settled or established.
An
application for registration should be
accompanied by notice of the name and
registered office of the trust, a certificate
from a trustee company, a barrister or
solicitor certifying that the trust upon
registration will be an international
trust or a qualified foreign trust, the
date on which the trust was created, settled
or established, and in the case of a qualified
foreign trust, the law under which the
trust was settled. Registration has to
be renewed annually.
The
register is not open for inspection except
that a trustee of a trust may in writing
authorise a person to inspect the entry
of that trust on the register.
A
trust registered under the Nevis Ordinance
is exempt from all income tax, all estate,
inheritance, succession and gift tax payable
with respect to the trust property by
reason of any death, stamp duty with respect
to all instruments relating to the trust
property or to transactions carried out
by the trustee on behalf of the trust,
and all exchange controls.
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St
Kitts and Nevis Investment Fund Legislation
Investment
funds may be formed in Nevis under the
Nevis International Mutual Funds Ordinance
2004. A mutual fund is defined under the
Ordinance as a company incorporated, a
partnership formed, a unit trust organized
or other similar body formed under the
laws of Nevis or any other jurisdiction
which collects and pools investor funds
for the purpose of collective investment.
The
definition includes umbrella funds whose
shares are split into a number of different
classes of funds or sub-funds. It also
includes a fund which has one or more
investors which are mutual funds not registered
or recognized by the Ordinance.
The
Ordinance divides mutual funds into three
classes:
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