Seychelles Corporate Formation

INTERNATIONAL LAW & CORPORATE SERVICES (PTY) LTD

COMPANY FORMATION & ADMINISTRATION IN SEYCHELLES

INTRODUCTION

The Seychelles has two corporate statutes. The Companies Act (Cap. 40) (the "Companies Act") is, in it's original version, over 25 years old and resembles fairly closely the 1948 English Companies Act. It is used, for the most part, to incorporate companies to do business within the Seychelles.

The International Business Companies Act (Cap100A) (the IBC Act) was passed in 1994 and provides for the incorporation of the International Business Company, an offshore company which is used worldwide, not only for holding companies and investment companies but also to carry on business within other jurisdictions.

This memorandum deals first, and in greater depth, with the International Business Company since it forms by far the greater number of incorporations in the Seychelles.

1. INTERNATIONAL BUSINESS COMPANIES ('IBC's)

A. SIGNIFICANT FEATURES OF IBCs

1. An IBC can be incorporated for any object or purpose not prohibited under the IBC Act or under any other law for the time being in force in Seychelles. This means that an IBC can have one very simple objects clause and does not need to set out pages of objects in its Memorandum.

In addition, IBCs have statutory power to perform all acts and engage in all activities necessary or conducive to the conduct, promotion or attainment of the objects or purposes of the company irrespective of corporate benefit.

2. An IBC is exempt from the provisions of the Seychelles Income Tax Act as are shareholders of an IBC if they are not resident in the Seychelles.

3. An IBC is exempt from Seychelles tax or stamp duty on documents in respect of transactions carried out by it or relating to its shares, debt obligations or other securities.

4. No public record is maintained as to the identity of shareholders or directors but a register of shareholders must be maintained and a copy of it must be kept in the registered office of the IBC in the Seychelles. A member of the IBC may make a request to inspect the register and other corporate documents "in furtherance of a proper purpose " but the IBC will not have to grant the request if it resolves, by resolution of directors, that it is not in the best interests of the company or any other member of the company to do so; the member can then apply to the Seychelles Supreme Court for an order to allow the inspection.

Public records of an IBCs consist only of the Certificate of Incorporation, the Memorandum and Articles of Association (and any amendments), the name and address of the registered agent and the record of payment of the annual fees. An IBC has the option of filing other documents such as its register of shareholders.

5. An IBC may have a single shareholder and it may also have a single director, both of which may be corporate and non-resident. Resolutions of either may be consented to in writing.

6. An IBC may issue bearer shares and nominee shareholders may be used.

7. An IBC may purchase and own its shares.

8. Shares may be issued with or without par value. Fractional shares may be issued.

9. There is no distinction between private and public IBCs and therefore, no additional regulations for a public IBC.

10. Subject to the provisions in the Memorandum and Articles of Association, the members may, by a simple majority, amend the Memorandum and Articles of Association to increase the authorised capital, change the name of the company etc. Power to amend the Memorandum and Articles of Associations may be given to the directors.

11. Reduction in authorised and paid up capital requires the minimum formalities compatible with the protection of creditors and minorities.

12. A foreign company may continue as an IBC without there being necessary any reciprocal arrangement in the jurisdiction of incorporation and notwithstanding any provisions to the contrary in the laws of the jurisdiction in which the foreign company is incorporated.

13. A foreign company may provisionally continue as an IBC conditional upon instructions for continuation being given to the Companies Registrar by a nominated third party. This allows foreign companies, concerned that they may have to relocate quickly, to do so in a very short space of time.

14. An IBC may change its domicile to another jurisdiction.

15. An IBC may merge, consolidate or enter into arrangements with other IBC's, with companies incorporated under the Companies Act and with foreign companies.

16. An IBC may indemnify officers and agents from corporate funds in accordance with the provisions of the IBC Act.

17. The directors may protect the assets of an IBC for the benefit of the company, it's creditors and its members and for any persons having direct or indirect interests in the company, by transferring the assets of the IBC to trustees or to another company or legal entity.

18. Where a foreign government expropriates or imposes confiscatory taxes upon the shares or other interests in an IBC, the IBC or any person holding shares or other interests, may apply to the court in the Seychelles for an order that the IBC disregard the action of the foreign government and continue to treat as members or interest holders those persons whose shares or interests were subject to the action by the foreign government.

19. There are provisions in the IBC Act enabling 90 % of the shareholders of an IBC to force the IBC to redeem the shares of the minority 10% (subject to any provisions to the contrary in the Memorandum and Articles of Association).

20. There are provisions in the IBC Act entitling minority shareholders to be bought out of the company for fair value, in certain circumstances.

21. The procedures for the voluntary winding up of an IBC are very simple and can be commenced either by a resolution of directors or a resolution of members depending on the provisions of the Memorandum and Articles of Association.

22. An IBC may rescind voluntarily winding up proceedings after their commencement.

23. An IBC may apply to a judge in chambers in the Seychelles Supreme court, without the necessity of joining any other party, for a declaration on any question of interpretation of its Memorandum and Articles of Associations or of the IBC Act.

B. FORMATION

An IBC is formed by filing a Memorandum of Association ( "Memorandum") and Articles of Associations ("Articles") with the Registrar of Companies together with the requisite incorporation fee. The Articles, which are similar to by-laws in the United States, must be filed simultaneously with the Memorandum which is similar to a US certificate of incorporation.

1. MEMORANDUM OF ASSOCIATION

The Memorandum must contain the following information:

(1) NAME

The name of an IBC can be in any language which uses the roman alphabet, there is, however, a system in place which allows the English name to be followed by the name in Chinese characters. An IBC's name must include one the following words or phrases or its abbreviation (as shown in brackets):

(a) Limited; (Ltd)

(b) Corporation; (Corp.)

(d) Société Anonyme or Sociedad Anonima (S.A.)

(e) Public Limited Company; (PLC)

(f) Société à Responsabilité Limitée; (S.àr.l)

(g) Berhad; (Bhd)

(h) Proprietary ; (Pty)

(i) Namloze Vennootschap; (N.V)

(j) Besloten Vennootschap; (B.V)

(k) Aktiengesellschaft; (A.G.)

(l) Limited Life Company; (LLC)

(m) Spolecnost s. rvcenin omezenym; (S.R.O.)

(n) Limita; (LTDA.)

(o) Compagnie; (CIE)

(p) Company; (CO.)

(q) Società per Azioni; (S.P.A.)

(r) Societè par action; (S.a.r.l.)

(s) Részvény Társaság; (R.T.)

(t) Osakkeyhtiä; (Oy)

(u) Részvénytársaság; (Rt)

(v) Akciová spole nost or Akciová spolo nos; (a.s.)

(w) Dioni ko društvo; (d.d.)

(x) Delniska druzba; (D.D.)

(y) Aktsionernoye Obschestvo; (A.O.)

(z) Osakeyhtiö; (OY)

(aa) Anstalt; (Est)

(bb)Gesellschaft mit beschränkter Haftung; (GmbH)

(cc) Anpartsselskab; (ApS)

(dd)Aktieselskab; (A/S)

(ee) Società a responsabilità Limitada; (S.r.l.)

(ff) Sociedad Limitada; (S.L.)

(gg) Spóka Akcyjna; (S.A.)

(hh) Spólka z organiczon odpowiezialno co; (Sp.z)

(ii) Private limited company; (o.o.)

(jj) Close Corporation; (CC)

(kk)(Proprietary) Limited; ((Pty) Ltd)

(ll) Eteria periorismenis efthynis; (E.P.E.)

(mm) Societe, a Responosabilité Limitée; (S.A.R.L.)

The following words or phrases, or words conveying similar meaning, are prohibited, unless written permission is granted by the Registrar of Companies,

(a) Assurance; (m) Indemnity

(b) Bank; (n) Guarantee

(d) Chamber of Commerce (p) Foundation

(e) Trust (q) Trust Corporation

(f) Chartered (r) Trustee Company

(g) Cooperative (s) Trustee

(h) Imperial (t) Savings

(i) Insurance (u) Savings and Loan

(j) Reinsurance (v) Underwriting

(k) Surety

(l) Casualty

Any words suggesting the patronage of or any connection with the Seychelles or the Government of Seychelles or with any other country or the Government of that country are also prohibited.

An IBC cannot be incorporated with a name that is identical to the name of a company which is already in existence in the Seychelles. The Registrar may allow an IBC to incorporate with a name which closely resembles the name of another company already in existence if the company in existence gives its consent.

The companies Registry has an on-line system for the purpose of checking the availability of a chosen name and an available name may be reserved for up to 30 days.

(2) REGISTERED AGENT'S NAME AND ADDRESS

Every IBC is required to have a registered agent in Seychelles at all times. A registered agent is frequently set up as a company, it has to be licensed in Seychelles and is regulated in Seychelles. The registered agent generally deals with filing formalities and payment of annual licence fees on behalf of the IBC. The registered agent can subscribe to the Memorandum and Articles to incorporate the IBC. The registered agent is not required to hold shares in the IBC; an IBC can be incorporated and usually is incorporated before any shares are issued or a director appointed.

(3) REGISTERED OFFICE ADDRESS

An IBC has to maintain a registered office in Seychelles and usually it will be maintained by the registered agent and will be the same address as the registered agent's address.

(4) OBJECTS OR PURPOSE

An all purpose clause is permitted, usually in the following terms:"The objects or purpose of the Company is to engage in any act or activity that is not prohibited under any law for the time being in force in the Seychelles."

It is possible to limit the objects by specific provisions in the Memorandum and by statute. An IBC is prohibited from carrying on certain activities which is required to list in its Memorandum as follows :

An IBC may not:

(a) Carry on business with persons resident in Seychelles;

(b) Own an interest in real property situate in Seychelles other than a lease for use as an office;

(d) Carry on business of providing the registered office or the agent for companies incorporated in the Seychelles.

These matters are set out in section 5 (1) of the IBC Act; section 5 (1) must be set out verbatim in the Memorandum.

The IBC Act provides that certain matters do not constitute "carrying on business with persons resident in Seychelles and although these matters are not required to be set out in the Memorandum, generally they are as follows:

An IBC shall not be treated as carrying on business with persons resident in Seychelles by reason only that :

(a) it makes or maintain deposits with a person carrying on banking business in Seychelles,

(b) it makes or maintain professional contact with counsel and attorneys, accountants, bookkeepers, trust companies, investment advisors or similar persons carrying on business within Seychelles.

(d) it holds within Seychelles meetings of its directors or members.

(e) it holds a lease of property for use as an office from which to communicate with members or where books and records are prepared or maintained.

(f) it holds shares, debt obligations or other securities in an IBC incorporated in Seychelles or a company incorporated under the companies Act,

(g) it holds bonds, treasury bills and other securities issued by the Government of Seychelles or the Central Bank of Seychelles.

(h) it owns or manages a vessel registered in the Republic under the Merchant Shipping Act, an aircraft, so registered under the Civil Aviation Act.

(i) Shares , debt obligations or other securities in the IBC are owned by any person resident in Seychelles or a company incorporated under the companies Act.

(5) CURRENCY OF SHARES TO BE ISSUED.

Shares may be issued in one or more foreign currencies.

(6) AUTHORISED CAPITAL

The authorised capital and number of shares into which it is divided and the par value of each share or the number of shares, the company is authorised to issue with no par value. Generally, if an IBC issues shares with no par value, it will have no authorised capital (and this should be stated in the Memorandum ). The capital of the IBC, in this case, will be amount (if any) designated as capital by the directors upon the issue of shares.

(7) CLASSES AND SERIES OF SHARES

The number of classes and series of shares and the number of shares of each such class and series.

(8) DESIGNATION OF POWERS

The powers, preferences, rights, qualifications, limitations or restrictions of each class and series of authorised shares must be set out. Alternatively, an express grant of authority to the directors to fix the same by resolution may be included and the rights and preferences etc., limitations or restrictions will not need to be set out in full.

(9) REGISTERED AND BEARER SHARES

The number of shares to be issued as registered shares and the number of shares to be issued as bearer shares or an express grant of authority to the directors that they are authorised to determine at their discretion whether the shares are to be issued as registered shares or bearer shares.

(10) EXCHANGE OF SHARES

Whether registered shares may be exchanged for bearer shares and vice versa

(11) NOTICE TO HOLDERS OF BEARER SHARES.

If the IBC is authorised to issue bearer shares, the manner in which any notices required to be given to members are to be given to the holders of bearer shares. See further under Section C "Administration" at paragraph 7.

The memorandum will also usually include a clause stating how it can be amended and particulars of all limitations or restrictions on its amendment.

The memorandum must be signed by the registered agent in the presence of a witness who must also sign his or her name as witness.

2. ARTICLES OF ASSOCIATION

The Articles prescribe regulations for the IBC. There are very few requirements as to what must be included in the Articles, these are set out below.

(1) An IBC must state whether or not certificates in respect of its shares will be issued.

(2) The number of directors of the IBC must be fixed by the Articles. This is usually done by stating a minimum and maximum number of directors.

There are however, a number of matters where the provisions of the IBC Act will prevail unless the matter is dealt with in the Memorandum or Articles. The following is a list of the most important matters (which are usually dealt with in the Articles).

(1) Unless the quorum for a meeting of directors is set out in the Memorandum or Articles, it will be one half of the total number of directors present in person or by alternate.

(2) Unless the Memorandum or Articles specify that directors can appoint directors, only members can do so.

(3) Unless the Memorandum and Articles specify that directors can amend the Memorandum and Articles , only members can do so (other than where the IBC Act permits the directors to amend).

(4) Directors have to be given not less than 2 days notice for a meeting of directors although the Memorandum or Articles can specify a longer notice period. All of the directors, or the majority entitled to vote at the meeting can waive notice of the meeting

(5) Unless the Memorandum and Articles provide for a lesser percentage, the directors will have to call a meeting of shareholders on the request of members holding more than 50% of the votes.

(6) Directors have to give not less than 7 days notice of meetings to shareholders although the Memorandum or Articles can fix a longer notice period; they cannot fix a shorter notice period although notice may be waived by 90% of the shareholders or a lesser amount if specified in the Memorandum or Articles.

(7) Unless a quorum for a meeting of shareholders is fixed by the Memorandum or Articles the quorum will be one half of the votes of the shares of each class entitled to vote as a class on a matter to be decided at the meeting.

(8) Unless provided otherwise in the Memorandum or Articles, all shares have one vote.

(9) Unless otherwise specified in the Articles both shareholders and directors can execute resolutions by way of written consent as well as by attending a meeting.

(10 ) Unless resolutions of directors and members are otherwise defined in the Articles they can be passed on the affirmative vote of a simple majority present at the meeting entitled to vote and who do not abstain; written resolutions require an absolute majority.

3. FEES ON INCORPORATION

An IBC has to pay a fee on incorporation as follows :

(1) US$100 - where the authorised capital is US$5,000 or less.

(2) US$300 - where the authorised capital of the IBC does not exceed US$50,000 and all shares have par value.

(3) US$1,000 - where the authorised capital of the IBC exceeds US$50,000

(4) US$350 - - where the authorised capital of the IBC does not exceed US$50,000 and some or all shares have no par value or the IBC has no authorised capital and all shares have no par value.

C. ADMINISTRATION

1. DIRECTORS

The first directors have to be appointed by the registered agent which is the subscriber to the Memorandum and Articles. Frequently, the registered agent will appoint a nominee company as director and pass initial resolutions dealing with the basic formalities such as adoption of the corporate seal and issuing the first shares before appointing new directors and resigning. After the appointment of the first directors by the registered agent, members have the right to elect directors and the Articles may also specify that the directors may elect directors.

The IBC Act provides that the business and affairs of the IBC shall be managed by the board of directors.

2. MEETING OF DIRECTORS

Meetings of directors can be held whenever it is deemed necessary by the directors, there is no requirement that the directors meet once a year, although certain acts can only be done by a resolution of directors, for instance the appointment of agents, the designation of committees of directors and the refusal of a request by a member to inspect the books and records of the company. Directors can appoint alternates to attend meetings and vote in their place. Resolutions can be passed by written consent without the need for a meeting.

3. SHARES

After the IBC has been incorporated the first step is for the directors to issue shares. Shares with a par value cannot be issued for less than par value. Shares have to be fully paid on issue unless issued for a written binding obligation to make payment. Shares issued for a promissory note or other binding obligation to pay cash may be forfeited after the compliance with certain statutory requirements if the obligations to pay is not met.

4. SHARE CERTIFICATE

If the Memorandum and Articles provide that share certificates are to be issued by the IBC such certificates must be signed by two directors or two officers of the IBC or by one director or one officer, alternatively the certificate may be under the common seal of the IBC with or without the signature of any one director or officer.

5. TRANSFER OF SHARES

(1) Registered Shares - A transfer of registered shares is generally made in writing signed by the transferor containing the name and address of the transferee but the directors may accept such evidence as to transfer of shares as they consider appropriate.

(2) Bearer Shares - A bearer share is transferable by delivery of the certificate relating to the share.

6. MEETINGS OF SHAREHOLDERS

Directors can call shareholders meetings as when they deem it necessary and there is no requirement for an annual general meeting. The directors have to convene a meeting on the written request of more than 50% shareholders or such lesser percentage as may be specified in the Memorandum or Articles. There is no distinction between ordinary and special resolutions, anything that is required to be done by resolution of shareholders will only require a simple majority of votes present at a meeting or an absolute majority of votes for a written resolution unless the Articles provide otherwise.

7. SPECIAL PROVISIONS FOR BEARER SHARES

The Memorandum must provide for serving notices on holders of bearer shares. Usually, the holder will be required to provide the company with the name and address of an agent for service of any notice but if this is not given the Memorandum will specify that publication of any notice in a newspaper, in the most appropriate location, will be sufficient notice.

The Articles usually set out the way in which holders of bearer shares can pass resolutions. Usually the Articles provide that for the purposes of attending a shareholders meeting, the production of the share certificate is sufficient evidence of the right to vote as a member. For the purpose of executing a written consent of shareholders , the signature of the bearer shareholder will have to be authenticated by a person in a position of responsibility such as a notary public or a bank manager. For the purposes of receiving dividends, the holder of the bearer share will have been provided with coupons or talons which he can present to the IBC.

8. AMENDMENTS TO THE MEMORANDUM AND ARTICLES

The Memorandum and Articles can be amended by the members or the directors if permitted by the Memorandum and Articles. An extract of the relevant resolution, certified as a true copy by either a solicitor or the registered agent of the IBC must be filed at the Companies Registry in Seychelles and the amendment will only take effect from the time the amendment is registered by the Registrar of Companies.

9. BOOKS AND RECORDS

(1) An IBC must keep a share register in such form as may be approved by the directors. A copy of the share register must be kept at the registered office of the IBC.

(2) An IBC is also required to keep minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members and is required to keep copies of all resolutions consented to by directors, members, committees of directors, committees of officers and committees of members.

(3) An IBC may keep a register of directors and may file it at the Companies Registry. There is , however, no objection to do so.

(4) An IBC has to keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the IBC.

10. REGISTER OF MORTGAGES AND CHARGES

An IBC can enter into a mortgage , charge or other encumbrance over any of its assets wherever these may be situated and such mortgage, charge or other encumbrance can be in accordance with the law of any jurisdiction.

An IBC may create a register of mortgages and charges; the creation of such a register will not affect the validity of any mortgage or charge but will affect the priorities of the mortgage or charge. If an application is made to the Seychelles courts to enforce any mortgage , charge or other encumbrance and the assets of the IBC are subject to two or more mortgages or charges, notwithstanding the provisions of any other law priorities shall be determined in accordance with the date of entry in any register of mortgages and charges created by the IBC . If an IBC has a register of mortgages and charges it has to be held at the registered office of the IBC in Seychelles, the IBC has the option of filing it at the Companies Registry in Seychelles.

11. COMPANY SEAL AND EXECUTION OF DOCUMENTS

An IBC has to have a common seal and an imprint of such seal has to be kept at the registered office of the IBC.

Share certificates may require to be executed under seal. Any deed governed by Seychelles law should be done in the presence of one director or any other person authorised by a resolution of directors.

12. POWER OF ATTORNEY

A power of attorney granted by the company must be in writing but need not be under its seal.

13. FEES

An IBC is required to pay an annual licence fee to the Government to enable it to remain in good standing, the amount of which depends on the amount of authorised capital of the IBC on the licence fee payment date as follows :

(1) US$100 - Where the authorised capital is US$5000 or less.

(2) US$300 - Where the authorised capital of the does not exceed US$50,000 and all shares have par value.

(3) US$1,000 - Where the authorised capital of the IBC exceeds US$50,000.

(4) US$350 - Where the authorised capital of the IBC does not exceed US$50,000 and some or all shares have no par value or the IBC has no authorised capital and all shares have no par value.

Fees are also payable on the filing of documents at the Companies Registry such as amendment to the Memorandum and Articles, the filing of articles of merger, the filing of an article of continuation or arrangement as the case may be.

14. TAXES

An IBC is exempt from all provisions of the Seychelles Income Tax Act. All dividends interests, royalties, compensations and other payments made by an IBC to persons who are not resident in Seychelles are also exempt from the Seychelles Income Tax Act. There is no withholding tax, capital gains tax, capital transfer, estate duty or inheritance tax or corporation tax which is applicable to an IBC in Seychelles.

An IBC is exempted from stamp duty in Seychelles.

The exchange control Act does not apply to an IBC or to any transaction relating to any transaction relating to the securities of or in such company between the holders of such securities.

II. COMPANIES INCORPORATED UNDER THE COMPANIES ACT ("Cap 40 Companies)

A. SIGNIFICANT FEATURES

1. Although Cap 40 Companies are used mainly as vehicles to conduct business in Seychelles (since one of the prohibitions on an IBC is may not carry on business with persons resident in Seychelles) they are also used by persons wishing to carry on business outside Seychelles since these companies can be incorporated with a corporate structure same as an IBC ie where member's liability is limited by shares.

2. An annual meeting of members is required.

3. A proprietary or private company has to have two or more members, it has to restrict the transfer of it's shares, it is prohibited from inviting members of the public to subscribe for its shares and the number of its members is limited to fifty; a public company has to have two or more members but has none of the above restrictions.

4. Subscribers to the Memorandum and Articles of Association have to take shares.

5. Filing requirements are more onerous than for IBCs. There are also different filing requirements depending on whether the company is a public company or a proprietary company.

6. Cap 40 Companies are subjects to Seychelles income tax but dividends are exempt from tax. Non-resident Cap 40 Companies are only subject to income tax on income arising or received in Seychelles.

7. Cap 40 Companies cannot issue bearer shares although public companies with a capital limited by shares may issue warrants to bearer.

B. FORMATION

Like an IBC, the constitutional documents of a Cap 40 Company are its Memorandum of Associations and Articles of Association which (in most cases ) have to be filed simultaneously at the Companies Registry together with the requisite incorporation fee.

1. MEMORANDUM OF ASSOCIATION (" Memorandum")

(1) The following matters must be set out in the Memorandum for all Cap 40 Companies.

(i) Name - There are similar restrictions on the choice of name as for an IBC. The name of Cap 40 Company must end in the word " Limited."

(ii) The address of the registered office in Seychelles.

(iii) Objects or Purposes - Unlike the Memorandum of an IBC, the Memorandum of a Cap 40 Company has to set out in full the objects and purposes for which the company is incorporated.

(2.) The company must, in addition, set out the following matters.

(i) A declaration that the liability of the members is limited.

(ii) The amount of capital with which the company proposes to be registered divided into shares of a certain fixed amount.

(iii) The number of shares to be taken by each subscriber (not less than one) which must be set against each subscriber's name.

The Memorandum has to be signed by each subscriber in the presence of a witness who must also sign the Memorandum. In the case of a company with share capital, the subscriber agrees that it will take the number of shares set out opposite its name.

2. ARTICLES OF ASSOCIATION ("Articles")

The articles prescribe regulations for the company.

A cap 40 Company limited by shares does not have to register Articles of Association with its Memorandum of Association but if it does not do so the regulations applicable to the company will be those contained in Table A of the First Schedule of the Companies Act. If it does register Articles of Association it can either exclude Table A or adopt it in its entirety or in parts but the provisions of Table A will apply where they are not modified or excluded.

The Articles have to be signed by each subscriber in the presence of a witness who must also sign the Articles.

3. FEES ON INCORPORATION

A Cap 40 Company has to pay a fee on incorporation as follows :

(1) For a company with a capital divided into shares :

(a) US$150 - Where its nominal capital does not exceed US$2,000, and

(b) US$200 - plus US$15 for every subsequent increase of US$2,000 or part thereof where its nominal capital exceeds US$2,000.

C. ADMINISTRATION

1. DIRECTORS

There are very few provisions in the Companies Act with regard to directors. All Cap 40 Companies having a share are required to file details of the directors of the company with their annual return or details of those who occupy the position of directors within the company.

The companies Act contains no provisions about directors meetings and resolutions which therefore allows for a certain amount of flexibility as to these provisions in the Articles.

2. SHARES

Shares can be issued without being fully paid; they are deemed to be held subject to payment of the full amount in cash unless payment is to be in a form other than cash. Shares redeemable at the option of either the company or the holder may be issued but a redemption can only take place after the filing of a solvency declaration with the Registrar. Shares can be held by nominees.

3. REGISTER OF MEMBERS

Every company has to keep a register of members at its registered office which has to be open for inspection. In the case of a company with a capital limited by shares, the register of members must include a statement of the shares held by each member.

4. ANNUAL RETURN

A company having a capital divided into shares is required to file an annual return with the Registrar. It must include full details of the share capital, shareholders and directors. In addition, a public company must file an audited balance sheet and provide details of redeemable shares and a proprietary company must file a certificate that it has not breached any of the conditions permitting it to be a proprietary company.

5. REGISTER OF DIRECTORS

Every company is required to keep a register of directors as its registered office and to file a copy of the register and any changes with the Registrar.

6.SHAREHOLDERS MEETINGS

Every Cap 40 Company has to hold a general meeting of members at least once a year.

7.SHAREHOLDERS RESOLUTIONS

The companies Act provides for special resolutions of members which have to be passed by two-thirds of the members of the company entitled to vote. Most matters requiring a resolution of members under the provisions of the Companies Act require a special resolution.

An ordinary resolution is not defined under the companies Act but is passed by a simple majority of those present at the meeting and voting.

8. REGISTER OF MORTGAGES AND CHARGES

Every limited Cap 40 Company has to keep a register of all mortgages and charges affecting property of the company which has to be open to inspection by any creditor or member of the company at all times.

9. TAXES

INCOME TAX

If the company is deemed to be "resident in Seychelles it will pay income tax of 15% on its worldwide income. Whether or not it is resident will depend on the location at which the company is managed and controlled; it is deemed to be resident in Seychelles if more than one half of the members of the board of directors are resident in Seychelles. A company which is deemed "non-resident" is only liable to tax of 15 % on the profits arising or received in Seychelles. If however, the company is resident but is an "offshore trading company" meaning that 90% of its profits arise from business carried on exclusively outside of Seychelles, it is only liable to pay income tax at the rate of 1 % rather than 15%.

Dividends paid to resident of Seychelles Cap 40 Companies are exempt from Seychelles income tax. Dividends paid to non-residents are subject to 15% tax where as interests paid to non-residents are liable to tax of 10%.

STAMP DUTY

A Cap 40 Company is liable to stamp duty in accordance with the provisions of the Stamp Duty Act of Seychelles and will, therefore, have to pay stamp duty on documents relating to transactions undertaken in the Seychelles or transactions involving Seychelles entities or property.

Shareholders will have to pay stamp duty on the transfer of shares effected by an instrument in writing. If the transfer is not by way of sale, the stamp duty is nominal.

This article is intended as a brief guide to the incorporation of companies in Seychelles but is not intended to render legal advice and should not be relied upon. Persons interested in the establishment or administration of companies should seek legal advice in Seychelles based on their specific requirements and circumstances.

For further information please contact:

International Law & Corporate Services (PTY) LTD.

Head Office : 2^nd Floor, Allied Building Annex, Francis Rachel Street

P.O. Box 1137, Victoria, Mahe, Seychelles.

Tel: (248) 323850/321217 Fax : (248) 225432/247913

E-mail: ilcs@seychelles.net