27 March 2019 legislative bodies of Belize have enacted next amendment to International Business Companies Act 2011 (“IBC Act”) which provides for changes of physical presence requirements.
In December 2018 the definition of a resident company and physical presence requirements have been included in the IBC Act for the first time, as well as the list of relevant activities conducting of which impose the liability to comply with physical presence requirements for international business companies (IBC companies) has been established. IBC companies that did not carry on activities explicitly named in the list of relevant activities of IBC Act were not obliged to comply with physical presence requirements.
Also, the previous version of IBC Act provided for three physical presence requirements, and starting from March 2019 their list has been extended to five positions. Current version of IBC Act includes the following meaning of physical presence requirements:
- the direct or indirect employment of a sufficient and adequate amount of suitably qualified persons to carry out company’s core income generating activities (the domicile of such persons in Belize is not required, as well as the “sufficient amount” of such persons is not described as an exact number);
- expenditures consistent with the size of the business relative relation to the nature and complexities of its relevant activity (such expenditures are not necessarily to be borne in the territory of Belize);
- the control and management activities are conducted from Belize either directly or through a management agency. This means that company must have at least two directors resident in Belize and meetings of board of directors must be arranged in Belize;
- the keeping of records in Belize for its production upon request by an appropriate authority (starting from March 2019);
- the direct or indirect maintenance of premises and facilities in Belize (starting from March 2019).
The second important amendment is that physical presence requirements embrace all IBC companies except pure equity holding companies startingfrom March 2019. As per current version of the IBC Act, pure equity holding companies are deemed to be:
- companies having its function the acquisition and holding of shares or equitable interests in other companies;
- companies holding equity participation and earning only dividends and capital gains;
- companies that do not carry on any other commercial activity.
All IBC companies that are obliged to comply with physical presence requirements are entitled to fulfill such requirement on their own discretion or they can enter into services agreement with management agency in Belize licensed by International Financial Services Commission (IFSC). IFSC is a public authority responsible for monitoring of compliance with physical presence requirements in Belize.
If companies fail to comply with physical presence requirements they may be liable to forced strike off the register of companies. Such liability may be applied by the Registrar of companies of Belize in case of request of IFSC with respect to particular IBC company.
Currently the timeframes for establishing the compliance with physical presence requirements for IBC companies have not been provided by legislation. It is expected that the additional act that will establish such timeframes and regulate other physical presence issues will be passed.