Redomiciliation of companies: international practice
Legislation of many countries allow re-registration to another jurisdiction of legal entity that was originally incorporated in one jurisdiction. Due to substantial changes of requirements to international companies in offshore jurisdictions (British Virgin Islands (BVI), Belize, Cayman Islands, etc.) that was made in 2019 this instrument may be used more frequently than before.
Redomiciliation provides for change of country of company’s registration and its registered office address in this country to another country with simultaneous change of registered office address. It is important that in this case all assets, as well as rights and liabilities of the company that arise from transactions entered into before redomiciliation, remain in full. In some circumstances it is possible that a company proceeds with its original name and existing bank account.
The necessity to redomicile a company may arise from due to one or several reasons:
- adverse changes have been made to the laws of a country of a company’s incorporation;
- a company intends to choose more favorable tax regime;
- a company is registered in a jurisdiction which is included into a particular countries or territories blacklists;
- costs of annual maintenance of a company have essentially increased.
Advantages of redomiciliation
For reasons stated above business may from time to time decide to liquidate a company incorporated in one jurisdiction and incorporate new one in another jurisdiction with consequent transfer of assets, rights, liabilities, etc.
As it was mentioned previously, redomiciliation has some features that turn to advantages while comparing this procedure with liquidation of one company and incorporation of new one, for example:
- Saving of company’s assets and rights without its transfer from liquidated company to newly incorporated company;
- If permitted by bank, it is possible to continue carrying out business activity with use of the existing bank account;
- The reputation formed during company’s activity and its market positions will be affected less than in case of liquidation and formation of a new company.
General information about redomiciliation procedure
The transfer of domicile of company from one jurisdiction to another requires registration acts as in the original jurisdiction, so in the new one. It is important that legislation of both jurisdictions must permit redomiciliation. Such permit must be confirmed on the stage of search of jurisdiction redomiciliation to which is planned.
The majority of offshore jurisdictions (such as BVI, Seychelles, Panama, Belize and others) permit redomiciliation. Generally, redomiciliation procedure includes application to the Registrars of both jurisdictions by submitting documents to them. The list of such documents, requirements to their form and terms of procedure may vary because they are regulated by national legislative or other acts of particular state or territory.
The result of redomiciliation is registration of company in new jurisdiction with new registration number and registered office address, as well as discontinuance of registration in the original jurisdiction and strike the company off the Register.
Redomiciliation procedure: BVI-Seychelles example
As it is known, starting from 1 January 2019 BVI corporate legislation was amended so that the regime of business companies now includes requirements to have a physical office and employees in the territory of BVI, except for companies that apply for their non-resident status. In light of these requirements many businessmen may face the necessity to redomicile their BVI company to another jurisdiction.
Redomiciliation of BVI company to Seychelles may be an appropriate option because current legislation of Seychelles does not establish any taxation of International Business Companies (IBC) profits derived from non-Seychelles sources, there are no substance requirements, and the details of directors and beneficial owners are not publicly available.
Redomiciliation procedure may be organized in 3 steps:
Step 1. Checking of company’s name acceptability in Seychelles
Redomiciliation is possible only in case when BVI company’s name meets the requirements of Seychelles legislation. Otherwise, it is necessary to change the company’s name in BVI or choose another jurisdiction to redomicile to.
Step 2. Application for redomiciliation
In case if company’s name meets the legislative requirements, it will be necessary to submit to the Registrar of Companies in Seychelles the following documents issued in BVI:
- Certificate of Incorporation;
- Current version of Memorandum and Articles of Association (M&AA);
- Articles of Continuation that must include:
- current name of the company and the name with which it will be redomiciled;
- reference that the original jurisdiction in which it was incorporated is BVI;
- date of incorporation in BVI;
- provision stating that company intends to redomicile to Seychelles;
- undertaking of company to approve new M&AA that must comply with International Business Companies Act 2016 (IBC Act);
- Resolution of director or another managing body of company to redomicile it to Seychelles;
- Certificate of Good Standing.
- Document issued by director or another managing body of company that must be submitted to the Registrar of Companies in Seychelles and state that:
- the company is solvent;
- the company is not in the process of winding up, dissolution or strike off in BVI;
- no receiver or administrator has been appointed to the company;
- the company has no outstanding debts;
- the legislation of BVI does not prohibit redomiciliation to Seychelles.
- Registers of Directors and Members.
The application documents for redomiciliation are to be submitted to the Registrar by the company’s new registered agent in Seychelles.
Upon the results of processing of the application the Registrar approves the company’s Articles of Continuation and new M&AA, gives registration number to the company and issues a Certificate of Continuation. This Certificate is a documentary evidence that all the requirements to redomiciliation established by the IBC Act have been complied with.
Starting from this moment the company is deemed to be registered in Seychelles and may exercise all rights and powers according to the Seychelles IBC Act.
Stage 3. Deregistration of company in BVI
The information that company has been redomiciled must be provided to the Registrar of Companies of BVI by previous registered agent of company together with the original of Certificate of Continuation issued in Seychelles. After this the Registrar:
- issues Certificate of Discontinuance;
- strikes the company off the Register as of -the same date;
- publishes information that the company has been struck off in the Gazette.
After all stages of redomiciliation have been completed the company may continue its activity and be subject to legislative regulation in Seychelles where there are no rules of economic substance (physical office and employees in the territory of jurisdiction of company’s registration). Its assets, rights, duties and liabilities which existed before redomiciliation, remain in full.
Tags: offshores, BVI, seychelles, Belize, Cayman Islands