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Redomiciliation of companies
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Redomiciliation (continuation, change of jurisdiction, transfer of a company from one jurisdiction to another) may appear relevant due to number of reasons, e.g.:
- adverse changes have been made to the laws of a country of a company’s incorporation;
- a company intends to choose a more favorable tax regime;
- a company is registered in a jurisdiction which is included into a particular countries or territories blacklists;
- costs for annual maintenance of a company have essentially increased;
- the need to enter new markets or to change the geography of company’s business;
- economic downfall in a country of a company’s incorporation etc.
In each particular case the reason to change a company’s jurisdiction may differ.
The most obvious solution in such case is to dissolve a company in one country and to incorporate a new company in another. However, not everyone is ready to dissolve an existing company and register a new one in other jurisdiction. For example, if a company has gained reputation of a reliable business partner, has formed an extensive customer base and has good market positions, maintenance of business relations with the partners and existing contractors will be very important for it.
In such situation the redomiciliation procedure (i.e. continuation of a company as a legal entity in another jurisdiction) may become a relevant option, as far as the existing company survives proceeds with its bank accounts, assets, business contacts and the known firm name. At the same time, it is important to note that various banks may show different approach regarding continuation of bank accounts in case if a client company changes its jurisdiction. Also, redomiciliation does not automatically entail change of tax residency.
The redomiciliation procedure includes the necessary formalities both in the original and the new jurisdiction. Company’s transfer to a new jurisdiction is possible only in case if redomiciliation is allowed by the laws of both jurisdictions, and their corporate legislation is similar to some extent. Some popular jurisdictions do not allow this – e.g. Hong Kong, Singapore and the United Kingdom do not allow neither registration transfer of foreign companies in the jurisdiction, nor registration transfer of domestic companies out to other countries.
Redomiciliation of a foreign company to Seychelles as an IBC
Seychelles IBC companies are exempt from internal taxation if they do not carry on business activity in the territory of Seychelles and can conduct any lawful business throughout the world.
A foreign company may continue as a company registered in Seychelles provided that it is in good legal standing in its original jurisdiction in accordance with the local legislation.
Redomiciliation procedure may be organized in 3 steps:
Step 1. Checking of company’s name acceptability in Seychelles
Redomiciliation is possible is only in case when foreign company’s name meets the requirements of Seychelles legislation. Otherwise, it is necessary to change company’s name in its original jurisdiction 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 the original jurisdiction of the company:
- 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;
- original jurisdiction in which it was incorporated;
- date of incorporation in the original jurisdiction;
- 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 the original jurisdiction;
- no receiver or administrator has been appointed to the company;
- the company has no outstanding debts;
- the legislation of the original jurisdiction 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. Its assets, rights, duties and liabilities which existed before redomiciliation, remain in full.
Stage 3. Deregistration of company in its original jurisdiction
After the company has been redomiciled to Seychelles, the deregistration procedure must be initiated in the original jurisdiction. Generally, it is provided that the previous registered agent of the company must submit documents that prove the redomiciliation of company to Seychelles. Such documents are to be submitted to the Registrar of Companies of the original jurisdiction so that it can strike the company off the Register.
Volume of documents, terms and other conditions of deregistration in the original jurisdiction of the company may vary in different jurisdictions as they are regulated by the local legislation.