The international financial services industry in Nevis began in earnest sixteen years ago when the island first enacted offshore company legislation. Prior to that time, Nevis¡¦ economy was based primarily on sugarcane, which declined as an export crop in the latter part of the 1970s. In recognition of this void, the Nevis Island Government had the foresight to identify the international financial services industry as a sector that is compatible with its tourism industry and one which offered novel opportunities for economic diversification and growth of small island states.
To this end, the Nevis Island Government enacted a series of legislative instruments and expended considerable resources aimed at developing expertise in the international financial services area and enhancing the ability of the service providers on the island to offer effective financial planning structures to the international financial community. Accordingly, astute international investors now have a unique blend of cutting edge legislation and over 55 highly qualified service providers in Nevis with expertise in law, banking, taxation and finance to meet the financial requirements of the astute international investor. Today, Nevis is known in the international arena as a well-established reputable jurisdiction from which to conduct legitimate international financial activity.
Over the years, the international financial services industry has become increasingly important to the economy of the island and the people of Nevis. It has generated foreign exchange earnings, contributed to government revenue and to the overall gross domestic production. It has generated high-end employment and applied high technology which has had spin-off effects to other sectors of the economy. This sector has enhanced the quality of life of all of the citizens of Nevis, either directly or indirectly. This is demonstrated in the form of direct revenue from government registration, renewal and other fees; as well as local spending; rental of office space and accommodation and increased activity in the construction sector.
International Financial Services Legislation
Currently, Nevis has four major pillars of the international financial services industry offering a complete range of products that are employed in international planning. Legislation include: 1) The Nevis Business Corporation Ordinance, 1984; 2) The Nevis International Exempt Trust Ordinance, 1994; 3) The Nevis Limited Liability Company Ordinance, 1995 and 4) The Nevis Offshore Banking Ordinance, 1996.
Nevis Business Corporation Ordinance, 1984
The Nevis Business Corporation Ordinance is modeled in large part on the United States Delaware Corporate statutes combined with English law. A company formed under this Ordinance is the equivalent of what is commonly termed as an International Business Company (IBC) and may be incorporated to conduct any lawful business. The registration process is simple and can be accomplished with ease. Unlike many other jurisdictions, Nevis, although well established does not have a problem with the availability of names. The process of clearing a name with the registry can be accomplished in minutes with the company being registered the same day. Offshore companies registered in Nevis are required to maintain a registered agent at all times in Nevis but need not file annual returns, may keep corporate records anywhere in the world and are not required to hold annual general meetings or meetings of the Board of Directors in Nevis. Furthermore, the Ordinance facilitates the easy transfer of domicile to Nevis of any foreign corporation, and by the same token, offshore companies registered in Nevis are permitted to transfer domicile to another jurisdiction. The procedure to transfer domicile, as with any other procedure under the Ordinance is remarkable for its simplicity. Additionally, the legislation is contemporary and user-friendly and is continuously updated to ensure that it remains progressive and innovative.
Nevis International Exempt Trust Ordinance, 1994
The Nevis International Exempt Trust Ordinance was passed by the Nevis Island Assembly in 1994. The Ordinance governs the establishment and operation of international trusts and is an amalgamation of the more progressive international trust legislation of various jurisdictions combined with innovative provisions to form a totally unique product. When combined with an NBCO, users can create powerful asset protection vehicles. Today, the Nevis International Exempt Trust Ordinance, 1994 is considered by professional advisors to be one of the best in the world.
Under the Nevis International Exempt Trust Ordinance, the Trust can be created with only one trustee and the settlor or trustee of the trust may also be named as a beneficiary. The Ordinance provides for the creation of several types of trusts including Charitable; Spendthrift; and Protective Trusts. The Ordinance also includes special provisions tailored to make Nevis a preferred jurisdiction for the establishment of "Asset Protection Trusts" (APTs). In recent years, there has been an increase in demand for these types of vehicles especially in nations with increased frivolous litigation.
Nevis Limited Liability Company Ordinance, 1995
The Nevis LLC is a business entity that provides an alternative to those who might consider using corporations or partnerships. The owners of the Nevis LLC are referred to as members, who may be thought of in the same way as one thinks of partners in a partnership or shareholders in a corporation. Their precise characterization depends on the nature of the LLCs management. The management may be vested in all of its members as in a general partnership. Alternatively, the company may be run by designated managers, who may, but need not come from the ranks of the members. As such, it might be like a limited partnership or a corporation with general partners or officers and directors, respectively.
A Nevis LLC is formed by filing articles of Organization with the Registrar of Offshore Companies. The company's operation and the rights among the members are defined through an operating agreement. The limited liability company is liable solely for its debts. No member, except those who may have affirmatively guaranteed the LLCs debts has liability for its obligations.
In certain countries, limited liability companies generally may be taxed either as corporations, or as partnerships, with income and losses flowing through to the members without any incidence of tax effects at the entity level. The Nevis LLC Ordinance permits planners to structure their Nevis LLC in any manner that suits their particular needs.
While most U.S. LLC statutes, as does the Nevis LLC Ordinance, protect the company's assets from the creditors of its members through the limitation of creditors to a charging order, the Nevis LLC Ordinance further specifies that this is the exclusive remedy available to the creditor and also gives the company the power to redeem the interest of creditors.
Nevis Offshore Banking Ordinance, 1996
The banking legislation is comprehensive with strong built-in regulatory framework to ensure that a bank licensed under the legislation can be properly monitored to safeguard depositors' funds and ensure that the bank maintains acceptable accounting standards and satisfies capital requirements.
To deter the establishment of brass plate banks and to protect the reputation of the jurisdiction, Section 6 of the Ordinance provides that no license can be issued to an individual. Licenses are only granted to eligible companies of local banks incorporated under the Domestic Banking Act of 1991 or qualified foreign banks. A qualified foreign bank is defined as a bank with adequate capitalization and assets that is licensed to conduct domestic banking in its jurisdiction of incorporation, or a financial institution that is directly or indirectly a wholly owned subsidiary of a foreign bank.
Commitment To Maintenance Of Reputation
The government has laboured to ensure that only the most qualified persons are permitted to offer services to the international investor and recognizes the need to be increasingly vigilant to protect the reputation of its jurisdiction. In reaffirmation of its commitment and maturity as a serious legitimate international financial services centre, the Nevis Island Government recently undertook various initiatives aimed at ensuring the maintenance of the highest degree of standards in the industry. To this end, the Nevis Island Administration has undertaken several initiatives, namely:- „h Established a Joint Task Force with the sister island of St. Kitts and the Eastern Caribbean Central Bank to develop a comprehensive legislative framework to cover financial services in both jurisdictions. Accordingly, legislation was drafted to provide a Financial Services Commission Act and the new Proceeds of Crime Act which includes the Financial Investigations Unit as well as Comprehensive anti-money laundering legislation. Plans are in place to shortly enact this legislation. „h Participated in CARICOM meetings to address Caribbean countries being placed on the negative OECD, FATF and FSF lists and Advisories and considered actions to be taken for removal. „h Participated in the formation of the Caribbean Association of Regulators of International Business Meeting (CARIB). „h Recognizing the maturity of the Nevis Financial Services Sector, the functions of marketing and promotion were separated from regulation and supervision. On 1st October, 2000, Dr. Agatha Jeffers-Gooden who served as Director of the Department for two years, was appointed as Director of the Division of Development & Marketing. She is charged with identifying new markets and products aimed at increasing Nevis¡¦ competitive advantage and market share in the international financial services industry. Also, on 1st October, Mr. Thomas Peacock was officially appointed as Regulator of the Division of Regulation and Supervision. He is a Canadian Lawyer with direct experience in offshore finance, has a background in the securities industry, trust business and corporate and trust liquidation. He is charged with the enforcement of the regulatory framework and ensuring that all service providers on the island adhere to strict professional standards and are subject to a high level of due diligence prior to the issuance and continuance of a license. Accordingly, a Service Providers Licensing Ordinance is being drafted. The separation of duties in the department was undertaken in an attempt to address potential conflicts of the two functions and aimed at protecting the jurisdiction and clients of the industry. This action also meets one of the basic standard requirements of the international community. „h Updated the department¡¦s computer facilities by installing a state of the art dial-up modem computer system that increases the efficiency of the registry and allows registered agents to access the registry to undertake searches and reserve names. „h Enacted an amendment to the International Trust Act to ensure that a trust that is settled in Nevis will not be used to hide the proceeds of criminal proceeds. Also introduced several amendments to its Nevis Business Corporation and Limited Liability Company (LLC) Ordinances to ensure that Nevis remains a jurisdiction from which to conduct legitimate international financial activity. „h Drafted an amendment to place regulation and supervision of offshore banks in the hands of the Eastern Caribbean Central Bank.
Plans For 2001
As we continue our journey into the twenty-first century, the Nevis Island Administration has several core themes aimed at ensuring its continued growth and success in the international financial services sector. One goal is to ensure that the high level of confidence that has been experienced between the Government and the Financial Service Providers on the island will continue to exist. A second goal is to continue the aggressive marketing strategy aimed at developing new markets and new products with the view of remaining attractive in the financial services industry. This will necessitate the Government and the Service Providers to continue to work together to chart the best course forward. A third goal is to conduct a program of training, educational seminars, and mini-conferences with the aim of enhancing training and development within the public and private sectors in the changing face of the international financial services industry in areas such as Anti-Money Laundering Prevention and Detection Procedures and other initiatives. Accordingly, the Nevis Financial Services Department is presently planning to host two conferences in the early part of 2001. The first will be an Anti-Money Laundering Conference in conjunction with the United Nations Drug Control Program (UNDCP), and the second, and the second, a conference on related topics through the Caribbean Anti-Money Laundering Program (CALP). Both conferences will be open to government employees, Registered Agents and other private sector persons.
Taxes And Exemptions
There are no personal income taxes in Nevis. However, local companies are subject to a corporate tax on profits. Offshore companies, limited liability companies and trusts are exempt from income, social security, capital gains, withholding, gift, estate and succession taxes on the island. In addition, under the Fiscal Incentives Act, several enterprises qualify for tax holidays, such as concessions and exemption from import duties on parts, raw materials and production machinery.
The position of Nevis as a premier location for business and recreation has been greatly enhanced by the infrastructural development that is being laid by the Nevis Island Administration. Of great significance is the rehabilitation of the Newcastle Airport that can accommodate larger aircrafts and a soon to be completed passenger terminal. These will accommodate increased cargo and passenger traffic. Furthermore, a deep-water port was recently completed that provides modern berthing facilities to accommodate large ships and freight carriers. In addition, several other projects are currently being undertaken to improve the quality of life on the island.
Nevis has a state of the art telecommunications system. Its modern network permits smooth and prompt telephone, telex, facsimile and internet connections throughout the world. Nevis also enjoys a 42-channel cable television service that provides daily entertainment, sports, news programs from North America and England via satellite.
Activities & Attractions
Nevis has a wide array of activities and historical attractions. It also offers a wide variety of accommodations. It currently boasts of several hotels and guesthouses including the only triple A five-diamond resort in the Caribbean.
As the global community continues its journey into the third millenium, Nevis has reaffirmed its commitment to facilitating legitimate financial activity and maintaining the highest degree of standards in the international financial services industry. The government of Nevis is committed to responding dynamically to the needs of the international financial community and firmly believes that the jurisdiction will continue to grow, while at the same time keeping in mind its watchwords of quality, integrity and confidentiality.
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