Owen Foley of Misick & Stanbrook in Providenciales looks at the main regulations surrounding corporate and finance work
The Turks and Caicos Islands (TCI) are situated to the south of The Bahamas and approximately 500 miles southeast of Miami Florida. TCI is a British Overseas Territory and free of any corporate taxes and personal income tax. As the world (and TCI's own) economic recovery gathers momentum, TCI is again an attractive zero tax jurisdiction without the media notoriety of some similar jurisdictions. TCI has demonstrated significant corporate and financial law stability over many decades. TCI law is based upon English common law, with a significant number of locally-enacted TCI-specific statutes, including several in the areas of corporate law and financial services. Similarly, the TCI court system is based upon English law and English civil and criminal procedure. The ultimate court of appeal from the TCI Supreme Court is the Privy Council in London.
Companies and similar entities
Company registrations in TCI occur under the provisions of the TCI Companies Ordinance (1981) and this ordinance contains most of the elements seen in similar statutes in the region's financial centres.
The preferred TCI corporate vehicle for conducting international business is the “exempted” company (or IBC) limited by shares. These companies are for doing business mainly outside TCI. There is no requirement for a TCI exempted company to file a current list of its shareholders or directors with the TCI Companies Registry and on incorporation, an exempted company receives an exemption from any future TCI taxes for 20 years.
Companies limited by guarantee, companies limited by guarantee but having a share capital, hybrid companies, limited life companies (LLCs), and unlimited companies are also permissible.
Where a company intends to do business within TCI, the company is registered as an “ordinary” company and there are additional filing requirements.
Incorporation of TCI companies is essentially straightforward and the issued share capital may be from one US dollar upwards.
Partnerships
Partnerships are recognised in TCI and general partnerships have been recognised in TCI since 1799 when the common law of England was applied to and became part of the laws of TCI. Much of the English common law concerning general partnerships has been recently codified by the enactment of the TCI Partnership Ordinance (2011).
Limited Partnerships are also permitted pursuant to the TCI Limited Partnership Ordinance (1992). TCI limited partnerships are similar to many other jurisdictions but retain the TCI no-tax benefits.
Trusts
Trusts are recognised in TCI and the territory's Trusts Ordinance (1990) (based on a Jersey model) is comprehensive. In addition to a codification of various principles of the common law and equity, the ordinance contains specific anti-forced heirship provisions, the effective abolition of the rule against perpetuities and solvency-based creditor protection provisions.
Regulation
In terms of financial services, TCI has an extensive regulatory scheme which governs most aspects of the TCI financial industry including banks, insurance companies, brokers, agents, company administration managers, trust companies, investment dealers, mutual funds administrators and money transmitters.
Since 2007, the TCI Financial Services Commission (FSC) has been independent of the TCI government. The FSC was initially created pursuant to the TCI Financial Services Commission Ordinance (2001) and FSC functions incorporate the supervision and regulation of licensees under the financial services regulatory ordinances and the monitoring of financial services business.
TCI's anti-money laundering regime is to international best practices. Anti-money laundering and anti-terrorist financing is a priority of both the TCI Government and the FSC and all local service providers are obliged to comply with the regulations and are subject to FSC compliance audits.
Consequently, any individual or corporation seeking to register a legal entity or obtain TCI licensing needs to comply with the relevant regulations. The TCI anti-money laundering regulations have continued to receive minor amendment (most recently in 2014), which have added to the confidence of the international community in doing business in and with TCI.
Parts of these regulations are set out in the TCI Proceeds of Crime Ordinance (2007). This Ordinance and the TCI Companies Ordinance (1981) were recently added to respectively by the TCI Non-Profit Organisations Regulations (2013) and the Companies (Amendment) Ordinance (2012 and 2014). These recent pieces of TCI legislation extended the powers of registration of not for profit organisations under the TCI Companies Ordinance and ensured such organisations are correctly regulated in terms of the TCI anti-money laundering legislation.
Luxury tourism
Luxury tourism is a major plank of TCI's economy. In the decade preceding the 2008 financial crash, TCI experienced heavy levels of foreign direct investment, primarily in five-star hotel and condominium resorts. As the hemisphere's economies rebound, TCI is again experiencing strong interest from international resort developers and there are several major new developments in the planning stage, slated to commence construction in the near term. The local market for high-end vacation homes has rebounded and the letting of upscale residential properties to affluent holiday-makers and retirees is a big part of TCI's tourism package.
Partner
Misick & Stanbrook
Turks and Caicos Islands
Owen practices extensively in the areas of corporate and commercial, commercial property development and tourism, and inward investment. He is a regular contributor to international publications on TCI corporate, development and financial law matters. The rebounding market for foreign direct investment in TCI as regional economies recover from the recession has seen Owen advise in the recent past on major new foreign investments in TCI, on agreements between those foreign investors and the TCI Government, and on related financing, joint venture and corporate structuring issues. In the recent past, Owen has acted as lead TCI counsel:
- for a group of European investors in the acquisition out of receivership of the West Caicos hotel and mixed-use development;
- for a Latin American investment group in the acquisition for resort development of two large commercial beachfront tracts on Grace Bay, Providenciales; and
in the negotiation of development agreements and letters-of-intent with the TCI Government for several large-scale resort and mixed-use commercial property developments throughout the Islands.