New Financial Services Legislations amendments – Seychelles
New Financial Services Legislations amendments – Seychelles
The President of the Republic of Seychelles, Mr. Wavel Ramkalawan vetted the new financial services legislation amendments following the approval of the National Assembly. The amendments have been gazetted on the 6th of August 2021.
The proposed amendments pertain to the International Corporate Service Providers (ICSP) Act that governs businesses that are known as Corporate Services Providers (CSP), which have the licenses to provide services to businesses that operate in the offshore sector. Specifically, the new financial services legislations amendments establish the Private Trust Companies that come as a significant amendment to the new Trusts Act and amendments to the International Business Companies Act.
Another amendment grants the Financial Services Authority (FSA) the authority to pro-rate or provide a reduction to the license fee which a CSP pays to obtain its first license. This will ensure that the CSP is not disadvantaged according to the month its application was made. Hence, a CSP that made its application in January will pay the full fee, but if its application was made in July or December, it will only have to pay a pro-rated fee.
The old International Trusts Act of 1994 is replaced by a new Trust Act. The act of 1994 was among one of the first Acts to be enacted together with the International Trade Zone Act 1995 and International Business Companies Act 1994, together, they launched and regulated the offshore sector in Seychelles. No significant amendments have been made to these Acts in 25 years, making them outdated, not providing the required regulations for offshore companies to thrive in Seychelles. There was thus a real necessity for new laws to help Seychelles retain its competitive advantage over other jurisdictions. Other notable amendments include the Trust’s Protectors, Power of a settlors, financial records to be kept in Seychelles, and the preservation of information, amongst others.
Existing Acts subjected to the new financial services legislations amendments
The new financial services legislations amendments to the Companies (Special Licenses) Act (CSL Act) aims to enhance the oversight ability of the FSA towards these companies and also to upgrade the business environment in which these companies operate. Under the old Acts, the FSA did not have the required authority to compel these companies to pay their license fees as no sanctions were applicable. Moreover, certain provisions were not practical for companies operating in the Seychelles offshore sector, like the 3-month period to submit their annual report and financial statements, which was very hard to comply with. Other amendments make provision for the application and validity of a special license as well as to cancel or surrender it, amongst others.
The new Foundations Act provides the regulations for Foundations to be registered with the FSA. In this context, Foundations are comparable with hybrid companies and trusts. A foundation is a distinct legal entity that is established when a ‘founder’ transfers his assets to a foundation for the benefit of his beneficiaries.
These amendments have been drafted following the Report Global Forum (OECD), published in April 202, which changed the status of Seychelles from ‘Largely Compliant’ to ‘Partially Compliant. This report takes into consideration the transparency and exchange of tax related information. The new financial services legislations amendments make it mandatory for Foundations to maintain their accounting records in Seychelles, together with records of their councillors, agents and beneficiaries. If they fail to meet these obligations, Foundations will have to pay a penalty of $10,000 maximum.
Moreover, several other amendments have been made to the Internation Business Companies (ISC Act). One of them lay the foundation to compel service providers to preserve information of all IBCs under their administration for a minimum period of 7 years. Included in the information to be preserved are the registers that the companies are required to keep and their accounting records. This provision also applies to companies that have been dissolved and ‘struck off’. The information preserved will then be transferred to the FSA when the service providers cease to operate.
This provision will make the information requested by foreign authorities easily accessible, in addition, their financial records will also be retained in Seychelles. The new financial services legislations amendments make it compulsory for the Court and the FSA to only restore companies when they are convinced that they are compliant with their obligations related to accounting records, registration of members, registration of directors and registration of beneficial owners. This will make sure that struck-off companies remedy any previous violation of record keeping. Corresponding amendments have been made under the Foundations Act and Limited Partnerships Act.
Finally, several new financial services legislations amendments have also been made to the Limited Partnerships Act of 2003. These amendments make it mandatory for the Registered Office of the Limited Partnerships to be the main address of their agents or CSP in Seychelles. It also makes it a legal obligation for the Limited Partnerships to appoint a licensed CSP as their registered agents in Seychelles. The amendments also make the provision for Seychelles to be compliant with international standards for the exchange of information on tax matters relating to financial products. The amendments are also in line with the good conduct and best international practices which have been adopted by other financial services jurisdictions.
How Valsen Can Help
The experienced staff of Valsen Fiduciaries Group our global network allow us to provide high-quality services in several jurisdictions. We are at your disposal to help you understand the new financial services legislations amendments to the Financial Services Legislations in Seychelles and to help you be compliant with them. Please contact us through email@example.com or +248 2 525 217.