This new Act repeals and replaces the IBC Act 1994 and introduces major policy changes in the corporate law regime of the Republic of Seychelles with which all financiers will have to comply. The key reforms include the following.

An extended list of prohibited activities for IBCs

Prohibited activities that an IBC cannot undertake now include:

• carrying out securities business in the Seychelles (although it is to be allowed outside the Seychelles, subject to the IBC being licensed to do such business in the country in which it carries it out);
• carrying out gambling business, including interactive gambling business in the Seychelles (although, once again, it is to be allowed outside the Seychelles, subject to the IBC being licensed to do such business in the country in which it carries it out);
• carrying out business as a mutual fund, unless it is licensed to do so under the Mutual Fund and Hedge Fund Act of Seychelles, or under the laws of a recognised jurisdiction.

IBCs are now allowed to be protected cell companies

This provision aims at building value-added business as PCCs are mostly used for mutual fund structures and are also commonly used for offshore captive insurance business in instances where the insured and the insurer are affiliated parties.

IBCs can no longer lease Seychelles property

Previously, IBCs could lease a property for use as an office from which to communicate with members or where books and records of the company were prepared or maintained. That provision is not consistent with the general principle that IBCs ought not to do business in Seychelles. An IBC is intended for business use outside Seychelles, so it is sufficient for its ‘local presence’ to operate only through its registered office provided by its registered agent.

IBCs cannot hold Seychelles’ government bonds, treasury bills, etc.

.IBCs will no longer be able to hold bonds, treasury bills and other securities issued by the Government of the Seychelles or the Central Bank of the Seychelles.

Clarifications for IBCs owning or managing vessels registered in the Seychelles

An IBC may own or manage a vessel registered in Seychelles and the vessel may visit or be situated in Seychelles waters, provided that the IBC does not carry out any business in Seychelles, including, without limitation, fishing, charter or tourist-related business involving the vessel.

New statutory and filing requirements with regards to annual returns

• An IBC is not required to submit an annual return in the year of its incorporation or continuation, or conversion into an IBC, under the Act.
• IBCs are now only required to file declarations of records that are not required to be kept in the Seychelles (i.e. accounting records, minutes and resolutions) and to include details of the address at which the IBCs accounting records and minutes and resolutions are kept.
• A company that fails to furnish its annual return will be liable to a fixed penalty fee of US$500 and if a company provides false or misleading return, it has commited an offence and is liable on conviction to a fine not exceeding US$5000.

New record keeping obligations with regards to beneficial ownerships

Except for listed IBCs and their subsidiaries, every IBC is required to keep a register of beneficial owners at its registered office address.

New requirements for the register of directors

• The register of directors of the IBC has to be kept only at its registered office address.
• All IBCs are required to file withsend the registrar a copy of its Register of Directors.
• The register of directors will be made publicly available (for current IBCs, the register of directors will be publicly available after two years following the commencement of the Act).

Register of charges and registration of charges with registrar

• Every IBC must keep a register of charges at its registered office address.
• Registration of charges for an IBC is still optional, but it will now allow people to work out the priority that this-or-that secured creditor ought to have over his colleagues.
• Whereas only registered agents of IBCs were allowed to lodge applications for registration of charges at the FSA, now a legal practitioner in the Seychelles, acting on behalf of the chargee, will also be able to lodge an application for the registration of a charge.
• Certain provisions of the Civil Code of Seychelles as it applied to pledges given by IBCs have gone, so that the new provisions of the IBC Act now apply.

A complete ban on bearer shares

Bearer shares are prohibited (as was previously the case in recent amendments made to the IBC Act 1994).

New provisions to discourage the practice of having aged shelf companies

The Act now provides for the appointment of the first director(s) within nine months of the date of incorporation of the IBC.

Disqualifications of directors

A Seychelles court may now make an order, for example, prohibiting a person from being a director, secretary or other officer of any IBC if that director has been involved in fraud, dishonesty, misconduct or other wrongdoing in connection with a company.

Fraudulent or wrongful trading

If any business of an IBC is carried out with intent to defraud creditors (whether of the company or of any other person), or for any fraudulent purpose, every person who is knowingly a party to the carrying out of the business in that manner is guilty of an offence. Provisions will also apply for civil liability in insolvent trading situations.

Memorandum and articles of the IBC

• May contain provisions for the payment of commissions. A company is a separate legal person and who it pays commissions to is a commercial and contractual decision for it.
• An IBC will not be required to state the object of the company in its Memorandum of Association.

In such cases, the IBC’s object is deemed under the Act to include any activity that is not prohibited under any law for the time being in force in Seychelles.

In cases where the objects are specified, the company is limited to carrying on those objects.

Pre-incorporation contracts

The Act removes the current 90-day limit on ratification of pre-incorporation contracts in order to bring the Seychelles’ regime into line with modern corporate law elsewhere.

Transitional provisions

On 26 July 2016, the National Assembly of Seychelles approved the IBC Act 2016. The New Act will come into operation on 1 November 2016. With the repealing and replacing of the old IBC Act, under the New Act, every existing IBC shall be deemed to be automatically re-registered under the New Act, with a 12 months transitional period from the commencement date of the New Act for:

• filing of register of directors with the registrar;
• fulfilment of obligation relating to beneficial owners; and
• compliance with notice of location of minutes and resolutions of members and directors and register of charges.

It shall not be mandatory for an existing IBC to amend its memorandum and articles to comply with the New Act but to the extent that it is inconsistent with the New Act, the provisions of the New Act shall prevail.

* Malcolm Moller can be reached on +230 203 4301 or at mmoller@applebyglobal.com; Juliette Butler can be reached on +248 4295 289 or at jmbutler@applebyglobal.com