ICS Offshore Belize

Welcome Message by Gian C. Gandhi

WELCOME MESSAGE

By

GIAN C. GANDHI, Director General of

the International Financial Services Commission of Belize

Introduction

It is my distinct honour and pleasure to write this introduction to the revised and reconstituted website of Belize Offshore Practitioners Association (BOPA).  Historically, the international financial services industry in Belize owes its very existence to the private sector, where BOPA has played a leading and pro-active role.   Incorporated in 1995 as a statutory body under the Belize Offshore Practitioners Association Act (Chapter 273 of the Laws of Belize), one of BOPA’s functions is to ‘take such steps as may be proper and necessary to ensure the regulation of the industry in Belize and to consider all questions connected with the industry and the members of the Association’.  The international financial services industry in Belize, as it has evolved since its inception, is mostly self-regulated, and the role of the ‘regulator’ is not, and need not be, as pronounced as in the domestic financial services sector.

The Offshore Offensive

While the ground was broken in 1990 with the enactment of the International Business Companies Act, the real offshore ‘explosion’ took place in 1999, when at the instance of BOPA, as many as seven (7) offshore industry measures were added to the statute book, including the establishment of the International Financial Services Commission (IFSC) to promote and regulate the offshore industry.   Further progress has been made since then and Belize now offers a variety of financial services to international investors.  These include the formation and management of international business companies (IBCs); the formation and management of international trusts and the provision of international trustee services; international asset protection and management; protected cell companies; international insurance services; international collective investment services; trading in foreign exchange and other securities; international money lending services; international foundations, international limited liability companies (LLCs), and international banking services.

There are at present 81 licensed registered agents for IBCs; 50 trust agents for international trusts; 22 service providers for insurance services; 7 for international collective investment schemes or mutual funds; 5 for international asset protection and management; 30 for trading in securities; 5 for international money lending services; 9 for brokerage/consultancy/advisory  services for trading in securities;  2 for international safe custody services;  3 for trading in foreign exchange; 2 for money transmission services; 2 for money brokering; 1 for money exchange; and 2 service providers for payment processing services.

The list of licensed service providers continues to grow even though there are strict requirements for obtaining a licence.

To assist international investors, a list of licensed service providers is posted at the IFSC website www.ifsc.gov.bz which is regularly updated.

IBC Registry

Belize’s IBC is still the flagship of Belize.  Since its inception in 1990, Belize has registered 121,180 IBCs.  Belize’s IBC legislation is viewed internationally as one of the most modern and user-friendly. It is particularly designed with the offshore investor in mind. A Belizean IBC is an ideal corporate vehicle for international financial transactions and allows the investor to engage in a wide variety of activities ranging from asset protection to operating bank accounts, brokerage accounts, ship ownership, commission arrangements and various other commercial transactions.

An important feature of a Belizean IBC is its cost-effectiveness in comparison with similar types of companies in other jurisdictions.  Individuals who choose to diversify their assets for protection can establish themselves in a secure, reputable jurisdiction by means of a Belizean IBC at an affordable price.

Belize’s IBC law creates a ‘firewall’ between onshore and offshore business.  Belizean residents cannot form IBCs, nor can an IBC hold shares or debt obligations in a local company.   This dichotomy has proved instrumental in preventing a misuse of the IBC legislation.

International Trusts Registry

Belize is one of the few jurisdictions that provides for mandatory registration of international trusts.  The International Trusts Registry of Belize, which opened its doors for business in 2007, has proved to be extremely popular among investors for asset protection purposes.  As many as 1,702 international trusts have so far been registered.

The Trusts (Amendment) Act 2007 defines an international trust (also called offshore trust or exempt trust) as a trust where:

  • The settlor is not resident in Belize;
  • None of the beneficiaries is resident in Belize;
  • The trust property does not include any land situated in Belize;
  • The law of Belize is selected as the governing law of the trust;
  • In case of a purpose trust, the purpose or object of the trust is to be pursued or performed outside of Belize.

The key features of this law are:

  • An international trust may be created only by an instrument in writing, not by an oral declaration or by conduct.
  • An international trust must be registered with the International Trusts Registry.
  • An international trust shall at all times have a trust agent resident in Belize.
  • Certain basic information about the trust (e.g., name of the trust, date of settlement of the trust, name of the trustee, name of the trust agent) shall be kept at the Registry, while more detailed information, including the names of the beneficiaries and details of trust property, shall be kept by the trust agent.
  • The Register of International Trusts shall not be open for public inspection.
  • An international trust that is duly registered shall be exempt from Belize taxes and duties.

On the whole, the Act strikes a balance between transparency and the need for confidentiality.

An international trust can be registered with a one-time registration fee of US$100.00.   There is no requirement for annual renewal.

Protected Cell Companies (PCCs) Registry

The PCC Registry was established in 2008 under the Protected Cell Companies Act and the Protected Cell Companies (Registration) Regulations.

In Belize, PCCs can be formed only for international insurance business or for mutual funds.

The main steps for the registration of a PCC are the following:-

  • A PCC can only be formed with the consent of the Minister responsible for international financial services.
  • An application to the Registrar for the incorporation of a PCC should be accompanied by the Minister’s Consent, and copies of the Memorandum and Articles of Association.
  • There should be a five-year business plan.
  • There should be details of the cell accounts to be administered (if known).
  • There should be a statement that the company will not issue any bearer shares.
  • The prescribed fees should be paid.
  • The fee for Minister’s Consent is US$200.
  • The fee for incorporation of a PCC or for conversion of an existing company into a PCC is US$500 if the share capital does not exceed US$50,000 and US$750 if the share capital exceeds US$50,000.
  • Fees for other services range from US$50 to US$350.

International Foundations Registry

Belize’s International Foundations Registry, which was established in November 2010, has made steady progress.  As many as 90 foundations have so far been registered, while more are in the pipeline.  This number is expected to grow in the coming years as the advantages of a foundation over a common law trust become better known to the investment community.

The International Foundations Act of Belize, enacted in 2010, combines the best of both worlds by replicating in a common law jurisdiction the essential characteristics of a civil law foundation, while avoiding unnecessary complications.

The salient features of this new law are:

  • An ‘international foundation’ is defined as a foundation where (a) the founder or any person who has contributed assets to the foundation otherwise than for full consideration is not resident in Belize, (b) none of the beneficiaries of the foundation is resident in Belize; and (c) the foundation endowment does not include any land situated in Belize or the shares of any company beneficially owning any land situated in Belize other than property for use as an office for the administration of the foundation.
  • Unlike a common law trust, which is merely a relationship between the trustees and the beneficiaries, a foundation is a legal entity in its own right and may hold property and do all other acts in that name.
  • It makes provisions to facilitate efficient registration, renewal, striking off, restoration, dissolution, continuance and discontinuance of foundations.
  • Every foundation shall at all times have a registered agent resident in Belize.
  • Registration does not require the foundation charter to be registered, only particulars thereof to be provided.
  • Provisions exist for exchange control and tax exemptions for international foundations which are duly registered under the Act.
  • There are special provisions for purposes of civil asset protection, e.g., the non-recognition of foreign judgments and anti-alienation of the foundation endowment, as well as reduction of the limitation period for actions against foundations.
  • Provision is made for the mobility of foundations both into and out of Belize.
  • Provisions exist for substantial security of costs in respect of claims brought against international foundations to avoid frivolous litigation.
  • Specific provisions are included for disclosure of information relating to a foundation in pursuance of mutual legal assistance treaties, Tax Information Exchange Agreements or for the investigation and prosecution of money laundering and terrorism-related offences.
  • To safeguard the confidentiality of foundations, provision is made for judicial proceedings relating to a foundation to be held in camera unless otherwise ordered by the Supreme Court.

The fees for the registration of international foundations are highly competitive and are as follows:

  • US$200 for certificate of establishment of foundation
  • US$100 for amendment or change in particulars
  • US$200 for annual renewal fee
  • US$50 for change of Registered Agent
  • US$50 for certificate of continuance
  • US$350 for certificate of discontinuance
  • US$25 for certificate of good standing
  • US$150 for certificate of dissolution
  • US$500 for restoration to Register (after striking off)

International Limited Liability Companies (LLC) Registry

This is the newest product added by Belize to its IFS industry infrastructure.

The LLC Registry was set up in April 2012 under the International Limited Liability Companies Act, 2011 and the International Limited Liability Companies (Registration) Regulations 2012.

A Limited Liability Company or an LLC is a hybrid between two familiar business structures, namely, a corporation and a partnership.

The Act is designed to give statutory certainty to some of the key issues of concern to US attorneys using domestic LLCs.

It provides a broad foundation to structure an LLC according to its own rules, rather than being dictated by statute. The operating agreement may contain any provision for the conduct of business that is not contrary to law and relates to the business of the company and the conduct of its affairs.

An LLC shall be a legal entity with separate rights and liabilities distinct from its members and managers. No manager, officer, member or employee of an LLC shall be liable for the debts, obligations or liabilities of the LLC unless he has assumed such liability by written contract.

Like most LLC jurisdictions, a creditor of a member is permitted to apply for a charging order against a member’s interest. To the extent so charged, the judgment creditor shall only have the rights of an assignee of the member’s interest and shall have no right to partake in the management of the company. The Act further provides that the charging order remedy shall be the sole and exclusive remedy available to a judgment creditor or other creditor of a member.

Only the judgments delivered by a court in Belize shall be enforceable against an LLC or any manager or member thereof. This would, of course, include judgments rendered in appellate courts not located in Belize but which relate to actions commenced in a court in Belize, e.g., Caribbean Court of Justice (CCJ).

An assignee of a member’s interest shall in no event have any right to interfere or enquire into the management or administration of the company, or to become a substituted member except as may otherwise be provided in the operating agreement. An assignee shall only have the right to receive distributions attributable to a member’s interest in the LLC.

LLCs from other jurisdictions may transfer their domicile to Belize and Belize LLCs may move to another jurisdiction.

The LLCs are exempted from taxes, duties and exchange control in Belize except that an instrument relating to a transfer of property situate in Belize, including any shares in a local company, shall not be exempt from stamp duty.

Provision is made for the usual confidentiality requirements. All proceedings, other than criminal proceedings, relating to LLCs shall be held in camera and information may be divulged only in limited circumstances. There are penalties for unauthorised disclosure.

Every LLC shall at all times have a registered agent resident in Belize. Any person licensed by the IFSC to provide company formation and management services would be eligible to act as a registered agent for LLCs.

There is no requirement for an LLC to prepare annual accounts or to appoint an auditor. However, a simple annual return would be required to be lodged with the Registrar setting out the name of the LLC, the address of the registered agent and certain others ancillary matters.

The fee for the registration of a Belize LLC is US$150.00 with an annual renewal fee of the same amount.

International Banking

International banking licences are issued by the Central Bank of Belize under the International Banking Act.  There are two categories of offshore banking licences ─ the unrestricted ‘A’ Class and the restricted ‘B’ Class licence.  The holder of a ‘B’ Class licence maintains lesser capital and is restricted to conducting certain limited business activities only.

In processing an application for a banking licence, the Central Bank of Belize scrutinises, among other pertinent issues, the financial status of shareholders, the character and experience of directors and managers, and the earning prospects and viability of the proposed bank.

The licensing process is streamlined to encourage the establishment of legitimate offshore banks and to maintain international confidence in the integrity of Belize’s offshore banking sector.

There are at present, 6 Class A and 1 Class B international banks in Belize.

Open Ships Registry

The International Merchant Marine Registry of Belize (IMMARBE) was established in 1989 under the Registration of Merchant Ships Act.  In 2010, a new and improved Act was passed ─ the Merchant Ships (Registration) Act ─ to meet the present day demands of the shipping industry.

Today, there are 912 vessels flying the Belize flag and there is a network of Deputy Registrars and IMMARBE Offices around the world.

The Registry has proved to be one of the most efficient and fast growing registries in the world.  In fact, Belize’s ‘friendly flag’ Registry has become a byword in the international maritime community.

Belize is on OECD’S White List

While promoting and developing its international financial services industry, Belize has not overlooked the demands and recommendations of the OECD, FATF, IMF and other international oversight bodies.  Realising the importance attached by the G20 to Tax Information Exchange Agreements (TIEAs), Belize has so far signed TIEAs with 15 countries, namely, the United Kingdom, Australia, Belgium, Netherlands, Sweden, Norway, Denmark, Finland, Iceland, Greenland, the Faroes, Portugal, Ireland, France and Mexico.

Two other TIEAs ─ with Poland and South Africa ─ have been initialled and are expected to be signed shortly.

As a result, Belize has been placed by the OECD into the category of jurisdictions that are considered to have substantially implemented the internationally agreed tax standard.

Why choose Belize?

Belize is a haven of peace, stability and democracy in Central America.  Its political system is based on the Westminster model with the Queen as the Head of State and a Governor-General as the representative of the Queen.  The Constitution of Belize guarantees to all persons certain fundamental rights including the right to property.   There is an independent judiciary to protect the rights of the people.

Belize is an emerging market in Central America with deep roots in the Caribbean.   Excellent opportunities exist for investment in tourism, agro-processing and information technology.

The international financial services sector in Belize is clean, efficient, cost-effective and user-friendly.  The Government of Belize is committed to creating a fertile climate that promotes and encourages the offshore industry.  The cost of doing business in Belize is highly competitive and the licensing processes are streamlined.   Belize is indeed a jurisdiction of choice for international investors.