Regulation

Anguilla’s Increasingly Prominent Role in International Finance


By Pam J Webster, Partner, Webster Dyrud Mitchell, Anguilla (01/08/2012)

Anguilla is a British Overseas Territory situated in the Northern Leeward Islands. It is politically stable with a common law legal system based on English law and is a truly zero tax jurisdiction, with a highly skilled professional financial services infrastructure. The official currency is the Eastern Caribbean dollar which is fixed to the US dollar. There are no foreign exchange restrictions.

The Island is a respected member of the international financial services community and has had a strong reputation as a solid financial centre since the early 1990s. Over the last 20 years Anguilla has grown steadily to the stage where it has now become a significant professional provider of management services for international businesses. Anguilla’s approach includes flexible business and labour laws, comprehensive bank and financial regulations and various incentives to mitigate taxation.

Anguilla has become recognised as a prime jurisdiction of choice for company management, tax planning and asset protection purposes by some of the world’s most discriminating advisers, and its reputation continues to grow.

The Government has signed 18 TIEAs thus far and is committed to further enhancing the Island’s reputation as a world-class financial services centre.

Company Law and Business Regulations

The Ordinary Company

An Ordinary Company, which can be used both within Anguilla and as an offshore vehicle, has many attractive features:

                    Companies may be incorporated by one incorporator and have one director.

                    Companies may be limited by shares and/or by guarantee.

                    The Companies Act abolishes the doctrine of ultra vires.

                    Companies may acquire, purchase or own their own shares.

                    Foreign companies may continue into Anguilla.

The International Business Company

The IBC is based on the traditional model and provides for the easy incorporation and subsequent administration of a flexible and cost effective corporation.

The Limited Liability Company

Anguilla is one of the few jurisdictions to have legislation dealing specifically with limited liability companies based on the well-recognised Delaware model, with additional features not found in the original legislation. An Anguillian LLC will provide its members with limited liability, but provide the advantages of income and losses passing through to the members.

Offshore and Captive Insurance

Anguilla is now the world’s fifth largest captive insurance market (by numbers of licensed insurance entities) with highly regarded legislation and service level responsiveness. The insurance market has grown dramatically over the last five years and continues to develop, in terms both of size and of unparalleled professionalism. With regard to insurance in general, there are five types of licence available to meet the diverse needs of clients:

                    Insurer’s Unrestricted Licences permit foreign insurers to carry on any foreign insurance business, including long-term foreign insurance business.

                    Insurer’s General Licences permit a foreign insurer to carry on general foreign business, but not long-term foreign insurance business.

                    Insurer’s Association Licences permit a foreign insurer to carry on general foreign insurance business and long-term foreign insurance business, with two or more owners of the insurer, and their affiliates, and to carry on no more than 30 per cent of its foreign insurance business with persons who are not owners of the insurer or their affiliates.

                    Insurer’s Group Licences permit a foreign insurer to carry on any foreign insurance business, including long-term foreign insurance business, with a single owner of that insurer and its affiliates, and employees of the owner or its affiliates.

                    Insurer’s Single Licences permit a foreign insurer or a trust to carry on any foreign insurance business, including long-term foreign insurance business, with the sole owner of the insurer, if a company or with the beneficial owners of the insurer, if a trust.

Protected Cell Companies

A key feature of a Protected Cell Company (PCC) is that any asset which is linked to a particular protected cell account can be held as a separate fund, which is not part of the general assets of the PCC, and is held exclusively for the benefit of the account owner of the PCC account and to any counter-party to a transaction linked to that PCC account.

Mutual Funds

The Mutual Funds Act provides for the registration or recognition and regulation of mutual funds and the licensing of managers and administrators carrying on business in or from within Anguilla.

Private Funds are funds whose constitutional documents specify that it will have no more than 99 members. There is no restriction on the amount of investment by individuals who may constitute a private fund.

Professional Funds are funds whose shares are made available only to professional investors and the initial investment in which, in respect of each of the persons constituting a majority of such investors, is not less than US$100,000.

Public Funds are neither private nor professional funds. A public fund has a duty to publish and file a prospectus. Public funds must maintain accounting records and prepare annual audited financials.

Offshore Banking

Offshore banking licenses are granted under the Trust Companies and Offshore Banking Act (TCOBA). Offshore banks are supervised by the Anguilla Financial Services Commission (AFSC) in collaboration with the supervisory authority of the home jurisdiction of its parent bank or company. Under the TCOBA, an offshore banking license is required to conduct offshore banking business, which is defined as banking business in a currency other than Eastern Caribbean dollars with non-residents of Anguilla. There are currently three offshore banking licenses issued by the Financial Services Commission.

The Anguilla Foundation

An Anguilla Foundation is established under the Anguilla Foundation Act and is a hybrid entity, having the characteristics of both a corporation and a trust. Like a corporation, it is a separate legal entity that can buy and sell property, sue and be sued, enter into contracts and hold assets in its own name.

The Anguilla Foundation offers the private foundation (a civil-law concept) as an alternative to the common-law trust. It is very flexible and is the vehicle of choice for persons residing or domiciled in civil-law jurisdictions. Assets endowed upon an Anguilla Foundation constitute an estate independent from that of the founder(s).

Subject to the Anguilla Foundation Act and the declaration of establishment, an Anguilla Foundation may be established for any purpose which is lawful, moral, not contrary to public policy and capable of fulfillment. A feature distinguishing it from its competitors is that it can carry out any kind of civil or commercial transactions apart from activities prohibited in Anguilla or any financial services business (unless the required licence has been obtained). The majority, if not all, of competing foundation laws do not permit commercial activities.

Trusts

Anguilla provides for the licensing of two types of trust company. The first is a general trust company, allowing the licensee to offer trustee services to the public in general. This licence allows the licensee to extend the licence to wholly owned subsidiaries engaged in trust activities. The second type is a restricted trust company, which limits the licensee to administering a limited number of trusts. The underlying legislation seeks to modernise trust law with respect to security, confidentiality and flexibility, whilst preserving the best features of common law trust interpretation.

Meeting the Needs of International Business Clients

Anguilla’s aim is to be the jurisdiction of choice for all of its key product lines and to have pride in its reputation, which is second to none. The island has a first class record of regulatory standards and service levels and strives to provide a responsive and thoughtful attitude to clients’ needs. The private sector, along with Government and the FSC continuously review best practice and respond in a timely manner to update legislation as necessary.

By virtue of its constitutional status as an Overseas Territory of the United Kingdom, Anguilla is leading several regulatory initiatives in the Caribbean aimed at profiling the region as one of the most secure areas in which to invest.