SAMOA – A POTENTIAL WINNER
A quiet island in the southern Pacific Ocean roughly equidistant between Honolulu and Sydney would strike one as an ideal location for a vacation spot rather than an offshore jurisdiction or rather an international financial centre (IFC), to be politically correct. However, going by the Caribbean trend, such a locale is the norm rather than the exception for housing exactly such a business.
Although the concept of developing an IFC in Samoa was initially considered in the early 1970’s, it was not until 1987 that the Government decided to proceed with its establishment.
The attractions of Samoa as an IFC are those that any IFC of international repute would be expected to tick-off on their list:
- A long history of social and political stability
- Economic stability
- Modern legislation providing maximum flexibility
- Exemption from all taxes and duties
- An established international standard domestic banking system
- A well-developed economic and commercial infrastructure
- Competitive cost structure
Since the introduction of the initial legislation in 1987-88, there have been regular amendments and new legislative initiatives to satisfy market requirements. The IFC legislation now includes the following:
- Trustee Companies Act 1987
- International Banking Act 2005
- International Companies Act 1987
- International Trusts Act 1987
- International Insurance Act 1988
- International Partnership and Limited Partnership Act 1998
- Segregated Fund International Companies Act 2000
- International Mutual Funds Act 2008
- Electronic Transactions Act 2008
By providing for maximum flexibility, minimum formality and efficient service, all at an acceptable cost, the legislation is designed to attract a high quality international clientele
The legislation now incorporates some of the most up-to-date features of IFC legislation. It is designed to attract a high quality international clientele whilst providing for maximum flexibility, an efficient service and minimum formality, all at an acceptable cost. Further legislation to cover other aspects of international business and to improve the facilities offered by the Samoa IFC are expected to be introduced as required.
Entities operating under the IFC legislation are exempted from all Samoa income-taxes, stamp duties, withholding taxes, and any other direct or indirect tax, duty or levy. They are also exempted from exchange or currency controls and foreign exchange levies. Similarly, the shareholders, members, beneficiaries, partners or other beneficial owners of such entities are exempt from taxation in Samoa.
All aspects of the IFC legislation incorporate stringent confidentiality provisions to protect clients from unauthorized disclosures. The absence of any double taxation treaties provides further protection against fiscal enquiries.
The recent introduction of the Electronic Transactions Act 2008 brings legal recognition and admissibility to electronic records and electronic signatures, there by greatly improving the efficiency of business transactions within the Samoa IFC. The acceptance of an electronic record requires the consent of both parties and is not compulsory.
International companies incorporated in Samoa benefit from:
A company can be incorporated under the International Companies Act 1987 as an international company if its shareholders are non-residents of Samoa. A trustee company registered under the Trustee Companies Act 1987 may hold shares in an international company.
One can incorporate an international company swiftly, within 24–48 hours. International companies may be incorporated under foreign language names, e.g., in Chinese, French, Japanese, German, etc.
There is no minimum capital requirement and shares may have no par value. Shares may be designated in most major currencies. Bearer shares may be issued but must be held in custody by a trustee company.
Only one director of an international company need be appointed and there is no obligation to appoint a resident director. It is obligatory to have either a resident agent or a resident secretary who must be an officer of a registered trustee company. If a resident secretary is not appointed then an international company must appoint a non-resident secretary. A copy of the Register of Members must be held at the registered office.
An international company may be incorporated for any lawful purpose other than that of a trustee company, but shall not carry on the business of banking or insurance, unless it is licensed under the relevant Act.
An international company is not required to file annual financial statements or to lodge an Annual Return. Subject to shareholder agreement, it is not necessary to appoint an auditor.
Directors and shareholder meetings may be held anywhere in the world. Resolutions signed by all directors or shareholders may be adopted in lieu of formal meetings. There is no requirement to hold an Annual General Meeting.
Meetings of Directors and Members may be held by telephone, fax or other electronic means.
A foreign company incorporated outside of Samoa may register under the Act. The legislation expressly provides that international companies and foreign companies registered under the Act and their shareholders will not be subject to any form of taxation including stamp duty. The legislation also provides such entities with a guarantee that the State will not compulsorily acquire or expropriate their property situated in Samoa.
The confidentiality provisions of the Samoa legislation are drafted to provide maximum protection to an individual’s privacy.
Principals or promoters of international companies may remain anonymous as there is no obligation to disclose any details of beneficial ownership of shares. Such anonymity is further guaranteed by the Act which imposes penal sanctions on any person who discloses information derived from an inspection of the records of an international company.
The documents lodged with the Registrar of International Companies are only available for inspection by directors, members and debenture holders.
4. Other special features
The International Companies Act 1987 incorporates a number of special provisions which provide considerable flexibility and unique benefits for international corporate structures. These include:
- Default succession companies
- “Creditor controlled” companies
- Transfer of corporate domicile
- Companies limited by Guarantee and “Hybrid” companies
Some utilities / Special Features of Samoan companies
A couple of the above mentioned structures can be of particular interest to investors in this region, with succession and control being peculiar issues that crop-up in almost every discussion pertaining to wealth-planning or structuring of businesses.
Default Succession Companies
The uniqueness of Samoan legislation is demonstrated by an asset protection section of the International Companies Act (Section 228 (B)) whereby a member can elect that his shares in the company can be automatically vested in a specified person on the occurrence of a specified event.
The definition of “specified event” is flexible but it typically includes the occurrence of a foreign expropriation or court order. This can also be used by the original beneficial owner to pass a company on to his or her beneficiary upon presentation of the death certificate of the original owner (duly attested). It is generally observed that there are no similar statutory provisions protecting member interests in many popular and / or traditional jurisdictions around the world.
Creditor Controlled Companies (CCC)
A company with no share capital can be incorporated in Samoa. It is “owned” by the holder(s) of bearer debentures. A non-voting redeemable preference share can be allotted to a non-resident to ensure the company is in fact a “company” rather than some exotic derivative if this is felt necessary. The Samoa CCC can be an effective entity in which to accumulate foreign sourced income and to defer tax liability. Also, the concept, potentially, has application in corporate structuring.
(This article is compiled by Mr. Chaitanya G. Kirtikar, Manager, Offshore and Free Zone Services)