- International Partnerships introduced
- Guarantee and "Hybrid" Companies now permitted
- Re-domiciliation concessions
- Improved Prudential Supervision of Offshore Banking
- International Insurance Act amendments
During July 1998, the Government of Samoa passed legislation to significantly upgrade its offshore legislation. The new legislation reconfirms the Government's objective of enhancing the range of products offered to the international investor, whilst preserving the credibility of its offshore finance centre.
The new and more significant amending legislation is summarised below.
INTERNATIONAL COMPANIES
Companies Limited by Guarantee and by Shares and Guarantee
The most significant amendment to the International Companies Act has been the introduction of legislation allowing for the formation of international companies limited by guarantee and by both shares and guarantee ("hybrid companies"). Such companies enjoy the benefits of the Samoan offshore legislation on the same basis as other international companies, i.e. tax exemptions and no reporting obligations. An international company limited by shares, other than an international "LLC", may change its status to that of a guarantee or "hybrid" company.
The liability of a member of a company limited by guarantee is limited by the memorandum to such amount as that member has undertaken to contribute to the assets of the company in the event of its being wound up. In a "hybrid" company, guarantee members' liabilities are limited in the same way whilst the liability of shareholders is limited to the amount unpaid on the shares held by them, i.e. the same as an international company limited by shares.
Notwithstanding any rule of common law or equity pertaining to guarantees, the Act specifically deems a guarantee given by a member to be a proprietary interest and consequentially capable of transfer, assignment, charge or other disposition, or such other dealing as may be permitted by the articles.
The Government registration fee for a company limited by guarantee or a "hybrid" company is US$300, the same as for all international companies incorporated in Samoa.
Such structures are popular in the civil law jurisdictions of Europe and Latin America where they are used as an alternative to the common law trust concept. Their lack of share capital has also resulted in guarantee companies being used as sophisticated tax planning vehicles.
RE-DOMICILIATION CONCESSIONS
The process of re-domiciling an overseas company to Samoa has been made simpler and less expensive. The requirement to obtain the consent of the local authorities in the home jurisdiction of the overseas company has been eliminated. The Government annual registration fee for companies re-domiciling to Samoa has been reduced from US$300 to US$100.
INTERNATIONAL PARTNERSHIPS
The International Partnership And Limited Partnership Act provides for the formation of both standard International Partnerships as well as International Limited Partnerships. The Act is founded on the principles of English common law and equity applicable to partnerships.
Both forms of partnership must have one partner who is either an international company, a foreign company, or a trustee company, registered in Samoa and all other partners must be non-residents. Every international partnership is required to maintain a registered office in Samoa at the principal office of a trustee company. Asiaciti Trust Samoa Limited as a registered trustee company in Samoa, may act as the local partner and registered office.
A limited liability partnership must consist of one or more general partners, who are personally liable for all the debts and obligations of the partnership, and one or more limited partners, whose liability for the debts and obligations of the partnership is limited to the amount contributed as capital to the partnership. In this respect the liability of the limited partners is similar to that of the members of a corporation who are liable to the creditors of a company only to the extent of the unpaid capital of their shares.
For limited liability partnerships, common law partnership principles are further modified so that the limited partner takes no part in the management of the business of the partnership.
REGISTRATION
The Act prescribes a simple process for registration of International or Limited Partnerships. It is not necessary to lodge the partnership agreement but it may be registered at the option of the client. Government registration fees are US$150 per annum. The Act also allows long term registrations on a basis similar to that for international companies with fee discounts for so registering. After registration a limited partnership must file a certificate specifying the names of the general and limited partners and their respective liabilities.
Every partnership must operate under a registered "firm" name. The name of a limited liability partnership must end with the words "limited partnership" or the initials "L.P.". Otherwise there are few restrictions on the names that may be used.
PRIVILEGES AND EXEMPTIONS
As with all the offshore structures available in Samoa, registered partnerships enjoy exemption from all local taxes, duties and currency exchange controls or levies. They are also exempt from any requirements to file any returns, accounts or reports.
The Act offers strict confidentiality in respect of the affairs of a registered partnership and to the partners thereof. It is an offence for any person to divulge or communicate any information relating to the establishment, constitution, business undertakings or affairs of a partnership.
APPLICATIONS
International partnerships, particularly limited partnerships, are frequently used in conjunction with offshore-based asset protection planning trusts. In appropriate circumstances they may also offer estate planning benefits. Tax effective investment into US real estate is often structured through an international partnership. In other countries partnership income and capital gains on partnership assets may be exempt from withholding taxes or capital gains tax.
OFFSHORE BANKS
In line with the Government's objective of improving the prudential supervision of banking activities in Samoa, the Offshore Banking Act has been amended to impose substantially higher compliance obligations particularly in the areas of operational controls, records maintenance, reporting and audit. Clients with offshore banks have been advised directly of these changes.
OFFSHORE INSURANCE
The amendments to the International Insurance Act, although not as extensive as those to the Offshore Banking Act, are similarly designed to enhance the supervision of the operations of Samoan based offshore insurance companies. Generally the amendments will not materially affect the operations of captive insurance companies licensed in Samoa.
Over the past ten years Samoa has made steady progress as a credible and reputable alternative to the Caribbean offshore jurisdictions. With these amendments and the recent focus on the high quality of the confidentiality aspects of the Samoan offshore jurisdiction, Samoa has enhanced its position as a major competitor to many of the Caribbean jurisdictions.
The content of this article is intended to provide general information on the subject matter. The reader should therefore obtain professional advice specific to their circumstances.
