By Don Mitchell, QC
Anguilla is a British Overseas Territory (BOT) in the North-eastern Caribbean Sea. At the end of 1994, with British Government technical assistance and funding, a package of the most up-to-date corporate and financial legislation was put in place. The package was amended and updated at the end of 1998. The formation of companies by overseas registered company formation agents is provided for. An offshore company formation agent using the ACORN network in Hong Kong or New York, once registered with the Anguillian Registry of Companies, may incorporate companies, IBC's, LLC's, etc, through the internet, directly with the Anguilla Registry of Companies. A local agent in Anguilla providing the registered office service contracted by the overseas agent is responsible for paying the government incorporation costs. A Certificate of Registration is generated by the Registry computer in Anguilla, and is transmitted instantaneously from the Registry computer to the incorporator's computer, making Anguilla the most technologically advanced company formation jurisdiction in the world.
Anguilla is situated 200 miles east of Puerto Rico in the West Indies. The American Eagle airline hub in San Juan provides several direct flights a day to Anguilla and back. European commuters may prefer to fly ALM, Air France or Lufthansa to neighbouring St Maarten, which is a four minute air taxi ride away. Several European airlines also have flights to San Juan in Puerto Rico.
The population is just over 10,000, being predominantly Afro-Caribbean. Education, housing, employment and tourism facility standards are amongst the highest in the Caribbean. Unemployment is non-existent.
The island is subject to a typical British Westminster-style system of government. The Governor is appointed from London, while the four Ministers of Government, locally appointed from amongst the elected members of the House of Assembly, share the portfolios of government between themselves. There is a healthy democracy in place, with government changing hands every five to ten years. The island is stable politically and economically, with, according to the Eastern Caribbean Central Bank's 1998 report, approximately 40% of all foreign currency circulating in the Eastern Caribbean being banked in the island's four banks. The Constitution of Anguilla with a Bill of Rights was created by an Order in Council of the British Privy Council.
As a BOT, Anguilla's relationship with the European Union is governed by Britain's legislation and British agreements with her European partners.
English is the language of Anguilla. The law of Anguilla is British common law, supplemented by local statutes enacted by the local House of Assembly.
The professional infrastructure is small but growing. There are ten law firms, none with more than 3 lawyers, but some with experience in the offshore field in Anguilla dating back to the mid-1970's. Two of the major accounting firms have branches on the island, and there are several smaller, local firms providing services both locally and offshore. Company management services are also growing, and there are several firms providing management services specifically for the offshore market. There is one offshore bank and 2 trust companies, with four banks having branches on the island. The law firm of Mitchell's Chambers (Don Mitchell QC, Bernie Stephenson and Josephine Gumbs) specializes in offshore work on the island, telephone 264 497 2391, fax 264 497 2050, email@example.com.
As there are no taxes nor any currency restrictions in Anguilla, there are no incentives sensibly to be offered. There is in Anguilla no income tax, withholding tax, asset tax, gift tax, profits tax, capital gains tax, distributions tax, value added tax, asset departure tax, inheritance tax, or estate duty tax. Additionally, various statutes contain guarantees against the imposition of future taxes or expropriation.
There are no currency or exchange controls in Anguilla. The commercial banks accept deposits in US dollars, pounds sterling, and Eastern Caribbean dollars, the local currency. There are no restrictions on bringing foreign currency in or out of Anguilla. The purchase over the counter in a commercial bank of any foreign currency attracts a 2% tax. Out-of-bank foreign exchange purchases attract no tax of any sort.
Professionals and banks in Anguilla, in addition to a confidential contractual obligation, are subject to the Confidential Relationships Ordinance, 1981, which imposes a criminal penalty for breaches of confidence. Shareholders and directors of ordinary companies must be published to the Registrar of Companies annually, but the common use of nominee shareholders holding the shares under a trust agreement provides an additional layer of secrecy. For the purposes of the Companies Ordinance, the Registrar may obtain a Court Order requiring disclosure of beneficial ownership of shares. The Court will respect attorney-client privilege on such an application by a Registrar. Attorneys and banks require full disclosure of clients' names and backgrounds, but will not disclose such information without a court order or similar obligation.
The banks require to be satisfied about the source of funds in the case of significant deposits. Money laundering is not encouraged by banks or professional advisers in Anguilla.
Under the Mutual Legal Assistance (United States of America) Ordinance, 1990, the MLAT between the UK and USA has been extended to Anguilla
There are several Notaries Public and Commissioners for Oaths appointed for Anguilla. The Apostile is readily given in suitable cases.
An alien, defined as someone who is not a belonger to Anguilla, may not hold an interest in land in Anguilla without a licence from the Government under the Aliens Landholding Regulation Ordinance, 1976. Stamp duty to obtain this licence is 12.5% of the value of the property being purchased. For further information on the law relating to individuals contact Bernie Stephenson or Josephine Gumbs at 264 497 2391.
Work permits are required under the Immigration and Passport Ordinance, 1980, by all non-Anguillians who wish to reside and work on Anguilla. There are restrictions for occupations that are reserved for Anguillians. Specialized areas, particularly in the offshore and professional fields, are more relaxed for obtaining work permits.
Anguilla does not offer permanent residency easily. There is a permanent residence certificate available for alien home owners in Anguilla. This is a courtesy permit, intended to facilitate the passage of alien home owners through Customs and Immigration when they return periodically to stay in their home in Anguilla.
Domicile is governed by English common law.
There is no citizenship of Anguilla. Anguillians are subject to the British Nationality Act, under which British Overseas Territory Citizenship (BOTC) is extended to Anguillians. An alien resident in Anguilla for an appropriate number of years may apply to the Governor to be naturalized as a BOTC. British naturalization of aliens in Anguilla is sparingly granted, as naturalization in Anguilla confers on the alien all local rights as an Anguilla belonger.
Corporations are established in Anguilla under either of the Companies Ordinance, 1994, or the International Business Companies Ordinance, 1994. Both of these Ordinances are very modern, and enable corporate entities to be registered in Anguilla under legal regimes that maximize flexibility and simplicity.
An LLC may be registered in Anguilla under the Limited Liability Company Ordinance, 1994. An Anguilla LLC is an improvement on earlier versions, found in other jurisdictions, in that it clearly creates an economic interest which can be transferred separate and apart from the membership interest. Also, its term may be either perpetual, or of limited duration, as provided in the LLC agreement.
Anguilla does not distinguish between local and offshore companies. All companies registered in Anguilla have the benefits of Anguilla's zero-tax situation. However, the most commonly formed companies, by persons resident outside of Anguilla who wish to form an Anguillian company to do international business, is either the Private Company or the International Business Company (IBC). A Private Company is registered under the Companies Ordinance, 1994. It is a normal company, except that it is exempt from all auditing and accounting duties. It may not have more than 11 shareholders, it may not publish a prospectus and offer shares to the public, and is otherwise a typical closely held company. An Anguillian IBC is registered under the IBC Ordinance, 1994. It is cheaper to form, and is more secretive, in that its shareholders and directors need not be published on any public register. The registered office of the IBC in Anguilla is required to have this information, which may only be obtained, subject to attorney-client privilege, by a member of the public who obtains a court order from the Supreme Court in Anguilla.
The Companies Ordinance permits the registration of a Company Limited by Guarantee. This is a company that has members rather than shareholders. It is frequently used as an alternative to a purpose trust in international tax planning and asset protection. The law permits in addition a hybrid type of company which may have shareholders as well as non-shareholder members. A Public Company is one which may be quoted on a stock exchange, and is subject to stringent auditing and filing requirements.
A partnership is a relationship which subsists between persons carrying on a business in common with a view to profit. The law of partnership in Anguilla is governed by the Partnership Ordinance, 1994, which sets out the standard law on the nature of the partnership, the relation of partners to persons dealing with them and with one another, and dissolution.
Limited partnerships in Anguilla are subject to the Limited Partnership Ordinance, 1994. Partners may be individuals, corporations or other partnerships. Limited partners may reside anywhere, but at least one general partner must be an Anguillian company or an Anguillian resident. Its name must end in the words or initials "Limited Partnership" or "LP". An LP is created by filing a Statement in the Registry of Companies, which then issues a Certificate of Registration.
All companies registered in Anguilla have complete freedom to re-domicile out of Anguilla, and foreign companies likewise may freely redomicile into Anguilla, either under the Companies Ordinance or under the IBC Ordinance.
A trust is a relationship recognised by rules of equity. In Anguilla trusts are regulated by the Trusts Ordinance, 1994. This law sets out an extremely modern trust regime. In addition to the standard provisions governing the settlor, beneficiaries, duties and powers of trustees, etc, there are provisions regulating spendthrift trusts, memoranda of wishes, purpose trusts, protectors, variation of terms, foreign trusts, and variant trusts. The rule against perpetuities is abolished.
Section 63 specifically excludes forced heirship rules.
The Fraudulent Disposition Ordinance, 1994, creates a 3 year limitation period affecting dispositions. This is the most significant provision relating to an "asset protection" trust.
A trust in Anguilla may be settled by a company. The terms of the trust may provide for beneficiaries to be added or excluded. Trusts may optionally be registered in the Registry of Companies, upon which a Certificate of Registration is issued. If the settlor and trustees are not resident in Anguilla, the trust is guaranteed to be exempt from taxes in Anguilla.
Banks and Trust companies are governed by the Offshore Banks and Trust Companies Ordinance, 1991. Anguilla strictly regulates such businesses. The position may be summarized in brief as follows: no offshore bank will be allowed to be formed or licensed to do business in Anguilla except it is a subsidiary or branch of a recognised, established bank from a well regulated jurisdiction. Trust companies are also regulated and supervised, but considerable flexibility is shown in practice in allowing such entities to be registered and licensed in Anguilla.
Insurance companies are regulated by the Insurance Act, 1968. Captive insurance companies are regulated and supervised almost as carefully as insurance companies dealing with the public in Anguilla. However, with a suitable business plan, proper capitalization, and professional accounting and legal support, captives are formed and licensed in Anguilla.
Anguilla is a Port of Registry under the British Merchant Shipping Acts. Boats in excess of 150 tons are not permitted to be registered due to the lack of boat maintenance facilities.
Open-ended mutual companies are recognised by the Companies Ordinance. There are no special regulations relating to mutual funds. It can be anticipated that any attempt to establish a mutual fund in Anguilla would be liable to the closest supervision and regulation.
For further information on the formation of companies and trusts and business in Anguilla generally contact Don Mitchell QC at telephone 264 497 2391 or email firstname.lastname@example.org.
Costs in Anguilla for the formation and licensing of the various entities described above are reasonable and competitive. Typical government and legal combined costs for formation and first year's Registered Office service are as follows: Private Company $1,510.00 IBC $1,250.00 LLC $800.00 Limited Partnership $1,250.00 Trust $1,250.00 Company Management $500.00
Because of Anguilla's status as a BOT, the support of the British Government, the interest of the Anguillian Government, the modern legislation, the computerised services available through government and private professionals, Anguilla's future prospect as an international financial centre appear bright. With Bermuda expected to go independent within the next 4 or 5 years, resulting in the inevitable period of insecurity in the international mind that occurs in such events, there are additional prospects for Anguilla's growth.
Milton Grundy - The OFC Report. (London: Campden Publishing)
Walter and Dorothy Diamond - International Trust Laws and Analysis. (Warren Gorham, Lamont).
Mr John Lawrence, Superintendent of Offshore Finance (fax 264 497 5872, email email@example.com)
Mr Alan Jones, Registrar of Companies (fax 264 497 5872, email firstname.lastname@example.org)
Mr S F (Roy) Horsford, National Bank of Anguilla (fax 264 497 3870, email email@example.com)
I D (Don) Mitchell QC, Esq, (fax 264 497 2050, email firstname.lastname@example.org)
Ms Birnie Stephenson, Barrister & Solicitor (fax 264 497 2050, email email@example.com)
Ms Josephine Gumbs, Barrister and Solicitor (fax 264 497 2050, email firstname.lastname@example.org).