St. Vincent and the Grenadines

Business Environment

Government is adjusting legislation so as to comply with the standards set by international organisations. St. Vincent and the Grenadines was targeted on three tax haven and anti-money laundering blacklists. The country was removed from the Organisation for Economic Cooperation and Development's (OECD) list of tax havens in 2002 after promising to exchange information on criminal and civil tax matters with overseas regulators by 2005.

The Financial Action Task Force's removed St. Vincent and the Grenadines from its blacklist of 'non-cooperative' countries in the fight against money laundering after the country adopted new legislation and regulatory procedures for its financial sector. The Financial Stability Forum listed St. Vincent among the group three countries deemed to have the lowest quality supervision of the financial sector.

St. Vincent is a member of the Organisation of the Eastern Caribbean States and of the Caribbean Community. St. Vincent is a member of the Eastern Caribbean Currency Union. The Eastern Caribbean Central Bank issues a common currency for all members of the union. The central bank also manages monetary policy and regulates and supervises commercial banking activities in its member countries.

St. Vincent legislation allows offshore companies, insurance companies, trusts, and banks. The Offshore Finance Authority regulates the sector under the St. Vincent & the Grenadines Offshore Finance Authority Act 1996. Due to changes in legislation the number of offshore banks registered in the jurisdiction fell to about 20 at the end of 2002.

Only a duly approved registered agent under the Registered Agent & Trustee Licensing Act, 1996, may submit applications for formations and undertake registration services outlined in in the act. The financial services legislation includes The International Business Companies Act, the Mutual Funds (Amendments) Act 1998, the International Trusts Act 1996, the International Insurance (Amendment and Consolidation) Act 1998, and The International Banks Act 1996.

International Business Companies

International business companies do not need a local director. There are no domicile requirements. One-director companies allowed, and any director may be a corporate entity. Two types of incorporation certificates are available, with or without the directors name displayed. The articles of incorporation is designed to contain minimum of information, including the name of the company, the registered agent, the currency of the capital and authorised capital, type of shares and any additional provisions that may be required by the company. The International Business Companies Act allows companies to be held through a wide variety of means including registered or bearer shares, voting shares, non-voting shares, shares that may have less than one voting per share, common shares, preferred shares, limited shares, shares limited by guarantee or redeemable shares, shares that entitle participation only in certain assets, the issue of options, warrants, rights or instruments of a similar nature. No list of shareholders has to be submitted. The beneficial owners of shares are not made public.

Company books, share registers, and other information may be kept in or outside St. Vincent. There are no limitations on where or how the meetings may be held, and there are no mandatory annual returns. An international business company may issue powers of attorney and management instructions ion writing to any person. All international business company matters are protected by the Confidential Relationships Preservation (International Finance) Act, 1996.

The act also has provisions for limited duration companies with a single member. The act also provides for the registration and name clearance of companies and trusts by electronic mail through full confidential and secure branch registries. The St. Vincent Trust Service in Vaduz, Liechtenstein is the first such branch registry. Name clearance has been introduced and encryption will be available in the near future according to the regulator.

Offshore Banks

The Offshore Finance Authority collaborate with the Saint Kitts-based Eastern Caribbean Central Bank in the licensing and supervision of offshore banks. All banks are either granted Class I or Class II offshore banking licences. A Class I bank must establish and maintain a capital fund with fully paid-up capital of not less than US$$500,000. Class I banks are required to hold a deposit or invest the sum of US$100,000. A Class II bank must establish and maintain a capital fund with fully paid up capital of not less than US$100,000. Class ll banks are required to hold a deposit or invest the sum of US$50,000.

Under the International Banks Act, 1996 and associated regulations an international bank must have a place of business within St. Vincent and designate a licensed registered agent resident in the jurisdiction. They must also have local employees An offshore bank must have a minimum of two directors who must be natural persons (rather than a corporate entity) and at least one must be resident in St. Vincent. Director appointments are subject to the approval of the Offshore Finance Authority. Only registered shares may be issued, and these may not be transferred or disposed of without prior permission of the regulator. Annual audited accounts must be submitted to the regulator. The auditors must be engaged at the time of the application. The annual accounts must be submitted within three months of the close of the business year, unless an extension has been approved. An application for registration must include the names of all shareholders, the names of all bank officers or managers and evidence must be supplied that the applicant or some person connected with the bank has banking experience. The application must include the name of the applicant’s lawyers and their written agreement to serve.

International Trusts

Trust deeds are registered in a confidential government trust registry. A registered trust under the International Trust Act, 1996 will not be rendered unenforceable because it was invalid under the laws of the settler or grantor’s domicile or residence. Purpose trusts, which are created for a specific purpose but without named beneficiaries, are allowed. A foreign judgment against a registered international trust, or its settlor or beneficiaries, is not enforceable in Saint Vincent if the judgment was based on law inconsistent with the act.

Actions against registered international trusts must be commenced within two years from date of creation of the trust. A complaining creditor may satisfy his claim against the property of a registered international trust only if that creditor can show both that the settler/grantor’s principal interest in creating the trust was to defraud him, that the disposition of property to the trust rendered the settler/grantor insolvent. Creditors must deposit US$25,000 with the courts of Saint Vincent prior to commencing an action against a registered international trust or its property. If the creditor is unsuccessful in the claim, the money may be used to pay the costs and expenses of the trust in defending the action Traditional fraudulent conveyance laws (Statute of Elizabeth) are not applicable to registered international trust. Unauthorised disclosures of trust information are punishable under criminal laws. The bankruptcy or insolvency of the settler/grantor under the laws of his residence or domicile will not affect a registered international trust, under the legislation. An international trust may own one or more Saint Vincent international business companies.

Mutual Funds

Mutual funds are regulated by the Mutual Funds Act, 1997 as amended by the Mutual Funds (Amendment) Act 1998, and regulations issued in 1999. The act provides for the licensing of both domestic and offshore mutual funds. Licenses are granted either as a private and accredited fund or as a public fund. A public fund can offers any shares it issues for subscription or purchase to any interested member of the general public. All public funds registered must publish a prospectus and file it with the Offshore Finance Authority. There are no capital adequacy requirements or minimum subscription limits placed on public funds. Public funds must maintain accounting records and financial statements. Public funds that intend to do business with residents must also submit an offering document synopsis to the Offshore Finance Authority.

Private and accredited funds either must have no more than fifty investors or issues shares on a private basis. An accredited fund issues shares only to accredited investors, with an initial investment of not less than US$25,000. An accredited investor is one who has a net worth in excess of US$1 million.

Mutual funds can be formed as an incorporated company, a partnership or a unit trust. Umbrella funds, open ended, closed ended and integral funds are permitted. Administrators and managers must apply to the regulator for a license to carry on business as administrators or managers. A natural person, any mutual fund, company, trusts or trustee may apply for a license to carry on business as administrators or managers. Applicants must show evidence that they have the expertise and resources to carry out a mutual fund business.

For further information: Offshore Finance Authority

Taxes

The standard corporate income tax is 40% on all sources of income earned in St. Vincent. International companies are exempt of taxes on non-resident income for up to 25 years. The maximum personal income tax is 45% on income over US$45,000. Duty on most goods ranges from 0-40%.

Contacts

Offshore Finance Authority
P.O. Box 356
Ministry of Finance
2nd Floor, Administrative Centre
Kingstown, St. Vincent & the Grenadines
Tel: (784) 456-2577
Fax: (784) 457-2568
E-mail: info@stvincentoffshore.com
Internet: www.stvincentoffshore.com

The Development Corporation (DEVCO)
Tel: (784) 457-1358
Fax: (784) 457-2838

Ministry of Trade & Consumer Affairs
Tel: (784) 456-1223
Fax: (784) 457-2880

St. Vincent & The Grenadines Chamber of Commerce & Industry
Tel: (784) 457-1464
Fax: (784) 456-2944
E-mail: svgcic@caribsurf.com

Ministry of Tourism, Information & Culture
Tel: (784) 456-1223
Fax: (784) 457-2880

Latest available figures

Status
Independent state within the British commonwealth.

Population
112,000 (2001); African descent (66%), mixed (19%), West Indian (6%), Carib Indian (2%). Language: English (official); some French Patois spoken.

Capital
Kingstown

Currency
The Eastern Caribbean dollar is legal tender and is pegged to the US dollar. US$1 = EC$2.70.

Legal system
Based on English common law with variations. Magisterial district courts exercise both civil and criminal jurisdiction up to a certain limit. The primary court of first instance is the High Court of Justice, from which appeal is made to the Eastern Caribbean Court of Appeal. Final appeals go to the Privy Council in the UK.

Government
The head of state is the British monarch represented by a governor-general. Legislative power is vested in a unicameral House of Assembly made up of 15 representatives elected for five years, and six appointed senators.

Governor-general: Sir Charles Antrobus
Prime minister, finance, legal affairs, information, labour, planning and economic development, Grenadine affairs: Ralph Gonsalves

Cabinet
Deputy prime minister, commerce and trade, foreign affairs: Louis Straker
Agriculture, lands, and fisheries: Selmon Walters
Education, youth affairs, and sports: Mike Browne
Health and the environment: Douglas Slater
National security: Vincent Beache
Social development, family, gender affairs, and ecclesiastical affairs: Girlyn Miguel
Telecommunications, science, technology, and industry: Jerrol Thompson
Tourism and culture: Rene Baptiste
Transport, works, and housing: Julian Francis
Attorney general: Judith Jones-Morgan

Politics
Unity Labour Party (ULP): leader Ralph Gonsalves. New Democratic Party (NDP): leader Arnhim Eustace. People's Progressive Movement (PPM): leader Ken Boyea. United People;s Movement (Adrian Saunders). In the March 2001 elections the ULP took 12 of the 15 parliamentary seats, ousting the NDP from government. The NDP took the remaining three seats. The next elections are due in 2006.

Economic overview
St. Vincent and the Grenadines is a small open economy largely agriculture-based with a growing services sector including tourism, telemarketing, and a small offshore financial centre. Agriculture (mainly bananas) and mining make up about 9% of GDP, while the service sector, mainly tourism, makes up about 38% (excluding government services). In 2002 total visitor arrivals were about 245,800 compared to 280,700 in 2000. Tourist receipts contributed US$78.4 million to the economy in 2002. The banking sector contributed 6.4% of GDP. Government is attempting to diversify by encouraging the development of the offshore financial business. The co

Gross domestic product (2002 est.)
Real growth 0.7%. Nominal GDP was US$360.6 million

Central Bank Reserves (imputed reserves with the ECCB)
US$42.7 million (June 2002)

Trade (2002 est.)
Current account deficit: -US$42.5 million. Merchandise exports US$42.2 million; merchandise imports US$152.4 million; services (net) US$70 million; capital account balance US$34.5 million; overall balance US$8 million.

Inflation rate (CPI) (2002)
1%

Labour force
About 40,000 with 60% working in agriculture. There are no figures available on unemployment.

Government accounts (2002 est.)
Total revenues and grants: US$116 million, of which US$110 is current revenue; total expenditure US$129 million, of which US$104 million is current expenditure; overall deficit: about US$13 million. Public debt: US$260.7 million, about 72% of GDP.

Public holidays (2004)
1 January (New Year's Day), 22 January (St. Vincent and the Grenadines Day); 9 April (Good Friday), 12 April (Easter Monday), 3 May (Labour Day), 31 May (Whit Monday), 5 July (Caricom day and Carnival Monday), 6 July (Carnival Tuesday), 2 August (August Monday), 27 October (Independence Day), 25 December (Christmas), 26 December (Boxing Day).

Time zone
GMT -4 hours. There is no summer time clock change.

Sources
Government of St. Vincent and the Grenadines
Offshore Finance Authority
US State Department: Background Notes
International Monetary Fund
Eastern Caribbean Central Bank
Elections Around the World
Holiday Festival