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Seychelles IBC

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    SEYCHELLES FOUNDATION FORMATION

    The Seychelles Foundation is a popular choice for individuals and families looking to establish a private or family foundation. Seychelles, an archipelago of 115 islands located in the Indian Ocean, has a well-established legal framework for foundations that offers many benefits, including asset protection and flexibility.

    Incorporated under the Seychelles Foundation Act, the Seychelles Foundation is a legal entity that has a separate legal personality and perpetual succession. This means that the foundation can hold assets, enter into contracts, and sue or be sued in its name. It is also exempt from taxes on its income and capital, making it an attractive option for those looking to protect their assets.

    One of the key benefits of the Seychelles Foundation is its flexibility. Unlike trusts, foundations have no beneficiaries, which allows for greater discretion in the management and distribution of assets. Additionally, the Seychelles Foundation Act allows for the appointment of any person as the founder, including a corporation or another legal entity, making it a suitable option for both personal and business use.

    Another benefit of the Seychelles Foundation is its clarity on legal issues. The Seychelles Foundation Act provides clear guidelines on the assignment of the founder’s rights and the protection of the foundation’s assets. This gives greater certainty and security to those using the foundation for asset protection.

    Furthermore, Seychelles is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), which promotes cooperation among member countries to combat money laundering and terrorism financing. The country has also implemented the Financial Action Task Force (FATF) standards for anti-money laundering and countering the financing of terrorism.

    KEY REQUIREMENTS FOR SETTING UP A SEYCHELLES FOUNDATION

    Seychelles Foundation Formation

    TIMELINE OF SETTING UP A SEYCHELLES FOUNDATION

    Incorporation of Seychelles Foundation
    3 to 5 days
    Corporate Bank Account Opening
    3 weeks

    The Seychelles Foundation Act sets out the mandatory requirements for the formation and operation of a foundation in Seychelles. Some of the key requirements include:

    Name

    The foundation must have a unique name that is not similar to any existing company or foundation in Seychelles.

    Registered Agent

    The foundation must appoint a registered agent who is authorized to carry out business in Seychelles.

    Registered Office

    The foundation must have a registered office in Seychelles where official communications and documents can be sent.

    Incorporation Document 

    The foundation must have a charter, also known as the incorporation document, which sets out the foundation’s purpose, objectives, and powers. The charter must be signed by the founder or authorized representative.

    Founder

    The foundation must have a founder, which can be an individual or a legal entity. The founder’s rights and powers are set out in the charter.

    Council

    The foundation must have a council, which is responsible for the management and administration of the foundation. The council must consist of at least one member.

    Beneficiaries 

    The foundation must not have any beneficiaries.

    Assets

    The foundation must have assets, which can be cash, securities, real estate, or other property. The assets must be transferred to the foundation at the time of its formation.

    OVERVIEW OF SEYCHELLES FOUNDATION

    A Foundation is a legal entity established under the Seychelles Foundations Act 2009, with its management structure and no members. It is created when the Founder donates assets to the Foundation. These assets can be in the form of cash, property, shares, or any other valuable asset.

    The foundation is set up for a specific purpose and is controlled by a board of directors or trustees who are responsible for managing the foundation’s assets and carrying out its objectives.

    Foundations are a unique form of organization that combines the benefits of trusts for succession planning with the flexibility and autonomy of a corporation. One of the main advantages of foundations is that they offer a high degree of control over the assets that are transferred to them.

    For instance, the founder can specify the purpose of the foundation, the beneficiaries, and the distribution of assets. This can be especially useful for individuals who wish to ensure that their assets are used for a specific cause or passed on to specific beneficiaries in the future.

    Additionally, foundations are often used for charitable and philanthropic purposes, such as funding grants for non-profit organizations. They can also be used for private purposes such as asset protection, estate planning, and tax planning. Foundations offer a high degree of privacy and confidentiality, which can be beneficial for individuals who wish to keep their financial affairs private.

    In recent years, private foundations have become increasingly popular as an alternative to traditional asset management and succession planning structures, such as private companies and trusts, due to the rising tax rates and unfavorable capital restrictions.

    The tax efficiency of foundations can be particularly attractive for high-net-worth individuals as they can provide a way to minimize taxes and maximize the potential for the growth of assets. Moreover, foundations can also be used to protect assets from creditors, lawsuits, and other legal claims.

    Furthermore, foundations are not just limited to individuals with high net worth. They are becoming increasingly popular among middle-class families, who are looking for ways to manage their assets and plan for their future. They can be used to create a lasting legacy and provide for future generations, while also protecting the assets from creditors or legal claims.

    In conclusion, foundations are a powerful legal structure that offers a high degree of control over assets, privacy, and confidentiality. They can be used for a variety of purposes, including charitable and philanthropic causes, asset protection, estate planning, and tax planning.

    With the increasing popularity of foundations, they are becoming an increasingly popular choice for individuals and families looking for ways to manage their assets and plan for the future.

    PROS AND CONS OF REGISTERING SEYCHELLES IBC

    PROS

    The high degree of control over assets Seychelles

    High degree of control over assets

    The founder can specify the purpose of the foundation, the beneficiaries, and the distribution of assets.

    Privacy and confidentiality Seychelles

    Privacy and confidentiality

    Foundations offer a high degree of privacy and confidentiality, which can be beneficial for individuals who wish to keep their financial affairs private.

    Tax efficiency Seychelles

    Tax efficiency

    Foundations can provide a way to minimize taxes and maximize the potential for the growth of assets.

    Asset protection Seychelles

    Asset protection

    Foundations can be used to protect assets from creditors, lawsuits, and other legal claims.

    Flexibility Seychelles

    Flexibility 

    Foundations can be used for a variety of purposes, including charitable and philanthropic causes, asset protection, estate planning, and tax planning.

    CONS

    Complexity Seychelles

    Complexity

    Setting up and managing a foundation can be complex and may require the assistance of legal and financial experts.

    Ongoing compliance Seychelles

    Ongoing compliance

    Foundations are subject to ongoing compliance requirements and must file annual reports and maintain accurate records.

    Lack of ownership Seychelles

    Lack of ownership

    The foundation’s assets are held in trust for the benefit of the beneficiaries and the founder does not have ownership rights.

    WHAT ARE THE VARIOUS USES OF A SEYCHELLES FOUNDATION?

    A Seychelles Foundation can be used for a variety of purposes, including:

    Asset protection

    Foundations can be used to protect assets from creditors, lawsuits, and other legal claims.

    Estate planning

    Foundations can be used to create a lasting legacy and provide for future generations.

    Tax planning

    Foundations can provide a way to minimize taxes and maximize the potential for the growth of assets.

    Charitable and philanthropic causes

    Foundations can be used to fund grants for non-profit organizations and other charitable causes.

    Holding of shares

    foundations can be used to hold shares of companies, this way, it can be used as a tool for business and investment.

    Succession planning

    foundations can be used to transfer assets to the next generation in a controlled and tax-efficient way.

    Privacy and confidentiality 

    Foundations offer a high degree of privacy and confidentiality, which can be beneficial for individuals who wish to keep their financial affairs private.

    ANNUAL REQUIREMENTS OF A SEYCHELLES FOUNDATION

    Annual requirements for a Seychelles Foundation include the following. 

    • Annual Return: A foundation must file an annual return with the Registrar of Foundations each year. This return must include details such as the foundation’s assets and liabilities, income and expenses, and any changes to the foundation’s trustees or council members.
    • Annual Financial Statements: A foundation must prepare annual financial statements, which must be audited by an independent auditor. These statements must be filed with the Registrar of Foundations each year.
    • Annual General Meeting: A foundation must hold an annual general meeting of its council members, at which the council members must review the foundation’s activities and approve the annual financial statements.
    • Maintenance of Records: A foundation must maintain accurate records of its activities, including minutes of meetings, financial statements, and other relevant documents.
    • Appointment of a registered agent: A foundation must appoint a registered agent who will be responsible for maintaining the foundation’s records and filing the required annual returns and statements with the Registrar of Foundations.

    It’s important to note that failure to comply with these annual requirements can result in penalties and fines, and in some cases, the liquidation of the foundation. Therefore, it’s important to ensure that all annual requirements are met in a timely and accurate manner.

    FAQs

    What is a Seychelles Foundation Protector?

    A Seychelles Foundation Protector is a legal entity that acts as a protector for a Seychelles Foundation. The role of a protector is to oversee the foundation and ensure that it is being managed by its stated purpose and the wishes of its founder.

    The protector has the power to appoint and remove foundation council members and to approve or veto certain decisions made by the foundation council. In some cases, a protector may also have the power to amend the foundation’s charter or articles of incorporation. The Seychelles International Business Authority (SIBA) is responsible for the registration of Seychelles foundations.

    What is a Seychelles Foundation beneficiary?

    A Seychelles Foundation beneficiary is a person or entity that is designated to receive benefits or assets from a Seychelles Foundation. The beneficiaries of a foundation can be specified in the foundation’s charter or articles of incorporation, which is the legal document that establishes the foundation. The beneficiaries can also be determined by the foundation council or the protector, depending on the rules set out in the foundation’s charter or articles of incorporation.

    The beneficiaries can be natural persons or legal entities, and their rights and obligations are defined by the foundation’s charter. The foundation’s assets are held for the benefit of the beneficiaries and the foundation’s council is responsible for managing those assets for the benefit of the beneficiaries.

    What is a Seychelles foundation charter?

    A Seychelles foundation charter is a legal document that establishes a Seychelles Foundation. It is similar to the articles of incorporation for a corporation. The charter contains the foundation’s name, purpose, the initial endowment, rules for the foundation council, the powers of the foundation council, the powers of the protector, the rights of beneficiaries, and other information required by the Seychelles International Business Authority (SIBA) for the registration of the foundation.

    The charter also defines the legal status of the foundation, its relationship with its beneficiaries, and the rights and obligations of the foundation council and the protector. Once the charter is approved and registered with the SIBA, the foundation becomes a separate legal entity with its assets, liabilities, and legal personality, and it’s governed by the rules set out in the charter.

    How much does it cost to set up a Seychelles foundation?

    The cost of setting up a Seychelles foundation will vary depending on several factors, such as the complexity of the foundation’s structure, the services required from professional service providers, and the fees charged by the Seychelles International Business Authority (SIBA) for registration and ongoing compliance.

    The fees charged by SIBA for registration of a foundation are as follow:

    • A one-time registration fee of SCR 12,000 (approx. US $ 880)
    • An annual fee of SCR 6,000 (approx. US $ 440)

    Additionally, professional service providers such as lawyers and registered agents may charge additional fees for their services, such as drafting the foundation charter, providing nominee services, and providing ongoing compliance and administration services. These fees can vary widely and depend on the specific services required and the provider you choose.

    It is also recommended to have some capital to meet the legal requirement of having an initial endowment, which is a minimum of SCR 1 (about US $ 0.07)

    It is important to note that the above information is based on current knowledge and fees may change over time. It is advisable to verify the fees with the Seychelles International Business Authority (SIBA) for the most up-to-date information and to consult with a legal professional for advice on the specific costs of setting up a foundation in Seychelles.

    Is local presence needed for a Seychelles Foundation?

    A local presence is not generally required for a Seychelles Foundation, as it is considered an offshore legal entity. This means that the foundation can be set up and managed by non-resident individuals or entities, and does not require a physical presence in Seychelles. However, it is mandatory to appoint a registered agent, who must be a resident of Seychelles and authorized by the Seychelles International Business Authority (SIBA), to act as the foundation’s point of contact with the government and to assist with the registration and ongoing compliance requirements.

    Additionally, it is important to note that every foundation must have a foundation council composed of at least one member who is a resident of Seychelles or a Seychelles International Business Company (IBC). The foundation council is responsible for managing the foundation and making decisions on behalf of the foundation.

    It is also important to note that the Seychelles foundation, like any other legal entity, must comply with the laws and regulations of the country in which it operates and it is advisable to consult with a legal professional for advice on the specific requirements for setting up and maintaining a foundation in Seychelles.

    What are the properties of a Seychelles Foundation?

    A foundation can possess several types of property, such as shares, investments, real estate, insurance policies, and other assets. These assets, however, are not permitted to be located in Seychelles unless certain exceptions are made under the Foundations Act.

    Can a Seychelles foundation partake in commercial activities?

    A Seychelles foundation can partake in commercial activities as long as it is in line with the foundation’s purpose as stated in the foundation charter. The foundation charter outlines the purpose for which the foundation was created, and it should be non-profit and for the benefit of the beneficiaries.

    However, some foundations are created for commercial purposes, such as holding assets and conducting business activities. The foundation council is responsible for managing the foundation and making decisions on behalf of the foundation, and it is responsible for ensuring that the foundation’s activities align with the foundation’s charter and the laws and regulations of Seychelles.

    It’s important to note that any income generated by the commercial activities of the foundation is considered the foundation’s property and it must be used for the benefit of the beneficiaries or the foundation, as stated in the foundation’s charter. Also, the foundation must comply with all the laws and regulations regarding commercial activities in Seychelles, such as obtaining the necessary licenses and permits and keeping accurate records of its financial transactions.

    It is advisable to consult with a legal professional for advice on the specific requirements for conducting commercial activities with a Seychelles foundation and to ensure compliance with the laws and regulations of Seychelles.

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