Business

Gov't introduces to IBC Bill accelerate growth

BY BALFORD HENRY
Senior staff reporter

Thursday, February 22, 2018

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An International Business Companies (IBCs) Bill, which is being debated in the House of Representatives, has raised a glimmer of hope that despite the setbacks there are still encouraging signs for improved economic growth in the short term.

Minister without portfolio in the Ministry of Economic Growth and Job Creation (EGJC), Daryl Vaz, who opened debate on the Bill — “the International Business Companies Act”— in Gordon House on February 13, says that it will modernise Jamaica's appeal as the ideal investment market for international investors, and create a more desirable and competitive business environment in line with international standards and practices.

According to Vaz, the Bill is a key component in a suite of legislation required to support international business and financial activities in Jamaica. The regime is under the supervision of the Jamaica International Financial Services Authority (JIFSA), and the Bill follows on the Partnership Bills for General and Limited Partnerships passed by the House in 2016.

The International Business Companies Act, 1984 was a statute of the British Virgin Islands which permitted the incorporation of International Business Companies (IBCs) within the territory. The Act played a major role in the economic and financial development of the territory in the 1990s, and has been called “the most important piece of legislation in BVI history since the emancipation”.

But Vaz said that Jamaica's IBC Bill is primarily based on the Ontario Business Corporations Act, but provides for the establishment and operation of IBCs in Jamaica.

The IBC Bill provides that these companies shall be incorporated in Jamaica, but may only conduct business activities outside Jamaica (save for a limited number of activities as listed in the Bill), and therefore may not compete in the domestic Jamaica market.

The IBC Bill contains a number of sophisticated features which will prove attractive to international investors, he said. These features include:

(1) Amalgamation of IBCs

(2) Continuance of foreign bodies corporate into Jamaica

It is designed to attract and facilitate a wide variety of international business activities and may be used for a number of purposes including:

(1) Serving as holding companies providing asset protection for intellectual property rights, real property, and the shares of other companies

(2) Serving as vehicles for licensing and franchising

(3) Conducting international trade and investment activities

(4) Acting as special purpose vehicles in international financial transactions

(5) Serving as the international headquarters for global business operations.

“This system will generate economic growth and job opportunities for local personnel who are needed for professional and administrative services,” Vaz said.

The activities within the international financial and business services sector will stimulate significant growth, generate revenues and create direct and indirect employment opportunities for Jamaicans, residing here and within the Diaspora, he stated.

“It is estimated that in the medium term, this industry will generate millions of dollars in foreign exchange and create thousands of jobs for local professionals — lawyers, accountants, corporate secretaries, to name a few, thereby creating a multiplier effect in the local economy,” Vaz insisted.

He said that the implementation of the new JIFSA legislation is done with a view to creating a new sector of business for the island, which, instead of eroding the tax base, would generate further revenue for the Government, through fees derived from company incorporations, registrations, regulatory licences and work permits for expatriate workers.

In terms of incorporation, every company incorporated under this Act must have a company seal, and must maintain a registered office in Jamaica and current records of the office address must be provided to the registrar.

To be incorporated as an IBC, one or more individuals or bodies corporate must submit to the registrar: Articles of Incorporation duly signed, notice of location of the registered office of the company, and the prescribed fee.

The registrar will then issue a certificate of incorporation and assign a company number, which must be printed on the certificate of incorporation provided that the name of the IBC is approved by the registrar and is not a prohibited name.

The IBC must maintain separate capital accounts for each class and series of shares issued by it and the account must be properly updated to include the full amount of consideration received, where the share was issued for money.

Vaz noted that the Bill has three schedules:

(i) The First Schedule outlines how the by-laws for the management of a company limited by shares is to be outlined

(ii) The Second Schedule outlines those offences with respect of which liability is on summary conviction, the monetary penalties applicable to each as well as the relevant sections in the Bill creating the offence

(iii) The Third Schedule outlines those offences in respect of which liability to conviction may be discharged by payment of a fixed penalty, the said fixed penalty and the relevant sections in the Bill creating the offence.

He said that the Bill is designed to attract and facilitate a wide variety of international business activities and boost Jamaica's standing in the international forum, as the ideal location to foster and grow investment.

He added that the IBCs may serve as holding companies for international assets including intellectual property rights, real property and the shares of other companies.

The debate is expected to continue when the House of Representatives resumes sitting.

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