The Companies Bill, the Trusts Bill and the OECD - What's it all about?

Well we have all been hearing about the Companies Bill, the Trusts Bill etc etc..., the SBC continues to show adverts on the telly reminding the public that if they want to comment on any of the Bills, they should do so by February 25.

We've heard that the Bar Association thinks that the Companies Bills 2011 is rubbish and the Robing Room has heard through the grapevine that the Association of Seychelles Accountants are going to basically say the same thing on the Companies Bill.

But why does the Government or certain factions of the Government believe that the current laws needs changing?

It is all apparently because the Organization for Economic Co-operation and Development ("OECD") has been applying some pressure on Seychelles. In particular, the OECD is concerned with the lack of information on the accounts and owners of Seychelles' offshore entities. Put another way, the OECD disapproves of how our current laws allow our offshore companies, primarily the International Business Company ("IBC"), to function without having to provide audited accounts or details on who owns these companies. Not a very transparent practice. Offshore entities have been accused as vehicles for "tax avoidance" (people in the industry like to call it "wealth management"), and the OECD doesn't seem too happy about the fact that there is no easily accessible information on the financial affairs of these offshore entities and its owners. Apparently, the OECD, who maintains a black list of countries with poor transparency laws, has threatened to put Seychelles in the black list unless something is done.

Hesto presto, SIBA, in charge of the offshore industry in Seychelles decided to act upon this. What should they do? Did they go to the Attorney General for advice? Doesn't look like it. Did they consult any of the key institutions connected with the offshore industry? Nope. Apparently, they hired one man to draft the Companies Bill and formulate its policies without wider consultation and the same man also drafted the Trusts Bill, but this time this Trusts Bill was also reviewed by "one of the world's largest offshore law firms and have some of the world’s leading offshore trust lawyers in the major small island state financial services jurisdictions, including Bermuda, Jersey, Cayman Islands, BVI and Mauritius".

This Companies Bill 2011 now wants to change domestic company laws, the Civil Code, the Business Tax Act, accounting practices for not only offshore entities, but also domestic ones and so on and so on. But wait a minute, isn't the OECD's concern only to do with offshore entities? So what is SIBA doing tinkering with other areas of the law that the OECD isn't even concerned about?

Then here comes the odd thing - the Trusts Bill 2011. This bill will actually further protect the true identities of the owners of these offshore entities by making declaration of trusts to the authorities optional. So we have SIBA engaging someone to draft a Companies Bill to please the OECD, then at the same time, SIBA engages that same person, with the assistance of "one of the world's largest offshore law firms and have some of the world’s leading offshore trust lawyers in the major small island state financial services jurisdictions, including Bermuda, Jersey, Cayman Islands, BVI and Mauritius" to prepare the Trusts Bill 2011 to defeat the very concerns that the OECD has.

So the people supporting the Companies Bill 2011 are saying that it must get passed to please the OECD and then, at the same time, that very same Companies Bill 2011 isn't actually addressing the OECD concerns and then in comes the Trusts Bill 2011, which goes even further against the OECD recommendations. Are the people who are backing these Bills begging the OECD to put Seychelles on the black list? Cause it definitely looks like it. The Government might as well tell the OECD to put us on the top of that black list right now.

This is what happens when you don't hold honest and proper consultations with the real experts such as your Attorney General, your legal practitioners (the real ones who actually did a proper pupillage), your accountants and most importantly... your public.

The Robing Room is the official blog of the Seychelles Legal Environment Website (sites.google.com/site/theseychelleslegalenvironment), the only website about the Seychelles Legal Environment that is constantly updated.