Organization : Vanuatu Financial Services Commission
Type of Facility : Company Trading & Registration
Country: Vanuatu
Website : http://www.vfsc.vu/index.php/services/forming-a-company
Company Trading & Registration :
What is a Company:
The concept of a “Limited Liability Company” was first legislated in the United Kingdom in 1855. Its purpose is to separate the legal identity of the Company from the personal identity of its owner (or owners).
Related : VFSC Vanuatu Financial Services Commission Business Name Registration : www.statusin.org/8621.html
In particular the creation of a separate corporate and legal identity allowed the owners not to be personally liable (i.e. from their personal assets) for the liabilities of the Company. It also enables the existence of “Shareholders” – a number of owners who each have a share in the Company. Under a shareholding arrangement each owner is only liable up to the limit of what he or she has promised to put into the Company.
This is why the term “Limited Liability Company” is used. The word “Limited” (Ltd in brief) warns involved third parties – e.g. Lenders, Creditors etc. – that the liability of the Company’s owners is limited in amount. Note that it is also possible to have a “Limited Partnership”.
Company types:
Under Vanuatu law a Limited Liability Company can be Limited by shares (as above) or by Guarantee. Limited by Guarantee is where the owners guarantee debts up to a certain sum. This usually a limit per head and is usually small. Often used by clubs – e.g. the Golf Club, Club Vanuatu etc.
There are 3 types of Limited Liability Company in Vanuatu and each type must comply with all laws which apply to them. They are:
Local Companies:
These have full powers to do business in Vanuatu. They must have a valid Business Licence if their activity requires it. They can conduct their business anywhere in the world.
Local Companies can either be Public or Private. Public Companies are entitled to sell shares to the general public if they issue a prospectus while Private Companies are not allowed to.
Exempted Companies:
These are severely restricted as to what they can do in Vanuatu. They cannot make contracts or agreements with local companies or persons except in regard to business carried on outside of Vanuatu. They can have bank accounts and agreements with Vanuatu based Banks, Accountants, Lawyers, Trust Companies etc. They can contract with other Exempt Companies and International Companies.
The International Companies (Amendment) Act No. 11 of 2010 provided for the continuation of existing exempted companies as companies under the International Companies Act effective 8 August 2010. As a result, exempted companies as a category of companies in Vanuatu no longer exists.
International Companies:
These cannot do business in Vanuatu except to further their business elsewhere. This category of company provides for more flexibility and simpler administration than an Exempted Company.
(Note that a TRUST is not a legal entity but something which sets out the terms on which someone holds property on behalf of another. Only a Local Company which holds a valid Trust Company Licence can charge for trustee services.)
Register of companies:
What has to be filed and what is available to the public?:
Local companies:
Must file with the Registrar of Companies the following:
** Legal Documents which govern the Company’s incorporation – its Memorandum of Association (which is the constitution of the Company and which specifies its objectives and activities that it is allowed to take part in); its Articles of Association (these are the internal rules of the Company).
** Notification of any changes to the Company’s Directors, Shareholding and Secretary, and of most mortgages or charges on its property.
** Certain Special Resolutions of the Company
** An “Annual Return”. This gives standard information about the Company as at a specified annual date – e.g. Authorised Shares and Issued Shares. The Annual Return is due on the anniversary date of the Company’s incorporation (see below) and must be filed within 28 days of that date.
** If the Company’s turnover exceeds VT 20 Million in any year it must have audited accounts and must file the audited accounts with the Registrar of Companies. The Registrar will examine the “Audit Certificate” and if it is “Qualified” will demand the reasons surrounding the qualification.
** All the above information is available for public inspection at the Registrar’s Office. A search fee is charged by the Registrar. The persons searching the records of a company cannot remove any of the records but the Registrar’s Office will provide photocopies on request for a nominal charge.
Exempt companies:
Exempted Companies which carry on the businesses of banking, insurance, trustees or selling securities must file the same documents as Local Companies and file audited accounts.
Other Exempted Companies need not be audited nor file annual accounts, and the Annual Return is simpler. There is no public file for Exempted Companies. The Registrar’s Office cannot show documents in respect of any Exempted Company except under a Court Order or at the written direction of the Exempted Company.
International companies:
International Companies have a public file but such companies do not have to file as many documents as the other three categories of companies nor do they have to file an Annual Return.
They have a “Constitution” instead of Memorandum and Articles of Association. They must file the details of their Incorporators, their Registered Office and their Registered Agent and of mortgages and charges on their property.
Notes on incorporation of companies and shareholding:
** Before the Registrar signs the “Certificate of Incorporation” for a Company all legal requirements must fulfilled. For example the Memorandum and Articles of Association must be properly completed as well as the other information required in Section 3 above.
** A Local Company must have 2 or more shareholders if private and 7 if public. An Exempted Company needs 2 and an International Company only needs 1.
** Local and Exempted Companies (other than a private Company) must have at least 2 Directors, one of which must be resident in Vanuatu. Private Companies must have at least one Director.
** A Company must not carry out business before its Certificate of Incorporation has been signed and issued. The date of signing is its “Date of Incorporation”, but pre-incorporation activities of an International Company can be ratified after incorporation.
** A shareholder normally has a right to a share of the Company profits, and a share of its dividends. Shareholders also most commonly have a right to vote in Company matters and a share in the Company’s residual assets if it is liquidated.
** Partially paid shares can be forfeited if not paid up when called.
** All shares, apart from Bearer Shares, require the Company, through it’s directors, to issue a Transfer of Shares Certificate.
** Each Company must have a Registered Office and (other than an International Company) a Company Secretary. Each International Company must have a Registered Agent. Certain documents cannot be signed by a single person holding both positions (i.e. Director and Company Secretary).
** In respect of the Registered Office address the Registrar will insist on obtaining and checking a Land Title where he thinks there may be some difficulty with the address.
Steps in company formation:
Special note on liquidations : Debits owed to government
A “Liquidation” is where the assets of a Company are “Liquidated” – i.e. turned into “Liquid” assets such as cash or bank balances in order to pay outstanding creditors as fully as the proceeds from liquidating the assets will allow. “Liquidated assets” may be transferred to creditors in kind (no sale and conversion to cash) and if there is a surplus after paying creditors, all assets are distributed to shareholders who are entitled to receive distributions (which may not be all shareholders).
The types of fees owed by Companies to the Government (including the Commission) are “Preferential Unsecured Debts” if incurred within a year of the Liquidation. This means that they are settled first as a priority over other unsecured creditors of a Company’s debts.
Company and trusts service providers:
These entities and individuals assist investors with company trading and registration requirements for a fee. They range from Local Companies, Trust Companies, Lawyers, and Accountants to private individuals. A list of the current providers can be found in the CTSP Directory. Not all providers are members of the Financial Centre Association of Vanuatu.