IN076 - Migration of Companies to Nevis

The suitability of a particular jurisdiction as a domicile for international business cannot be considered as permanent and can be affected by many economic or social changes, either within the jurisdiction itself or by external forces whose influence have a direct bearing on that jurisdiction. Sometimes it becomes beneficial or even essential to consider relocating all or part of an international structure to an alternative jurisdiction.

Consider the following hypothetical examples:

• A previously stable region with long-standing international business legislation, suffers a military coup and is plunged into a period of civil unrest, international pressure and economic turmoil.


• A more stable jurisdiction where the government is unable or unwilling to keep within its own domestic policies, or bows to international pressures to make changes aimed at reducing the benefits to non-residents of using that jurisdiction for commercial activity.

What are the Options if a Jurisdiction Becomes Unappealing?

There are basically two options for transferring a business from one jurisdiction to another:

1. Incorporate an entirely new company in an alternative jurisdiction; transfer the assets from the old company to the new and then dissolve or allow the original company to be struck off.

2 If the laws of the current jurisdiction do not forbid it, you can apply to migrate the domicile of the existing company to a new jurisdiction, so retaining the history and continuity of the one structure.

Benefits of Migration

The main benefit of migration over switching assets into a new company is that of continuity.

If the existing company has assets that are expensive or difficult to transfer into a new company (such as real estate or intellectual property) the issue can be avoided by moving the existing company to a new jurisdiction. This avoids the need to transfer any assets held within the company. It is also possible that this may avoid potential “deemed transfers” having taken place.

Similarly, where a company is a party to a contract or other agreement that could prove costly or difficult to renegotiate, e.g. to replace the existing party with a new one, renegotiation and implementation of a new agreement may be avoided by migration.

Another benefit that should not be ignored is that of retaining the history of the existing company. This may relate particularly to an owner who set up the company many years previously and who may view the move to a new company altogether as the end of an era. There will also be certain fields in which time has generated the development of goodwill in an existing company. This goodwill may not be retained by a new entity, even if the name is similar or identical.

Reasons Not to Migrate

The two main reasons why the option of migration is not chosen are:

1. Cost
The cost of migrating a company to a new jurisdiction, whilst not prohibitive, is almost certain to be in excess of the cost of forming a brand new company. What must be considered is the underlying cost of transferring the assets between the companies. Where the only assets are liquid and easily transferred, then migration will lose some of its appeal.

2. Uncertainty over the laws permitting migration from the jurisdiction of origin
Dixcart, through its network of contacts across the world, is able to obtain expert advice in the home jurisdiction to ascertain whether or not migration is a permissible alternative.

Why Choose Nevis as a Destination?

The Nevis Business Corporation Ordinance 1984 and the Nevis International Multiform Ordinance 2004 both contain sections specifically enabling the transfer of domicile both into and out of Nevis. For the purposes of this information note we are concentrating on the NBCO only as the transfer to a Multiform Fdn will be the subject of a separate information note.

Corporations domiciled in Nevis, but not resident for tax purposes, pay no tax in Nevis.

Nevis Corporate Law is designed to offer a strong, yet flexible, system to allow a full range of legitimate activities to be undertaken.

Nevis remains a comparatively inexpensive jurisdiction, with an annual renewal fee of US $600.

Emergency Temporary Transfers

The Nevis Business Corporation Ordinance 1984 also allows for the temporary transfer of a company’s domicile to Nevis if the current jurisdiction of domicile is suffering or is under immediate threat of suffering a range of “Emergency Conditions”.

These Emergency Conditions include: war or other armed conflict; revolution or insurrection; invasion or occupation by foreign military forces; rioting or civil commotion of an extended nature; domination by a foreign power; expropriation, nationalisation or consfication of all or part of the assets of the corporation and impairment of the institution of private property.

Under the above circumstances, companies may apply to the Nevis authorities to be granted temporary domicile in Nevis.

Once the Emergency Condition has ended, or earlier if the company so elects, the company must return to the jurisdiction of origin by filing a Certificate of Departure in Nevis.

Procedures and Costs for Transfer of Domicile

Dixcart, through its office in Nevis, is able to provide all of the documents and complete the necessary filings in Nevis to effect a transfer of domicile.

Such a transfer requires completion of the Application for Transfer of Domicile form, and a signed resolution passed by the shareholders. A Certificate of Good Standing and Certified Memorandum and Articles from the jurisdiction that the corporation is transferring from and a statement that the transfer is being made in good faith are also required. Revised Articles will be submitted at the time of application by the registered agents.

As already mentioned, through our wide range of professional contacts in other jurisdictions we are able to ascertain whether or not the jurisdiction of origin expressly prohibits the migration of a company.

Our fees (US$) for arranging the migration, which includes Government fees in Nevis are:

Costs Relating to Redomiciliation to a Nevis IBCApplication to transfer, inclusive of courier US $925.00
Application for emergency transfer US $1,400.00
Certificate of Departure US $475.00
Changing of registered agent US $25.00

Additional costs may be incurred in the jurisdiction of origin in obtaining proof of corporate existence and good standing, and in dissolving the company in that jurisdiction, once migration is complete.

Summary

The permanent or temporary migration of a company in to Nevis may be an effective means of restructuring all or part of an international business, whilst retaining the continuity of an existing entity.

It may also provide sanctuary from turmoil or unrest in the existing jurisdiction.

On applying for transfer of domicile, the Nevis authorities require a confirmation that the said transfer will not hinder, delay or defraud existing shareholders, creditors, claimants or other parties in interest. Nevis Law also expressly states that a transfer of domicile shall not affect any liabilities or obligations incurred prior to the transfer.

For further information or to arrange for a transfer application to be made to Nevis, please speak to either John Terry in our Nevis office or your usual Dixcart contact.


ISLAND OF NEVIS
APPLICATION FOR TRANSFER OF DOMICILE
PURSUANT TO PART XII OR PART XIII OF THE NEVIS
BUSINESS CORPORATION ORDINANCE, AS AMENDED

1. The name of the corporation is ...............

2. The corporation was established under the laws of ............. on ....................and it is presently domiciled in .......................

3. The Transfer of Domicile has been approved by the following corporate
action: a resolution passed unanimously by the shareholders at a meeting held at ....................on the ..................

4. Such transfer is made in good faith and will not serve to hinder, delay or defraud existing shareholders, creditors, claimants or other parties in interest.

5. The corporation’s Registered Agent in Nevis shall be Dixcart Management Nevis Limited

6. At the time of transfer, the corporation is not in breach of any duty or obligation imposed upon it by the Ordinance or any law of Nevis.

7. The corporation may be served in Nevis with process arising out of actions or omissions occurring prior to its departure from its present jurisdiction.

8. The Articles of Incorporation shall be identical to the current articles of Incorporation except as follows: a) the Registered Agent shall be Dixcart Management Nevis Limited b) the new domicile and place of incorporation shall be the Island of Nevis.

9. Annexed hereto are:

- Certificate of Good Standing
- Certified Memorandum & Articles of Association
- Revised Articles of Incorporation

IN WITNESS WHEREOF, the undersigned has executed this application on

....................................

I confirm that this is a CERTIFIED TRUE COPY.

Signed:........................
Notary Public