IN095 - Shareholding and Director Requirements of Nevis Corporations

The Nevis Business Corporate Ordinance (NBCO) 1984 is based on Delaware corporate law and is internationally recognised as being extremely straightforward to use and simple to understand. The purpose of this information note is to summarise the key points within the NBCO 1984 (as amended) relating to shareholding requirements and management control of these entities.

Shareholding Requirements

Nevis International Business Corporations (IBCs) are required to issue shares to the owners of the corporation. These shares can be either registered or bearer.

The minimum number of shareholders or owners of the corporation is one. This one shareholder can be either a person or a business entity i.e. a company, trust, limited liability company, limited liability partnership etc.

Registered Shares
With registered shares, a share certificate is issued in the name of the beneficial owner or, at the beneficial owner’s request, in the name of their nominee representative. This name is entered on the share certificate and into the register of shareholders, which the company is required to maintain.

This register of shareholders is not required to be held in Nevis and is not required to be disclosed to the Nevis Regulatory Authorities.

The registered agent is required to hold appropriate documentation identifying the beneficial owner(s). Where the registered agent in Nevis is acting on behalf of another corporate service provider (licensed in an acceptable jurisdiction), the Nevis agent is required to hold a written statement from the other corporate service provider confirming that the appropriate due diligence identification information is held and will be released if required.

Bearer Shares
A company incorporated in Nevis may issue bearer shares in the company and certificates “To Bearer” representing these shares.

For the issue of bearer shares, the company is, however, required to arrange for the certificates themselves to be held by a resident agent in Nevis, or an authorised financial institution, who will have confirmed the beneficial owner of these shares. The shares may only be released on the instruction of the beneficial owner to other registered agents in Nevis, or authorised financial institutions.

The registered agent is also required to report to the Regulator in Nevis that the company has issued bearer shares.

Control

The Nevis Business Corporate Ordinance 1984 (as amended) provides that:

• “The number of directors constituting the entire board shall not be less than three, except that where all the shares of a corporation are held by fewer than three shareholders, the number of directors may be fewer than three but not fewer than the number of shareholders”.
  
  The result is that if there is one shareholder there can be just one director, two shareholders require two directors.
  
  The NBCO goes on to define the directors’ roles and whether or not they have to be actual living people or corporate entities. Again the direct quote is from NBCO 1984 (as amended):


• “Every corporation shall have (i) a president and treasurer, or a managing director, and (ii), a secretary. All officers shall be natural persons except the secretary which may be a corporation.”


• Section 58 (5) states that “Any two or more offices may be held by the same person”, which is important if there is only one shareholder and one director.
  
  The practical application of these director rules is that the company can appoint a corporate director, or corporate directors (if more than one shareholder), but that specified positions on the board eg. president, treasurer, must be assigned to natural persons.
  
  For example: XYZ Corporate Directors Limited can be appointed as director of Nevis IBC Limited but John Smith, natural person, has to be appointed as president. As stated above, however, XYZ Corporate Secretaries Limited can be appointed as secretary to the corporation.

Conclusion

The NBCO 1984 (as amended) provides a very flexible structure for organising corporate entities for clients or to hold assets on behalf of trusts.

Ownership can be vested in just one natural person or entity via registered or bearer shares.

Control of the company can therefore be organised with one director, being a corporate director, or a natural person, subject to the number of shareholders, but the required management positions need to be taken up by natural persons, except the secretary, which may be a corporation.

For further information on this topic or Nevis entities in general, please do not hesitate to contact John Terry in our Nevis office or your usual Dixcart contact.