The laws of Turks & Caicos Islands comprise locally-enacted statutes or ordinances, statutes specifically extended to TCI by Britain and, to the extent applicable the common law of England.
TCI started its, offshore finance activities in the early i98os through the ;activities of local professionals and the introduction of the Companies Ordinance in i98i, providing for the TCI exempted Company, or IBC. In i989 the industry took on a more formal structure with the creation of the Offshore Finance Centre Unit, now renamed Financial Services Commission -(FSC). The FSC is headed by a Superintendent, Mr. John Lawrence Superintendent, Mr. James Cooney, an Insurance Superintendent, Mr. Colin Holder, and the Registrar of Companies, Miss Deborah Lindsay.
The main role, of the FSC is to regulate all activities within financial services industry. These activities are banking,' insurance, trustee business, investment activities including mutual funds, involving the public and all forms of company and partnership registration. Regulation covers the two areas of licensing companies to carry out financial services and the ongoing supervision of those activities through reporting, analysis of financial condition and regulatory reviews. The existence of a single authority covering the regulation of financial services., as well as company registration, presents both a convenient and workable solution for the industry, ensuring that level standards of regulation are applied to all the different financial activities which take place in TCI.
BANKING
TCI is keen to see further development in what it believes is a core financial service for a offshore industry. New guidelines have recently been introduced for the licensing of new banks.
Applications for domestic bank licences may be made by branches and subsidiaries of existing banks-, already subject to consolidated supervision in their home jurisdiction. Applications for offshore bank licences may additionally be made by affiliates of existing banks already subject to the same existing supervision and by major companies who may wish to form a bank in order to conduct in-house treasury functions.
COMPANIES AND PARTNERSHIPS
The Companies Ordinance embraces: a) Ordinary companies, which allow for business to be carried on within TCI and real estate to be owned in TCI. b) Exempted Companies (IBCs), which are ideal for holding personal assets and investments, conducting international trade outside TCI or undertaking a specific offshore activity. Exempted Companies are issued with an automatic 20 year tax exemption certificate. c) Limited Life Companies. This unique form of corporate vehicle allows in some jurisdictions, particularly the USA, tax advantages pertaining to a partnership, whilst retaining at the same time the limited liability aspects of a corporate entity.
One interesting feature of the TCI Companies Ordinance is that companies may have members with varying liability, thus allowing TCI companies to be set up for specific purposes where the economic requirements of certain classes of members may be different.
All names of companies require the prior approval by FSC to. ensure that no name gives the impression of providing a public financial service without due licensing. The fact that the FSC covers [both company registration and financial services licensing allows for efficient control of this important supervisory activity.
Partnerships are covered by the Limited Partnerships Ordinance i992. TCI partnerships can have certain advantages over other types of offshore vehicles, namely non-public disclosure of-ownership, limited liability in respect of certain partners and-direct control of assets.
INSURANCE
Offshore insurance has become a major activity for TCI and the industry is made up of entities covering general insurance, life insurance, captive insurance, producer-owned reinsurance, insurance management, local agents, brokers and principal insurance representatives. Producer-owned reinsurance companies are subject to certain exemptions in the reporting requirements under Section 7(11) of the Insurance Ordinance i989 and are often referred to as 7(II) insurance companies. Other than for producer owned reinsurance companies, all applicants for an insurer's licence must submit a detailed business plan, details of proposed capitalisation and full background information on beneficial owners and their experience. No person or company, including any agent or broker, is permitted to carry on insurance activities within or from within TCI without being duly licensed.
TRUSTS
All companies carrying on the business of a professional trustee must be licensed in TCI under the Trustees (Licensing) Ordinance i992. Although trusts may be set up to ensure -confidentiality, the purpose of the legislation is to ensure that the trustees are fit and proper persons anti have the financial resources to conduct trust business. Minimum capital requirements tire US $250,000 and 'all trustee companies are required to be audited annually. Two types of licence are catered to under the legislation: (a) an unrestricted licence; and (b) a restricted -licence where the trustees may only act on behalf of pre-named settlor.
OTHER FINANCIAL SERVICES
Any mutual fund or brokerage service offering investment or investments to the public must have the prior approval by FSC. The FSC sets out specific requirements which need to be in place before any such service can be introduced. Any prospectus offering shares to the public also requires specific prior approval, by FSC.
CONCLUSION
Supervision, can at times be a tedious exercise both for the supervised as well as for the supervisor. It is important however to develop and reserve the quality of regulation and the continuance of good regulation establishes the integrity and credibility of the TCI based company in international markets.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Supervision Of TCI's Financial Sector
