Offshore Services Overview - Belize

Background

Registration of Merchant Ships Act

International Business Companies Act

Trusts Act

Offshore Banking Act

Money Laundering (Prevention) Act

International Financial Services Commission Act

International Insurance Act

Mutual Funds Act

Protected Cell Companies Act

Limited Liability Partnership Act

Retired Persons (Incentives) Act

International Financial Services Commission

Commercial Free Zone Act

Export Processing Zone Act

Future Legislation

Comment

Background

Belize is now in its second decade of providing international financial services. Belize's first inroad into this industry was an opportunistic effort to take advantage of the exodus of merchant ship registrations during the United States-Panama crisis in 1989. Since then Belize has matured into a full service international financial jurisdiction, with a wide range of enabling offshore legislation.

In expanding its scope of service, Belize has not forgotten the importance of having in place the appropriate regulatory mechanisms to maintain and enhance its reputation as a jurisdiction committed to preventing abuse by criminal elements. As such, the Offshore Banking Act was delayed until appropriate anti-money laundering legislation could be enacted. The International Financial Services Commission was also established to regulate the provision of international financial services (IFS), including registered agent services for international business companies and trustee services. Any IFS practitioner must be licensed to practise by the IFS Commission and strict due diligence requirements are necessary before any application can be approved. Recently a code of conduct has been passed governing, among other things, the client verification practices of IFS practitioners (particularly registered agents).

Registration of Merchant Ships Act

In 1989 Belize enacted the Registration of Merchant Ships Act, which established an open ship registry, the International Merchant Marine Registry of Belize (IMMARBE). The Registration of Merchant Ships Act has since been amended in 1996. Numerous regulations have also been passed to make the process of registration with IMMARBE more transparent and make IMMARBE comply with international merchant shipping standards. These include the following:

the Registration of Merchant Ships Regulations 1991;

the Vessels under 500 Gross Registered Tons (in Service Outside the Territorial Waters of Belize) Regulations 1991 (amended 1997);

the Pleasure Vessels Regulations 1991;

the Fishing Vessels of 24 Metres in Length and Above Safety Regulations 1995;

the Disciplinary Regulations 1999; and

the Safe Manning, Hours of Work and Watchkeeping Regulations.

Other applicable legislation includes:

parts of the UK Merchant Shipping Act 1894;

the UK Merchant Shipping (Tonnage) Act 1965;

the UK Merchant Shipping (Oil Pollution) Act 1974;

the UK Merchant Shipping (Liability of Shipowners) Act 1958; and

the UK Merchant Shipping (Safety and Load Line Conventions) Act 1932.

All of these acts were extended to Belize while it was a colony of the United Kingdom.

Under the Registration of Merchant Ships Act, any person of the age of majority (or his or her authorized representative) or a corporate body may apply to any office of IMMARBE for registration of a vessel in IMMARBE. The application must be accompanied by the appropriate fee, which is based on the size of the vessel. The application for provisional registration should be accompanied by a duly notarized power of attorney in favour of the vessel's agent. Every vessel accepted for registration is granted a provisional registration that is valid for six months.

An applicant may apply for permanent registration while the provisional registration is valid. However, every application for permanent registration must be accompanied by:

a duly notarized bill of sale (or builder's certificate if the vessel has been newly built);

an original deletion certificate or a certified copy of the extract of registry from the previous flag administration;

a duly notarized power of attorney in favour of the shipping agent of the vessel;

an original or certified true copy of a tonnage certificate issue by a survey company authorized by IMMARBE; and

in the case of a vessel that is more than 20 years old, an inspection report prepared by an authorized government safety inspection surveyor stating that the vessel has passed a seaworthiness inspection.

The expertise and efficiency of IMMARBE and the low costs of registration make Belize an attractive jurisdiction for merchant ship registration.

International Business Companies Act

In 1990 Belize enacted the International Business Companies (IBC) Act, which was based on the British Virgin Islands model. Any person (not a resident of Belize) may, singly or jointly, incorporate a company under this act provided that their objective is not prohibited by any of the laws of Belize.

The only limitations of an IBC are that it cannot:

carry out business with persons resident in Belize;

own an interest in real property situated in Belize;

carry out banking business, trust business, collective investment schemes, or business as an insurance or reinsurance company, insurance agent or broker, unless it is licensed under an enactment authorizing it to carry out such business;

carry out the business of providing the registered office for companies; or

hold securities in, or issue them to, a local company.

Recently the IBC Act has been amended to provide for the incorporation of limited life companies.

A Belize IBC enjoys total income and business tax and stamp duty exemptions. Equally important, an IBC is exempt from exchange control regulation.

Although Belize's IBC Act is standard mirroring the British Virgin Islands model, Belize is an extremely attractive jurisdiction for IBC formations due to the efficiency and relatively low cost of registration by the IBC Registry, and Belize's status as an independent sovereign and economically stable country. The recent statistics on IBC registration bear out Belize's growing popularity, as it is enjoying the fastest rate of IBC registration among Caribbean offshore jurisdictions (including the British Virgin Islands).

Trusts Act

Belize's Trusts Act was enacted in 1992 to supplement offshore legislation. It remains one of the strongest and most flexible asset protection trust statutes in the world.

Where a trust is created under the law of Belize, the Supreme Court of Belize shall not vary it, set it aside or recognize the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect of:

the personal and proprietary consequences of marriage or the termination of marriage;

succession rights (whether testate or intestate), including the fixed shares of spouses or relatives; or

the claims of creditors in insolvency.

The law goes so far as to provide that the statutory prohibition on voluntary transfers with intent to defraud...