St. Vincent and the Grenadines

Saint Vincent and the Grenadines (SVG) is an independent island state located in the Eastern Caribbean, recognized for its political stability and commitment to upholding the rule of law. Its legal framework supports a favorable environment for company formation and cross-border business operations, particularly through the vehicle of the Business Company (BC), formerly known as the International Business Company (IBC).

The regulatory basis for BCs is established under the Business Companies (Amendment and Consolidation) Act, which governs their formation, governance, and compliance obligations. SVG’s legislation offers a relatively streamlined approach to company incorporation and administration, making it an accessible jurisdiction for international entrepreneurs and investors.

A Business Company in Saint Vincent and the Grenadines is a legal entity limited by shares, comparable to a limited company in the United Kingdom or a corporation in the United States. Shareholders invest in the company by subscribing to its shares, which confer both voting rights and entitlements to profits, subject to the share class.

The governance of a BC is primarily determined by its Articles of Incorporation and Bylaws. These governing documents must comply with the provisions of the Business Companies Act, although there is room for flexibility in drafting internal rules. The law outlines the duties and powers of directors and shareholders, while allowing companies to tailor specific provisions to meet the operational needs of the business.

The board of directors is responsible for managing the company’s affairs. Directors may be natural persons or legal entities and are appointed by the shareholders. Directors are empowered to enter into binding agreements on behalf of the company. Unlike some jurisdictions, SVG does not impose mandatory requirements for the appointment of company secretaries, nor does it require companies to hold annual general meetings.

A BC can be formed with minimal structural inputs. There is no required minimum capital contribution, and it may be incorporated with a single shareholder and a single director. This simplicity contributes to the jurisdiction’s appeal for small or closely held entities.

Saint Vincent and the Grenadines permits Business Companies to operate from anywhere in the world. The company’s books and records are not required to be maintained within the territory. Furthermore, BCs are authorized to issue registered shares, either with or without par value, and may assign voting or non-voting rights as determined by the articles of incorporation.

Each BC is required to maintain a registered office and appoint a registered agent within SVG. These are ongoing obligations and are subject to annual government fees, which are typically due each December.

SVG applies a territorial tax system. This means that only income sourced from within the jurisdiction is subject to corporate taxation, while income earned from foreign activities is exempt. Specifically:

• Local-source income is taxed at a flat rate of 30%.
• Foreign-source income is not subject to taxation in SVG.

Despite the territorial tax regime, all Business Companies are required to file an annual tax return, irrespective of whether they owe any tax.

Additionally, BCs are obligated to submit annual financial statements. However, there is a simplified reporting alternative for smaller entities. Companies with gross annual revenue not exceeding four million Eastern Caribbean dollars (XCD), or with total assets not exceeding two million XCD, may submit a declaration of solvency instead of full financial statements.

Another mandatory requirement is the submission of an annual economic substance declaration. The level of economic substance required depends on the nature of the company’s business activities. Most BCs can operate without a physical presence in SVG, but companies engaged in certain specified sectors must demonstrate local economic activity.

These sectors include:

• Banking
• Insurance
• Financing and leasing
• Fund management
• Headquartering services
• Distribution and service centers (serving affiliated companies)
• Shipping
• Intellectual property-related business (where IP generates standalone revenue)
• Pure equity holding companies (subject to limited substance requirements)

Entities conducting any of the above activities are required to establish a physical presence in SVG, including maintaining office space, hiring employees, and directing business decisions from within the jurisdiction.

It is important to distinguish between companies holding or using intellectual property in the normal course of commercial activities and those whose primary business model is the licensing or monetization of IP. Only the latter group is subject to economic substance requirements under the intellectual property category.

SVG’s company legislation requires disclosure of certain corporate information. The names of shareholders and directors must be submitted to the Registrar of Companies and become part of the public record. While this requirement reduces anonymity compared to some other offshore jurisdictions, it reflects SVG’s adherence to international transparency standards.

In terms of financial record-keeping, companies must maintain documentation that accurately explains their financial position and business transactions. While the actual accounting records do not have to be stored in SVG, they must be readily available if requested by competent authorities.

Non-compliance with filing or substance requirements can lead to penalties, including fines, administrative sanctions, and the potential for deregistration.

Saint Vincent and the Grenadines offers a well-defined legal and regulatory environment for incorporating Business Companies. The jurisdiction is characterized by:

• A streamlined incorporation process
• Low operational and administrative costs
• A territorial tax regime favoring foreign-source income
• Flexible governance structures
• Minimal capital and management requirements
• Specific compliance rules for companies engaged in high-risk or IP-intensive sectors

However, all companies must comply with general reporting obligations, including the filing of tax returns, financial statements (or solvency declarations), and economic substance reports.

While Saint Vincent and the Grenadines remains an attractive jurisdiction for international structuring, prospective incorporators should evaluate the compliance landscape carefully, particularly where operations intersect with economic substance or international tax transparency regimes.