Vanuatu

Vanuatu’s Companies Act [Cap. 191] governs the formation, regulation, and administration of domestic companies operating within the jurisdiction. This legislation, originally derived from English company law, has been modernized to reflect global best practices while retaining local applicability. It is distinct from the International Companies Act, which applies to offshore entities conducting business primarily outside Vanuatu.

Companies incorporated under the Companies Act are intended to operate within the domestic economy and are subject to broader regulatory and disclosure obligations than international companies. This type of company is used by both local entrepreneurs and foreign investors seeking to participate in the internal market, provide local services, or hold assets situated in Vanuatu.

The Companies Act allows for the incorporation of various types of companies, including:

1. Private Companies Limited by Shares – The most common form, typically used by small and medium-sized enterprises. Shareholders’ liability is limited to the unpaid amount, if any, on their shares.

2. Public Companies – These companies may offer shares to the public and are subject to more extensive disclosure, governance, and reporting obligations.

3. Companies Limited by Guarantee – Often used for non-profit organizations, where members agree to contribute a set amount toward liabilities if the company is wound up.

4. Unlimited Companies – Companies where there is no limit to the liability of members. This structure is rare and generally unsuitable for commercial ventures.

Companies incorporated under the Companies Act are required to appoint at least one director. The director can be an individual or a corporate body and does not need to be resident in Vanuatu. A secretary may also be appointed, though this is not mandatory under the Act.

The directors are responsible for managing the affairs of the company and owe fiduciary duties to act in good faith, in the best interest of the company, and with due care. The governance framework also permits the issuance of resolutions, holding of meetings (including by electronic means), and maintenance of records in line with international norms.

Shareholders exercise control over key matters such as appointment or removal of directors, alteration of capital, and changes to the constitutional documents.

Unlike International Companies, entities formed under the Companies Act are allowed to carry on business within Vanuatu. This includes owning immovable property, engaging in trade or professional services, employing local staff, and contracting with public or private sector entities.

Foreign investors may use Companies Act entities to establish a physical presence in Vanuatu, open bank accounts locally, lease premises, or participate in public tenders. In such cases, appropriate business licenses or permits may be required under sector-specific legislation.

Certain business activities—such as banking, insurance, legal services, or company management—require licensing under additional legislation and oversight from specialized regulatory bodies such as the Reserve Bank of Vanuatu or the VFSC.

Companies are required to file certain documents with the Registrar, including:

• Annual Returns – A summary of key information, including directors, shareholders, and the registered office address, must be submitted annually.
• Financial Statements – While not all companies are required to file financial statements with the Registrar, larger or public companies must prepare and, in some cases, submit audited accounts.
• Changes to Corporate Information – Any alterations to the board of directors, shareholding structure, company name, or registered office must be promptly reported.
• Companies must also maintain proper accounting records at their registered office or another location accessible to officers and auditors. These records should accurately reflect the financial status of the company and must be preserved for at least seven years.

Companies incorporated under the Companies Act are generally subject to Vanuatu’s domestic tax framework. However, as of the time of writing, Vanuatu does not levy income tax, capital gains tax, or withholding tax on companies. This places a relatively light tax burden on businesses operating within the jurisdiction, though employers are subject to payroll-related obligations, such as contributions to the Vanuatu National Provident Fund (VNPF).

Entities conducting certain types of business—particularly those involving the provision of financial services—may be subject to additional levies, license fees, or sector-specific contributions.

For non-residents, Companies Act entities provide a lawful means of accessing and participating in the local economy, either directly or through investment.