Seychelles IBC Accounting Records Obligation

[xxxmb]

So according to my agent (and all the information they provided me) Seychelles requires all their IBC's to submit their accounting records for at least the last 7 years. (bank statements, invoices, receipts, etc...).

Now I had no intention to continue with my Seychelles IBC, but after this news even less so. The issue lies in the fact that even closing down the company wouldn't alleviate me from this accounting obligation.

The way I see it now is that not complying comes with a $10.000 fine (which probably is still cheaper than the work it would take to comply). Any other people here in the same boat and have some advice?

Right now I figured I'll move over whatever business is still under the Seychelles IBC to another company and just see if they will ever fine/collect their $10.000 which seems unlikely to me?

 

[Sols]

"Submit or pay 10,000" is an oversimplification.

Seven or so years ago, Seychelles enacted a law which require companies to maintain accounting records. Companies are not required to file/submit the accounts, though, but you must be able to provide financial statements upon request. This is assured by the Seychelles FSA requiring that registered agents must know where accounting records are kept. It's a failure by you to not have complied with this, and you won't find any jurisdictions left where this requirement doesn't exist. For your next business, if you don't want to pay for an accounting service (which needn't cost much), at least use some free/cheap software to prepare a general overview of the company's finances.

If a request comes in from the FSA or other authority, the company must provide them in a timely manner (I don't recall the exact duration) or face penalties. Such requests are extremely rare, and usually prompted by extraordinary external circumstances. The FSA does not have the capacity or interest in reviewing every little IBC's financials. You basically don't matter unless you're a risk to the Seychelles.

To wind down a company, you can simply not renew it and it will be gone after a while. Barring anything exceptional, no government official is going to insist on seeing the financials of an expired company.

However, not winding down or dissolving properly can be a headache (present and future), if you have multiple shareholders, debts, liabilities, or if you derive wealth directly or indirectly from the company and later need to show Source of Wealth, which banks increasingly ask for.

So assess your situation: can you afford to have unexplained or poorly explained source of wealth originating from this company? If you can and if the company has no other liabilities/obligations, you can very likely abandon it and just start over somewhere else. Consider your business relationships, especially those with banks and financial institutions.

 

[xxxmb]

Thanks Sols for your input. You are right my submit or pay is an oversimplification, what I meant is according to their own documents $10.000 is the max cumulative fine.

I was aware of the fact that we have to keep our records, but in practice the odds of having to provide these were very small.

However according to my agent the difference is that now all IBC's have to submit their records:

1. Submit the accounting records to the Seychelles registered office by February 2022;
2. Submit bi-annual reporting going forward; and
3. Submit annual financial summary for large companies and non-large non-holding companies.

If I hire an accounting firm I'm sure we can make sense of my records for the past 7 years. However obviously I'd rather just skip that all together. My thoughts are the same as yours, I'm not worried about source of wealth questions (already reported back when this company was still active). Only thing I'm worried about is that the long arm of the Seychelles tax/law enforcement will track me down and fine me.

 

[Sols]

The arm of the Seychelles law enforcement is not very long. Unless you're an extraordinarily interesting case for some reason, nothing will come of this from the Seychelles authorities. Your concerns lie with business partners and how they react to the company disappearing and the business activities moving. If you've got that covered, I don't see any risks in abandoning.

 

[xxxmb]

Ok thanks, I will just ignore it then and let it expire.

 

[GrumpyMess]

Just found out about this news. What options are left if I don't want to take the money out from the company as dividends?

 

[ppa]

Do you think providing reports from Xero to the registered agent is sufficent to comply with this requirement?

Also what if you can not provide any details for a specific year? In my case I simply do not have banking data for 2015-2016 as the bank we used is no longer existing and we simply can not get that data in any sort of way.

 

[Sols]

Just found out about this news. What options are left if I don't want to take the money out from the company as dividends?

You can for example sell the company's assets to another company, invoice the funds to another company, or pay yourself a salary.

What works best in your case is something best left to a legal adviser to propose, after assessing the company's liabilities, obligations, debts, et cetera.

Do you think providing reports from Xero to the registered agent is sufficent to comply with this requirement?

That's probably fine, as long as they represent a fair and accurate account of your company's financials.

Also what if you can not provide any details for a specific year? In my case I simply do not have banking data for 2015-2016 as the bank we used is no longer existing and we simply can not get that data in any sort of way.

Then you might be fined for that. The accounting requirement existed before 2015, so it's your error as a director for not ensuring the records were kept.

 

[GrumpyMess]

You can for example sell the company's assets to another company, invoice the funds to another company, or pay yourself a salary.

What works best in your case is something best left to a legal adviser to propose, after assessing the company's liabilities, obligations, debts, et cetera.

I guess selling the company or invoicing the funds would work, unfortunately I don't have a reliable solution

 

[proples]

Does anybody here have a template or something that I can use to show to my accountant? I am worried that he might be using the wrong format