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Samoa

ASIACITI TRUST IN SAMOA

Asiaciti Trust Samoa Limited is the first licensed trustee company in that offshore finance centre. Apart from a full range of corporate services for Samoa international companies, our Samoa office also manages offshore banks and captive insurance companies. Strathford Insurance Company Limited is the Group's captive insurance company which provides specialised insurance services and products to clients of the Asiaciti Trust Group. Our other operational entity in Samoa is International Retirement & Superannuation Services Limited which provides offshore retirement planning services and administers offshore based superannuation or pension funds.

SAMOA - AN INNOVATIVE OFFSHORE JURISDICTION

Samoa formerly Western Samoa is an innovative offshore jurisdiction with flexible and modern legislation designed for international companies including US style "LLC", long term companies and creditor controlled companies, offshore banks and insurance companies, and offshore trusts. On the following pages we outline the Samoa offshore legislation and the services provided by Asiaciti Trust Samoa Limited.

INTERNATIONAL COMPANIES

A company can be incorporated under the International Companies Act 1987 ("The Act") as an international company if its shareholders are non-resident of Samoa. A trustee company registered under the Trustee Companies Act 1987 may hold shares in an international company.

International companies:

• May be incorporated under foreign language names, e.g. Chinese, French, Japanese, German.
• Have no minimum capital requirements and shares may be of no par value.
• May designate shares in most major currencies and may issue bearer shares.
• Need appoint only one director but there is no obligation to appoint a resident director.
• Must appoint either a resident agent or a resident secretary who must be an officer of a registered trustee company. If a resident secretary is not appointed then an international company must appoint a non-resident secretary.
• Is not required to file annual financial statements, lodge an Annual Return, appoint an auditor nor hold an Annual General Meeting.
• Is not be subject to any form of taxation including stamp duty.
• Shall not carry on the business of banking or insurance, unless licensed under the relevant Act.

The International Companies Act 1987 incorporates a number of special provisions which provide considerable flexibility and unique benefits for offshore corporate structures. These include:

The US style limited liability company may be formed under the Act. The legislation is modelled on the Wyoming Limited Liability Company Act and is designed to ensure that the Samoan LLC entity will be interpreted by the US Internal Revenue Service as a pass through entity for income tax purposes. The LLC can be the most effective entity for investment into the USA and similarly for outward investment by US investors.

International companies may be incorporated under the Act with all documentation written in the Chinese language. The presence of a People's Republic of China Embassy in Samoa facilitates the authentication or notarisation of corporate documents. Such companies are commonly used for investment or joint ventures in China.

The transfer of domicile provisions of the Act allow companies incorporated in other jurisdictions to transfer their registration to Samoa to become international companies; and conversely for international companies to transfer their registration to other jurisdictions.

The Act provides considerable flexibility in regard to reduction of share capital. Specifically, the Act allows:

• A company to purchase and cancel its own shares.
• Redemption of shares without maintenance of capital and without the need for a Court order.
• A company to finance the purchase of its own shares.

The Act permits the registration of international companies on a long term basis, i.e. for periods of 5, 10 or 20 years. Upon expiry registration can be renewed on an annual basis or for further long term periods..

Long term companies have special attraction for, inter-alia, project companies, joint ventures, property development companies, film production ventures, holding companies, investment companies and leasing arrangements.

Various forms of debentures may be issued including bearer debentures, registered debentures, secured debentures and perpetual debentures. Where a bearer debenture is issued in circumstances specified by the Act, the rights of shareholders are suspended until such debenture is redeemed.

The Act contains various provisions which enable an international company to operate without issued share capital whilst providing a mechanism for control over such company to be exercised pursuant to the terms of a secured debenture. There is no ownership of the company but control of its operations can be assumed by the debenture holder, i.e. as a creditor of the company.

The use of creditor controlled international companies is especially appropriate for residents of countries which adopt controlled foreign corporation ("CFC") legislation. Such countries include Australia, Belgium, Canada, France, Italy, Germany, Japan, New Zealand, Spain and the United States of America.

INSURANCE COMPANIES

The Samoa offshore insurance legislation provides an attractive but supervised environment for the establishment and operation of international insurance activities including captive insurance and reinsurance companies.

The International Insurance Act 1988 controls the registration of offshore insurance companies. Offshore insurance business is defined as any insurance business where each of the insured, the policy beneficiary and the owner of the policy are not domiciled nor ordinarily resident in Samoa. Only an international company or a foreign company registered under the International Companies Act 1987 may be authorised to carry on offshore insurance business. A registered insurer is not permitted to transact any insurance business other than offshore insurance business. An insurer registered under the International Insurance Act 1988 is exempt from any form of taxation and duty or exchange control in Samoa.

Under the legislation an insurer may apply for registration as a registered insurer for any one of four categories of clearly defined insurance business.

Minimum capitalisation requirements are set down for each category of insurance business as follows:

• General insurance   US$500,000
• Long term insurance   US$500,000
• Re-insurance   US$200,000
• Captive insurance   US$100,000

Registered insurers carrying on general or long term insurance business are required to maintain a margin of solvency variable with the category of insurance business undertaken. A captive insurance or re-insurance company is not required to maintain a margin of solvency other than an amount equal to its designated minimum paid up capital. A registered insurer must file audited annual accounts with the Registrar.

Registered insurers are subject to the supervision of the Registrar of International Insurance who is appointed by the Minister of Finance.

A registered insurer may obtain permission to maintain a permanent establishment in Samoa and to employ its own management there provided that such personnel have adequate knowledge and experience of the insurance business to be carried on. Otherwise a registered insurer must appoint an insurance manager in Samoa who is registered under the Act. In order to register as an insurance manager a company must be able to satisfy the Registrar of International Insurance that it has engaged suitable persons who have adequate knowledge and expertise to provide insurance management services in Samoa.

OFFSHORE BANKS

The Offshore Banking Act 1987 provides for and regulates the conduct of offshore banking activities in Samoa. An offshore banking licence is issued by the Minister of Finance pursuant to the Offshore Banking Act 1987.

The legislation incorporates a three-tier licensing system through the issue of A class licences and two categories of B class licences. The holder of an A class banking licence is required to have paid up capital and unimpaired reserves at all times of not less than US$10,000,000 and in the case of the holder of the B class banking licence not less than US$2,000,000 or US$250,000 depending upon the category of licence issued.

A licenced offshore bank which must be a company registered under the International Companies Act 1987, is exempt from any form of taxation or stamp duty on income earned or transactions effected in its offshore banking business. Similar exemptions apply to shareholders and depositors of a licenced offshore bank. Licensed offshore banks are also exempted from all currency and exchange control restrictions in Samoa.

All banks are required to submit audited accounts annually to the Central Bank of Samoa.

Specific secrecy provisions are included in the Act and penal sanctions are imposed on government officials, officers, employees and auditors disclosing information on the offshore banking business of the licensee.

INTERNATIONAL TRUSTS

The Samoa International Trusts Act 1987 provides for the registration of international trusts in Samoa and for the exemption of the trustee and the beneficiaries of such trusts from any form of taxation, duty or exchange control.

To qualify as an international trust, a trust must not have any beneficiaries who are residents of Samoa and at least one of the trustees must be a trustee company registered in Samoa, or an international company or foreign company registered under the International Companies Act 1987.

There is no requirement to file the trust deed with the Registrar. All information pertaining to an international trust, including the deed of trust and the identity of parties connected with the trust is confidential and subject to the secrecy provisions of the Act.

SUPERANNUATION, PENSION AND PROVIDENT FUNDS

A Samoa based retirement fund can be registered as an international trust and enjoy the taxation exemptions and other privileges of such registration. There are no requirements that any assets are retained within Samoa and the trustee is free to invest internationally to achieve optimum returns. The statutory administrative requirements of Samoa retirement funds are minimal, with the trustee merely required to renew registration as an international trust each year.

SEGREGATED FUND INTERNATIONAL COMPANIES

The Segregated Fund International Companies Act 2000 is an innovative vehicle for international investment and asset protection by providing a statutory regime for quarantining assets and liabilities.

A company incorporated under the Act can create segregated funds. These are identifiable divisions of the company where assets and liabilities are quarantined, and the rights and obligations of members and creditors are administered separately between the funds. There is no limitation on the number of funds which may be created within one company. Each fund is registered and bears its own name and designation.

To make people aware they are dealing with a segregated fund international company, its name must bear the words, “Segregated Fund”, “SF”, “SFC” or other approved cognate expression.

The assets and liabilities of a segregated fund international company are dividend into segregated and non-segregated assets and liabilities. Segregated assets and liabilities are those attributable to the segregated funds of the company. Non-segregated assets and liabilities are those which are not attributable to any segregated fund.

The capital structure of a segregated fund international company is not dissimilar to a conventional limited liability company. It may be a company limited by shares or guarantee, or by both shares and guarantee, although bearer shares are not permitted. The company can create or issue shares and other membership interests in each of the segregated funds. Shares issued in respect of each fund constitute a separate class.

Governance of a company is through a two-tier structure of directors and fund managers. While there is no limit on the number of directors for a company, and corporate directors are permitted, each company must have a resident director who is both an individual and an officer of a trustee company. Secondly, each fund must have a fund manager which must be a trustee company. As a trustee company, Asiaciti Trust Samoa Limited will be able to provide both the director and the fund manager.

The segregation of assets and liabilities into separate funds provides the company with its asset protection features.

The liability of a segregated fund company is limited to the assets of the fund to which the transaction is attributable. A transaction is deemed to be in respect of a fund where the company specifies the particular fund, or a creditor has notice the company has entered into a transaction on behalf of a fund. Creditors of a fund are entitled to have their liabilities satisfied only from the assets of the fund with which they transacted, and are statutorily prohibited from attacking the assets of other funds. The same principle applies to members, whose rights and obligations are only in respect of the fund in which they have an interest.

Consistent with the principle of segregation, distributions from a fund are dependent on the solvency of the particular fund, and recourse cannot be had to another fund to finance a distribution.

A segregated fund international company may be used by those undertaking insurance with different classes of risk, as an alternative to a “rent a captive” company, or as a mutual fund investment vehicle, or as a mutual fund investment vehicle, but it is not limited to these purposes. The company can be used by-joint venturers to manage the venture through one corporate vehicle while maintaining separation of their interests. It also provides an alternative to trusts, both for separating various family interests and succession purposes, while allowing administration of assets and investments to be undertaken in one entity. The segregation of funds in one company may also form part of a tax planning structure for residents of countries which adopt Controlled Foreign Corporation (“CFC”) legislation. Such legislation effectively taxes residents as though the foreign income were derived in their home jurisdiction.

Unless specifically provided for in the Act, the Companies Act applies to segregated fund international companies, giving them the same flexibility and functionality of Samoan international companies.

Specifically the confidentiality provisions of the Companies Act are incorporated into the Act maintaining the rigorous non-disclosure provisions both in respect of the company and its funds. Also, as under the Companies Act principles and promoters of a segregated fund international company and segregated fund may remain anonymous.

Like all other offshore structures the company and its funds are exempt from all local taxes, duties and exchange controls are not required to file annual accounts.

Further details are available from Asiaciti Trust Samoa Limited or any offices of Asiaciti Trust.

For further information, please send email to