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Company Management

Introduction

Ellul & Co. Corporate Services, mainly incorporates and manages Gibraltar companies for our clients but we can also offer companies from other jurisdictions in order to suit our clients’ needs.

All jurisdictions have different factors which may make them more or less attractive for a particular type of activity. We work with reputable professionals in many parts of the world and are able to provide advice to help our clients make an informed choice.

We are also able to provide our clients with Trusts.

Gibraltar Companies

Gibraltar companies are incorporated under our Companies Act which is based on English law but has been tailored to suit Gibraltar’s needs. The English common law and principles of equity apply in Gibraltar and these have a bearing on many aspects of Gibraltar company law.

Taxation of Gibraltar Companies

With the exception of royalty income and loan interest above £100,000 per annum, only income which accrues in or is derived from Gibraltar is subject to tax in Gibraltar. In essence, as long as the income-generating activity of a Gibraltar company takes place outside Gibraltar, it will not pay corporation tax in Gibraltar. In addition, none of the following taxes are payable in Gibraltar:

  • VAT;
  • capital gains tax;
  • tax on dividends paid to companies and to non-residents;
  • tax on interest or gains made from bank investments;
  • tax on interest or gains made from investments with any financial institutions;
  • taxes on liquidation distributions;
  • inheritance tax;
  • wealth tax;
  • gift tax; and
  • withholding tax.

Advantages of establishing Gibraltar companies through our firm

  • We advise on appropriate structures and work with international professionals to provide our clients with the best solutions.
  • We can provide nominee shareholders and, in appropriate circumstances, directors for companies under our management.
  • We can open bank accounts for your companies, in Gibraltar and elsewhere, and will advise on the banks best suited to your requirements.
  • Your companies will be managed by a fiduciary services company associated with our law firm which was established in 1973.
  • Our associated company management firm is regulated by the Gibraltar Financial Services Commission (www.fsc.gi).

Some uses & advantages of Gibraltar companies

  • Having a real presence in Gibraltar with local directors, substance, management and control to benefit from Gibraltar’s attractive low corporate tax and no VAT.
  • Holding bank accounts, funds, stocks and shares and other investments in company accounts since the capital invested and the interest earned will not be subject to tax.
  • Operating businesses.
  • Owning a yacht or ship in the name of a company so that any profits earned from trading or chartering are not subject to tax in Gibraltar.
  • For the holding of family assets either as a stand-alone company or in conjunction with Trusts. Advantages include confidentiality, making investments without incurring tax and the ability to give us instructions as to the family members who should inherit company assets.
  • Corporate restructuring allowing the tax-efficient distribution of assets.

Procedure to incorporate a Gibraltar company & some of its main features

Approval of company name

First of all a name has to be chosen which is different to any other existing Gibraltar company Availability can be quickly checked by us.

Company formation application

Upon request, we can provide you with a company formation application form. This is an important part of the process which provides our associated fiduciary services firm with the “know your customer information” and documentation we need from the owner in order to comply with our local laws, regulations and internal procedures.

Shareholders

A Gibraltar private company can have from one to fifty shareholders with no limits on public limited companies. Shareholders can be natural or legal persons and there are no restrictions as to their nationalities or their places of residence.

Nominee Shareholders

Shares may be held in the name of the fiduciary services company associated with our law firm. In such cases, the ultimate owner is issued with a declaration of trust which provides that the benefit of the shares belongs to him/her and this document is indisputable proof of this. Shares may also be held directly in the name of the owner or of a legal entity.

Directors

Under Gibraltar law, only one director is necessary and there are no restrictions as to residence or nationality. Directors can be natural or legal persons. Our associated fiduciary services firm can provide directors in specific circumstances and more information can be provided upon request.

Bank accounts

Our associated fiduciary services firm has long-standing relationships with banks in Gibraltar and many elsewhere and will advise you on which bank is best-suited to your requirements. They will handle all aspects of the bank account opening process and open the account for you.

Balance sheets, financial statements, accounting records, audit & tax returns

It is the responsibility of the directors of a company to compile accounts. Unless the company is subject to tax in Gibraltar, there is no requirement to file full financial statements. However, there is an absolute obligation to compile and, annually, file abridged balance sheets at the Gibraltar company registry annually. We assist our clients with this process.

Although company balance sheets are filed at the public company registry, they do not contain: the name or address of the company’s owner(s); any details which can identify its bank accounts or investments; the nature of any assets held by the company; profit and loss accounts. In essence, all that is disclosed in balance sheets are the monetary values of the assets held by the company (without identifying them) and, generally, figures for the total receipts and expenses of the company in its financial year.

Most companies manage, do not require an audit. Other than for companies which are subject to tax in Gibraltar, for which there are different rules, “small” companies do not need to produce audited accounts. As long as the Company does not surpass the below limits in two consecutive financial years, it will be a “small” company for the purposes of Gibraltar law:

  • Net turnover of less than £10.2m;
  • Total assets of less than £5.1m;
  • Average employees of less than 50.

A company (via its directors) has a duty to keep proper books of account for a period of five years in respect of:

  • all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;
  • all sales and purchases of goods by the company;
  • the assets and liabilities of the company.

All Gibraltar companies need to submit tax returns to our income tax office. In most cases, companies with business assets outside will be able to submit “nil” tax returns simply stating that the company has no assessable income in Gibraltar.

Gibraltar company law & special structures

Approval of company name

The Gibraltar Companies Act is based on the English Companies Act 1929 but it has, over the years, been amended and updated to suit Gibraltar’s needs. The current Act was passed in 2014 after recommendations made by a company law reform committee which was chaired by our Managing Director, Marc X. Ellul.

The English common law and principles of equity apply in Gibraltar and these, therefore, have a bearing on many aspects of Gibraltar company law.

Protected cell companies

Under the Protected Cell Companies Act 2001 (“PCC Act”) one company may segregate its assets and liabilities in different cells. These are known as a protected cell companies (“PCCs” or “PCC”). A PCC remains a single legal entity and the liability of the company in respect of each cell is limited to the assets attributable to the relevant cell, not for the debts of any other cell.

Many Experienced Investor Funds are set up as PCCs as they can, for example, allow sub-funds to pursue different investment strategies and allow sub funds to be created for different clients.

The PCC Act states that a protected cell company is a single legal person and that the creation by a PCC of a cell does not create, in respect of that cell, a legal person separate from the company.

It is the duty of the directors of a PCC to keep the assets of each cell separately identifiable. Specifically, they must (a) keep cellular assets separate and separately identifiable from non-cellular assets and (b) keep cellular assets attributable to each cell separate and separately identifiable from cellular assets attributable to other cells.

A PCC may create and issue cell shares in respect of any of its cells. The proceeds of the issue are comprised in the cellular assets attributable to the cell in respect of which the cell shares are issued. A PCC may pay a cellular dividend.

The rights of creditors are limited to the assets of the cell of which they are creditors. In the winding up of a PCC, the assets forming part of the estate shall only be the non-cellular assets. The winding up shall not terminate any agency, or in any way whatsoever affect the authority or power of any officer, receiver, administrator, servant or agent of the PCC in respect of the cellular assets.

Any liquidator of a PCC has a duty to keep cellular assets separate and separately identifiable from non-cellular assets. The liquidator must also keep cellular assets attributable to each cell separate and separately identifiable from those assets attributable to other cells.

Companies limited by guarantee with no share capital

These are a special form of company usually used by not-for-profit organisations. They have members rather than shares. The members have a series of rights, such as use of common property, but are not entitled to any dividends or to receive any profits from the company.

They are most commonly used in Gibraltar to manage large privately owned housing estates and private buildings whose common areas are jointly owned by several owners. Our firm represents many such companies.

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Any questions?

We have an approachable team who will be happy to help you.