The Nevis Multiform Foundations Ordinance 2004
Introduction
Although St. Kitts and Nevis are part of one Federation Nevis has its own Legislative Assembly with autonomous powers to pass Ordinances. Committed to remaining relevant to the needs of existing and new clients the Nevis Legislative Assembly decided to enhance the jurisdiction’s product portfolio to offer better options to the sophisticated investor. With this in mind the Nevis Multiform Foundations Ordinance came into force on October 1, 2005.
This piece of legislation facilitates a New Corporate Vehicle described as the “Swiss Army Knife” of legal entities. It introduces into the Nevis international financial services regime the formation of a ‘Multiform Foundation’ which is an innovative and flexible hybrid type of foundation.
What is a Nevis Multiform Foundation
The Nevis Multiform Foundation is an attractive asset protection tool which offers unique planning advantages. It is a legal entity which can be seen as an umbrella within which [subject to given rules that define the structure] a subscriber can personally design their form of Foundation.
With a single filing an entity can function as:
1) A corporation
2) A trust
3) A limited liability company
Each Nevis Foundation has a stated Multiform, which means that the constitution of the Foundation states whether it should to be treated as a trust, a corporation, a limited liability company or an ordinary Foundation. Whether an entity is designated to function as a corporation, a trust or a limited liability company would also be determined by the registration filed with the Registrar.
Requirements for Registration
The subscriber, promoter or registered agent acting on behalf of a subscriber or promoter shall deliver to the Registrar an original copy of the memorandum of establishment and by-laws (if any) of the foundation and a statement in the prescribed form signed by the subscriber and legally acknowledged, or signed by the registered agent on his behalf and duly witnessed.
Flexibility
- The constitutional format and the stated identity of the Foundation can be changed during its lifetime, thereby allowing for greater flexibility in its use and application;
Existing entities can to be converted or transformed, continued, consolidated or merged into a Nevis Multiform Foundation;
- An entity incorporated outside of Nevis can be converted into a Nevis Foundation;
- An existing Nevis entity can be similarly transformed into a Nevis Foundation;
- Two or more entities from outside or within Nevis can be merged into a Nevis Multiform Foundation.
These features serve to make the Nevis Multiform Foundations Ordinance an effective piece of legislation for the provision of asset protection vehicles.
Advantages
The Nevis Multiform Foundation is a useful tool for estate planning, financing structures, special investment holding arrangements and charities.
If the Nevis Multiform is used as a limited liability company (“LLC”) type entity a creditor pursuing a claim against the Multiform must post a $50,000 cash bond with the Nevis Courts, and transfers to the LLC are subject to a shortened statute of limitations on fraudulent transfers (maximum 1 year). Therefore members of a Multiform LLC may obtain benefits similar to settlers of an offshore asset protection trust. Multiform trusts enjoy similar protection as Multiform LLCs.
Once the Foundation conducts no business with persons ordinarily resident within the Federation, the Foundation is exempt from income, withholding and capital gains taxes.
The Foundation can become tax resident in Nevis. This is particularly important for some jurisdictions, and again enhances the flexibility of these entities.
The application for tax residency is simple and requires a fee of US$1,000. The Multiform will then be subject to Corporation Tax at a rate of 1% of net income (net profits) with a minimum tax payable of US$1,000 per annum.
A local Corporation Tax return must be completed each year. Audited accounts are not required to be filed, but the accounts and/or the return must be completed by a qualified accountant.
There is provision for a balance between privacy and transparency. As with all Nevis entities, privacy is guaranteed under the St Kitts and Nevis Confidentiality Act 1985. The Foundation can elect to have some or all information available on the public record. This is achieved by completing the appropriate form and supplying the Registrar with the information that you require to be made available. Should circumstances change, the Foundation can apply to have this information removed from the Register.
There is provision for a form based system of information collection. This removes ambiguity from the processing of information to and by the Registry, and simultaneously reinforces confidence in the system. All forms are held by the Registered Agent who can advise as to which form is required to meet each specific circumstance.
The Nevis Multiform Foundation Ordinance addresses the issue of forced heirship by categorically stating that any Multiform Foundation governed by the laws of Nevis cannot be made void, voidable or liable to be set aside or defective in any manner by reference to the law of a foreign jurisdiction.
Conclusion
Nevis Multiform Foundation is a new type of financial vehicle made available through innovative legislation. The key benefits of a Nevis Multiform Foundation are its flexibility, the ability to elect for tax residency and the balance between privacy and transparency.
