Private companies may be limited by shares or by guarantee, and are formed under the Companies Act 1996, which has effect in St. Kitts and Nevis. They have the following characteristics:

• A minimum of one shareholder is required and a maximum of 50 are permitted.
• Either registered or bearer shares may be issued. Bearer shares must be deposited with a regulated company in St. Kitts. Nominee shareholder service is available for registered shares. Fractional and Treasury shares are permitted, but shares cannot be sold at a discount except for commission payments. Public offers of shares may not be made.
• A private company must have at least one director. Every company must have a secretary and may have one or more assistant secretaries who, or each of whom, may be an individual or a body corporate.
• Every company must hold an annual general meeting unless all the members of a private company agree in writing not to.
• No annual returns required.
• Certain words are prohibited in company names and the company's name must end in "Limited," "corporation" or their abbreviations.
• All companies must have a registered office in the Federation to which communications and notices may be addressed; however a registered agent is not required.
• Every company must keep a register of members.

One or more persons associated for a lawful purpose can form a company by subscribing their names to a Memorandum of Association written in the English language. Incorporators either adopt model Articles or draw up their own Articles of Association. These documents are submitted to the Registrar of Companies along with payment of a 540 East Caribbean dollars ($200) registration fee, after which a certificate is issued. In its Memorandum, a company limited by shares must state the maximum number of shares that the company is authorized to issue and the share value, which can be expressed in any currency but may not be printed on share certificates. A company limited by guarantee must state in its Memorandum the number of members it proposes to register and the amount of the guarantee expressed in any currency.

Since the doctrine of ultra vires has been abolished, a company has the capacity, rights, powers and privileges of an individual. Perpetuity options are a limited life-span (with the number of years specified) or an unlimited life-span.

A public company is one that has more than 50 members, and is permitted to make public offerings of its shares. It needs three directors, of whom a least two are not employed by the company or related companies. Assistant secretaries can be individuals or corporations.

Members' meetings can be conducted by electronic means, as long as members can hear each other's voices. Public companies must hold an annual general meeting while members of private companies can agree to dispense with this. The first general meeting must take place within 18 months after incorporation. Shareholders holding one-tenth of shares and members of a company limited by guarantee who hold one-tenth of voting rights can demand that directors call a general meeting. If directors do not comply, those who requisitioned a meeting (or requisitionists of the group holding one-half of voting rights) can call a meeting themselves. A quorum consists of a least two members present in person or by proxy (1) holding at least one-third of value of issued shares with voting rights; or (2) one-third of voting rights of a company limited by guarantee. Special resolutions require a two-thirds vote.

St. Kitts and Nevis Exempt Private Company (St Kitts & Nevis)

A limited partnership can qualify for tax exemption if it refrains from doing business with Federation residents. Partners of an exempt limited partnership are not subject to income, capital gains, and withholding taxes. Furthermore, no estate, inheritance, succession or gift taxes have to be paid by any person regarding property owned by or securities created or issued by an exempt limited partnership. Also, stamp duties are not levied on any person with regard to transactions in securities issued or create in respect of an exempt limited partnership.

The rules for allowing an exempt limited partnership to carry on some onshore activities are the same as for a corporation (see above). The annual registration fee for an exempt limited partnership is US$200.

St. Kitts and Nevis Limited Liability Company (Nevis)

Nevis LLCs are formed under the Nevis Limited Liability Company Ordinance, 1995, whose features include:

• No corporate tax, income tax, withholding tax, stamp tax, asset tax, exchange controls or other fees or taxes are levied on assets or income originating outside of Nevis;
• Members may be individuals or business entities of any nationality or domicile; there may be a single member;
• No annual or other reports are required;
• Foreign Limited Liability Companies or other business entities may re-domicile to Nevis;
• Limited Liability Companies may have limited life.
• The name of an LLC must end in one of the following: "Limited Liability Company", "LLC", "L.L.C.", "LC" or "L.C.".
• Shelf companies are available immediately; the formation of a company normally takes 2 to 4 working days.

The Trusts Act 1996 was a replacement for the 1961 Trustee Ordinance modeled after the 1925 English Trusts Act, and contains modern asset protection provisions. Trusts and their beneficiaries receive the same tax waivers as companies, with the similar proviso that all transactions must be confined to non-residents for the trust to enjoy exempt status. Trusts may have a protector but, with the exception of unit, spendthrift and charitable trusts, the protector needs acceptable professional qualifications. Both the settlor and trustees can be beneficiaries of a trust.

St Kitts and Nevis trusts are exempt from income, withholding, capital gains and stamp taxes as long as all transactions are confined to non-residents, and subject to a statutory declaration of exempt status accompanied by an annual registration fee of US$200.

Section XV of the Act makes it clear that beneficiaries do not lose their exemption if trustees are active in the Federation owning or leasing property for an office or residences for beneficiaries, holding meetings, conducting banking, signing employment contracts, and arranging for goods and services.

Every trust must maintain an office in the Federation for service of papers. At least two trustees must be appointed, unless one trustee is a corporation or only one trustee was originally appointed under previous legislation. One trustee must either be a Federation resident or carry on business from an office within the Federation. Trustees' duties include registering the trust with the Registrar of Trusts (who may also be the Registrar of Companies).

Trusts do not have to be audited, unless trust terms call for this. The annual statement filed by trustees need not include any financial information. Strict confidentiality rules for trustees prevail. In response to a written request, trustees may in a "reasonable time" provide information about the trust's financial situation and management to the Eastern Caribbean Supreme Court, Government inspectors, and, subject to the terms of the trust, the settlor, protector, a beneficiary, and a charitable beneficiary.

Every non-charitable trust is restricted to a 100-year life span. No restriction is imposed on charitable trusts. Trust terms should specify how long the trust might accumulate income.

Asset protection provisions, covered in Part V of the Act dealing with a settlor's rights and responsibilities and applicable to all trust, shield the settlor against forced heirship, compulsory division of matrimonial property, and creditors' suits. A creditor who wants to bring a court action against trust property must first purchase a 25,000 East Caribbean dollars ($9,250) bond from a Federation financial institution and deposit it with the Minister of Finance to cover all costs should the action prove unsuccessful.

The proper law of the trust is the law of the jurisdiction expressed by the trust's terms as the proper law; or, failing that, implied from the trust's terms; or failing either, the jurisdiction with which the trust at the time it was created had the closest connection.

St. Kitts and Nevis International Exempt Trust (Nevis)

The Multiform Foundations Ordinance came into force on October 1st 2005. It introduces a flexible hybrid multiform of foundation into the Nevis international financial services regime.

The Nevis Multiform Foundation is a legal entity shell into which a subscriber can self-design the form of the Foundation, subject to given rules that define it. Therefore, each Nevis Foundation will have a stated multiform, meaning that the constitution of the foundation will state how it is to be treated: whether as a trust, a company, a partnership or an ordinary foundation.

Through the multiform concept the stated identity of the Foundation can be changed during its lifetime, thus allowing for greater flexibility in its use and application.

The Ordinance provides for other entities to be converted or transformed, continued or consolidated or merged into a Nevis Multiform Foundation. Therefore, an entity incorporated outside of Nevis can be transformed into a Nevis Foundation; an existing Nevis entity can be converted into a Nevis Foundation; and any two or more entities from outside or within Nevis can merge into a Nevis Multiform Foundation.

The Ordinance provides for a balance between privacy and transparency and also provides for healthy corporate governance. In light of this, the Ordinance anticipates that Nevis Multiform Foundations will be used for estate planning, charity, financing and special investment holding arrangements.

The Ordinance has a section on forced heirship, making it clear 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.

The Ordinance provides that a Foundation can become tax resident in Nevis, subject to an annual fee of $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. This is particularly important for some jurisdictions, and again enhances the flexibility of these entities.

Whether under Federation legislation or Nevisvian legislation, offshore entities in St Kitts and Nevis are exempt from Corporate Income Tax, Withholding Tax and Capital Gains Tax, as long as they carry on business only with non-residents of the Federation. However, the various laws make it clear that an exempt entity does not lose its tax waivers because of certain activities within the Federation including signing contracts or concluding arrangements for employing residents, purchasing goods and services, and exercising other powers to carry on its business such as holding directors' and members' meetings, transacting banking and reinsurance business, and conducting securities transactions or serving as adviser to Federation residents who enjoy exempt status.

Government Fees

At the time of writing, St Kitts and Nevis companies paid the following fees:

An Exempt Private Company (St Kitts and Nevis) pays an annual fee of US$200 to the government on filing of the annual return.

An International Business Company (Nevis) pays an annual fee of US$200 to the government (no annual return is required). Capital duty is US$200 based on an authorised share capital of 1,000 shares at no par value or on $100,000 of par value shares.

An Exempt Limited Partnership (St Kitts and Nevis) pays an annual registration fee of US$200 to the government.

A Limited Liability Company (Nevis) pays an annual registration fee of US$220 to the government.

A Trust (St Kitts and Nevis) pays an annual fee of US$200 to the government along with a statutory declaration of exempt status.

An International Exempt Trust (Nevis) pays an annual registration fee of US$220 to the government.

St. Kitts and Nevis Taxation of Foreign Employees of Offshore Operations

There is no personal income tax in St Kitts and Nevis but foreign nationals working in the country are required to obtain a work permit for which, at the time of writing, there is an annual charge of 1,500 East Caribbean dollars ($635). Persons or companies remitting payments to persons or companies outside of the nation must deduct a 10% withholding tax on profits, administration or management and head office expenses, technical service fees, accounting and audit expenses, royalties, non-life insurance premiums and rents.

There is no capital gains tax other than on short-term investments, but the St. Kitts and Nevis house tax of 5%, payable in two installments a year, applies on annual rental value of a property, with a 25% rebate on residential property. The controversial Alien Landowners Tax places a 14% levy paid by buyers and 4% by sellers on residences. Although it also applies to commercial land, it is subject to negotiations on a case-by-case basis. A 1% sales tax on gross sales, a hotel tax of 5% and a 2% tax on foreign currency transfers are in effect.