BY MATTHEW SMITH, GENERAL COUNSEL
On 18 October 2022, the Nevis Assembly passed amendments to Nevis company laws which change the way Nevis companies are dissolved and allow additional classes of companies to merge with each other.
The amendments are set out in the Nevis Business Corporation (Amendment) Ordinance, 2022 and the Nevis Limited Liability Company (Amendment) Ordinance, 2022 (the ‘Ordinances’). The Ordinances were gazetted on 10 November 2022 and came into force on that date.
The Ordinances have removed provisions which deem Nevis Business Corporations (‘BCs’) and Nevis Limited Liability Companies (‘LLCs’) to be dissolved 12 months after they have been removed from the register for failing to pay renewal fees. Such companies may now be restored to the register at any time within three years of their removal on payment of all outstanding fees and government penalties. Where more than three years has passed, restoration is still possible with the consent of the Registrar. Any restoration to the register is retroactive to the date of removal.
As a result of the amendments, the legal existence of Nevis BCs and LLCs will continue indefinitely until such companies are dissolved, either by way of judicial dissolution or by filing Articles of Dissolution. Allowing them to ‘lapse’ by ceasing to pay renewal fees will no longer result in dissolution. This may give rise to continued tax and/or reporting obligations for beneficial owners of such companies, depending on where they are tax resident.
Companies which have been removed from the register will not be required to file an annual Simplified Tax Return (Form CIT-101) in Nevis despite the fact that they have not been formally dissolved. However, if they are subsequently restored to the register they will need to file a CIT-101 for each year missed.
The LLC Ordinance also contains new provisions involving the merger of subsidiary LLCs into their parents and the disposal of LLC assets outside of the regular course of business. In summary, these provisions:
1. allow subsidiary LLCs to be merged into LLCs which own 90% or more of them;
2. allow Nevis LLCs to merge with LLCs from foreign jurisdictions (including parent or subsidiary LLCs);
3. require two thirds member approval for the sale, lease, exchange or other disposition of all or substantially all LLC assets which is not made in the usual or regular course of business actually conducted;
4. provide that any member opposing the merger of an LLC, or a sale or exchange of substantially all of its assets, may dissent and receive payment of the fair value of their membership interest; and
5. set down a procedure for ascertaining the fair value of a membership interest and for enforcement of a member’s rights to receive this payment.
If you need assistance dissolving a Nevis BC or LLC, please get in touch with your regular Southpac contact or contact us.
Disclaimer: The above contains a statement of the current laws of Nevis and is for information purposes only. It is not intended to constitute tax or legal advice. Seek a duly licensed professional for tax or legal advice.