The Commonwealth of Dominica enables international small business owners and mid-sized enterprises to incorporate locally with an international allure. Since 1996, Dominica allows non-resident professionals to incorporate an International Business Company (IBC) which exclusively performs corporate activities outside the country. As a result of the program, the jurisdiction has been able to boost economic revenue for years while minimizing access to its local infrastructure. The program contained the benefits but not the burdens of foreign direct investment by simply providing foreign access to its domestic corporate registry and local registered addresses. However, the current global financial era exposes the IBC to operational, reputational and regulatory risk for Dominica. Risk that the jurisdiction is unwilling to take after the year 2021. Thousands of IBC’s must, therefore, find a way to relocate or dissolve. Further difficulties arise, however, for dormant or already dissolved IBCs that need to be reactivated due to legal or financial reasons.
Offshore Company Reactivation
Increasing access to offshore financial centers prompted many people, businesses, and activities to expand into these jurisdictions. Most of these activities serve an authentic purpose and are legitimate. However, some conduct within offshore financial centers is detrimental and even illegal. This is addressed by the international community which condemns the regulatory and administrative infrastructure in offshore jurisdictions that is based on flexibility, low bureaucracy, and advanced privacy. By exploiting the vulnerabilities of these systems, illicit actors are able to launder the proceeds of their obscure activities.
Business professionals with an offshore IBC in Dominica work with international service providers, financial institutions, and other relevant parties. Over the years, regulation got stricter and scrutiny of offshore activities advanced. As a consequence maintaining banking relationships got difficult and the jurisdiction lost its competitive advantage as a cost-efficient offshore financial center. Many IBC’s seized trading and went into dissolution, left the jurisdiction, or were struck of the registry for failure to satisfy the financial and administrative requirements of the registrar.
Dissolved Dominica (offshore) IBC’s may be restored to the corporate registry when the registrar or the court approves the restoration application. Restoration can be initiated by the company, a creditor, a member of the company or a liquidator. Restoration applications for a company and its name can only be taken into consideration when it is fair and reasonable that the company should be restored to the corporate registry. Additionally, all fees due under section 104 and all license fees due under section 105 of the IBC Act of 1996 must be paid for the years the company was dormant.
Dominica Offshore IBC Reactivation and Restoration Procedures
IBC Acts govern a very specific part of domestic company law in the applicable jurisdictions. Companies incorporated under these Acts are not allowed to conduct business activities in the jurisdiction or with locals. Host countries, where the IBC operates, formulate their own rules and legal frameworks. IBC’s therefore fall between two stools and may be subject to additional scrutiny and requests that are not necessarily defined by IBC Acts. A confusing controversy that often occurs when a company is removed from the corporate registry and seized trading. As a result, the company, its members, and other beneficiaries are unable to use any of the corporate assets. A reactivation and reinstatement of the Dominica IBC is mostly required to resolve such matters and regain access to the corporate assets. An official liquidator may even need to be appointed. It is essential that the applicable procedures are performed with the utmost care to avoid exorbitant financial costs and uncontrollable timelines.
Dominica (offshore) IBC’s normally close due to voluntary winding up as defined in the statutes of the company, by failure to comply with its regulatory financial and administrative requisites, or by acts of a creditor leading to insolvency. Dominica’s decision to discontinue the existing IBC framework and stop the provision of offshore companies has put several businesses with ongoing activities, recovery procedures, and legal challenges in a precarious situation. Following this parliamentary decision, Dominica (offshore) IBC’s have three options. The members of the company can re-domicile its existing IBC to a different jurisdiction, which differs from incorporating a new company. They can also convert the corporate status into a local domestic company. And the third option is to dissolve the company. For reactivation purposes, the changes in the Dominica company law creates some challenges. Especially for beneficiaries of offshore IBC’s who are still in the middle of lengthy legal and asset recovery procedures or have obtained ownership of a company by inheritance.
If you are a beneficiary of an offshore IBC in Dominica and need an active company to protect your interests, you should examine the available options before making any decisions. It is not always possible to achieve the desired outcome by taking shortcuts, and mistakes can lead to permanent disqualification in for example liquidation and asset repayment procedures. To discuss your case and decide on your plan of action, please leave your contact information in the contact form below and one of our staff members will get back with you at shortest notice.