Hassans are experts in Gibraltar Company Incorporation – we assist in the formation of companies across a broad range of industries for clients both local and international. As a specialist onshore finance centre offering a full range of solutions from a fully-compliant, business-friendly environment with tangible and useful advantages from the structuring, taxation and licensing perspectives, setting up a company in Gibraltar is a compelling proposition in the global context.
Forms of Company in Gibraltar
Under the Companies Act 2014, more information and features of which are provided below, there are four types of company that can be incorporated in Gibraltar
- A company limited by shares
- A company limited by guarantee and having a share capital
- A company limited by guarantee and not having a share capital; and
- An unlimited company with or without a share capital.
- A private company limited by shares requires only one subscriber to be properly constituted. For a public company to be properly constituted there is a requirement for a minimum of seven subscribers.
Features of Gibraltar Company Law and Practice
The Companies Act previously in force in Gibraltar was based almost exclusively on the 1929 Companies Act of England and Wales. The financial services industry had long felt that the law should be updated in line with the requirements of modern practice. The task of modernising the Companies Act began in 2010, as an initiative of the Association of Trust and Company Managers, which was picked up and developed into a consultation paper by a Companies Act Reform Committee set up under the auspices of the Gibraltar Finance Centre Council.
The current legislation underpinning Gibraltar Company Law and Practice is the Companies Act 2014. A team from Hassans led by Ian Felice, including Gemma Vasquez, Chloe Oppenheimer and Gian Massetti, was involved in the process of drafting the Companies Act 2014.
Some of the features of the 2014 Act are as follows.
Memorandum of Association
The requirements as to a company’s memorandum of association have been brought in line with those of the UK Act. There is now a shorter form of memorandum which includes the name, registered office and authorised share capital of the company as well as the liability of the members. It is to be signed by the subscribers to the memorandum. The objects of the company no longer form part of the memorandum, there being a presumption that the company’s objects are unrestricted.
Articles of Association
The position as regards articles of association is similarly based on the provisions of the UK Act. The Minister is given the power to prescribe model articles of association for companies, which came into force simultaneously with the Companies Act 2014. The current Tables A – E are replaced by the Model Articles which have been brought into force by regulation. Companies in existence at the time of implementation have not and are not required to amend their articles of association.
Execution of documents
A significant practical change is the manner in which documents and deeds may be executed, which under the Companies Act 2014 is largely the same as the position in the UK and less onerous than was previously the case. The 1930 Companies Act is ambiguous as to whether a deed may be executed by a director in the presence of a witness. It is now specifically provided that a deed, or other document requiring execution by a company, may be executed by a director and a witness or by two authorised signatories (a definition for which is provided in the Companies Act 2014).
A simple contract, being a contract which is not a deed, guarantee or real estate agreement, can be entered into by any person on behalf of a company, on the condition that that person has the necessary implied or express authority. Furthermore, a company may be given authority to execute documents as a deed under a power of attorney, which is a common practice for which previously there was no statutory provision.
The Companies Act 2014 adopts what were referred to as the “whitewash” provisions in the UK in relation to financial assistance. The new provisions reflect the position under the 1985 Companies Act of England and Wales, with the definition of financial assistance having been tightened. This means that the practice of creating a holding company with which to provide financial assistance to its parent company is no longer possible. The only manner in which financial assistance is possible under the Companies Act 2014 is through the “whitewash” provisions.
A private company can give financial assistance under the Companies Act 2014 if its net assets are not thereby reduced, or, to the extent that they are reduced, if the assistance is provided out of distributable profits.
The insolvency provisions, or those relating to a “creditors’ winding up”, currently contained within the 1930 Companies Act have been transferred to the new Insolvency Act 2011, which came into force at the same time as the Companies Act 2014. Only provisions relating to voluntary liquidation are covered in the Companies Act 2014. Where a voluntary liquidation becomes an insolvent liquidation, reference is made directly to the Insolvency Act 2011.
The new voluntary liquidation provisions are based on the 1930 Companies Act but include, from the UK Act, the notably stricter requirements as to the statutory declaration of solvency made by the directors on the commencement of a voluntary liquidation. Under the new provisions, making such a declaration without having reasonable grounds to do so is an offence, with the director liable to up to two years imprisonment. Further details in respect of Gibraltar’s Insolvency provisions can be found on our Gibraltar insolvency expertise page.
The Companies (Accounts) Act and the Companies (Consolidated Accounts) Act have been consolidated within the Companies Act 2014, also removing any ambiguity and inconsistency between these acts and the 1930 Companies Act, and indeed any other inconsistencies with other legislation. Penalties faced by directors for not drawing up, signing or circulating the accounts are now applicable to both IAS Accounts and Non-IAS Accounts, rectifying an inconsistency between the Companies (Accounts) Act and the 1930 Companies Act which meant that such penalties were previously applicable only to the latter. Similarly, the requirement to produce audited accounts for Companies House has been reconciled with the Income Tax Act 2010, so that where a company is not required to provide audited accounts under that act, it is not required to do so under the Companies Act 2014.
The provisions relating to accounts have also been modernised generally, following consultation with the Gibraltar Society of Accountants. For instance, directors are now permitted to voluntarily revise accounts that they subsequently realise have not complied with any relevant requirement. Accounts may also be delivered to Companies House in numerous primary currencies, which include US Dollars, Euros, Japanese Yen and Swiss Francs.
Following a proposal from Companies House, many of the time periods for submitting documents to the Registrar have been changed to thirty days in an attempt to standardise time periods throughout the Companies Act 2014. While some periods remain as they were, such as the fourteen days to deliver a prospectus on re-registration as a public company or the fourteen days to provide notification of a change in the register of directors, the thirty day period has been applied to the majority of documents to be filed.
To provide the most noteworthy examples, the time period for registration of charges has been increased from twenty-one days to thirty days, as has the period for filing resolutions for voluntary winding up, which is fifteen days under the 1930 Companies Act.
Perhaps the most obvious example of the modernisation of the 1930 Companies Act is the inclusion of “e-filing” and the ability for companies to publish certain information on websites. Communications from a company to its shareholders, and vice versa, may also be made electronically, with the intention that all such contact be both quicker and more straightforward. The Registrar has the ability to impose requirements as to the form, authentication and manner of delivery of documents to the Registrar.
Taxation of Gibraltar Companies
Gibraltar Companies with income taxable in Gibraltar are taxed at a standard rate of 12.5%. A higher rate of 20% applies to a limited category of companies such as utility, telecoms and petroleum companies abusing a market dominant position. Tax is assessed on a territorial basis and, therefore, Gibraltar companies are taxed only on income accruing in, or derived from, activity in Gibraltar.
Company Incorporation Team
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