Caribbean Trade Law and Development

Month: February 2016

  • CARICOM Heads of Government 27th Inter-sessional taking place this week

    Alicia Nicholls

    The Heads of Government of the Caribbean Community (CARICOM) will be meeting in Belize this week for their 27th Inter-sessional meeting. The meeting, which will be taking place February 16th-17th, will  see a number of important issues on the agenda.

    Chief of which will likely be the Zika outbreak currently affecting several countries across the Caribbean and which the World Health Organisation declared a Public Health Emergency of International Concern on 1 February 2016. Moreover, the outbreak comes during the height of the Region’s tourism season, the main industry for many Caribbean countries. No doubt besides the public health risks, a key concern will be the potential economic fall-out from any negative impact on the Region’s tourism sector as most regional economies continue to experience sluggish economic growth in the aftermath of the Great Recession.

    Besides Zika, an issue which was discussed at the 26th Inter-sessional in the Bahamas last year and which remains of grave concern to the Region is international banks’ termination of correspondent banking relationships with indigenous banks in the Region due to de-risking practices. A recent World Bank survey that was published in November last year found that the Caribbean was likely the Region most affected by the loss of correspondent banking relationships. According to CARICOM Today, the Committee of Finance, which is working alongside the Caribbean Association of Banks, will prepare a strategy for the Heads of Government’s consideration during their meeting.

    Climate change will also be a prominent agenda item. This will be the first inter-sessional meeting since the historic Paris Agreement was concluded at the Conference of Parties (COP) 21 in Paris late last year and the Agreement will be open for ratification from April this year. Caribbean countries and other small island developing states were instrumental in getting many of their concerns incorporated into the final text of the Agreement.

    Several other issues may also be discussed as well, including the future of ACP-EU relations in light of the impending expiration of the Cotonou Partnership in 2020, relations with the Dominican Republic, security and terrorism concerns in light of reports of CARICOM nationals leaving the Region to join ISIS ranks, reparations, the still unresolved border disputes between Guyana-Venezuela and Belize-Guatemala, as well as the reform process and the way forward for the realisation of the Caribbean Single Market and Economy (CSME).

    According to a press release by the Barbados Government Information Service, the  Heads of Government are also expected to consider the applications for Associate Membership of CARICOM made by five territories: Curacao, French Guiana, Guadeloupe, Martinique and St. Martin. Additionally, Chilean President, Michelle Bachelet, will be a special guest at the Conference.

    The Opening Ceremony of the 27th Inter-sessional Meeting will be live-streamed on the official website of CARICOM, http://www.caricom.org on Monday, February 15th. The Closing Ceremony will also be live-streamed on Wednesday, February 17th.

    For further information on the upcoming 27th Inter-sessional Meeting, please see this report from CARICOM Today.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • WTO holds first post-Nairobi full membership meeting; Turkmenistan considering membership

    Alicia Nicholls

    This week the World Trade Organisation (WTO) held its first full membership meeting after the 10th Ministerial Conference in Nairobi last December. For the WTO’s news item on the meeting, please visit here.

    Turkmenistan considering WTO membership

    In other news, Turkmenistan is said to be considering WTO membership. According to Azer News, the EU proposed Turkmenistan for WTO membership in 2011 and Turkmenistan’s Deputy Prime Minister and Foreign Minister reportedly held several meetings in Geneva this week, including with Roberto Azevedo, Director General of the WTO. For the full Azer News article, please see here.

    Alicia Nicholls B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. The following information is for general You can read more of her commentaries and follow her on Twitter @LicyLaw.

  • Barbados to allow for Incorporated Cell Companies

    Alicia Nicholls

    Barbados is on the verge of adding another product to its international business and financial services offerings. The Companies Act, Cap 308 is currently being amended to allow for the establishment of incorporated cell companies (ICCs).

    Incorporated Cell Companies (ICCs)

    An ICC is a robust form of corporate cell structure which was first introduced by Guernsey by virtue of its Incorporated Cell Companies Ordinance in 2006. Each incorporated cell (IC) of an ICC has a separate legal personality from the ICC and the ICC’s other ICs. ICs can enter into binding arrangements with each other and the ICC. ICCs are more cost-efficient than a parent-subsidiary structure due to economies of scale.

    Cell company structures differ from traditional company structures. They allow for the creation of one or more underlying cells within the company so that the assets and liabilities of each cell are segregated from the assets and liabilities of the company’s other cells and of the cell company itself. This “ring-fences” the cellular assets allowing for enhanced asset protection and risk management. Cell company structures are particularly attractive for insurance activity (especially captive insurance), but also for other types of financial services activities like banking and mutual fund activity.

    Incorporated Cell Companies vs Segregated Cell Companies

    ICCs share similarities but also important differences with segregated cell companies (SCCs) which are also known as protected cell companies (PCC).  SCCs are an older type of cell company structure which were first established by the Guernsey through its Protected Cell Companies Ordinance in 1997. Unlike ICCs, an SCC is a single legal entity which means its underlying cells do not have separate legal personality from the cell company. Segregated cell companies and segregated accounts have been permitted in Barbados since 2011.

    Key Features of the proposed Barbados ICC product

    The key features under the proposed Companies Act (Amendment) Bill 2016 are as follows:

    • Naming – An ICC will be required to use the suffix  “Incorporated Cell Company” or the abbreviation “ICC” after its name. ICs must include the suffix “Incorporated Cell” or the abbreviation “IC”
    • Type of Business -any company incorporated or continued under the Act for the purposes of carrying on financial services activities, including insurance, banking and mutual fund activity, may incorporate as an ICC
    • Formation – A company may conduct business as an ICC in Barbados in four ways: (a) incorporation as an ICC, (b) the incorporation of an existing company (incorporated under the Act) as an ICC, (c) the registration of an external company as an ICC in Barbados and (d) the continuation of an external company as an ICC in Barbados.
    • Creation of ICs – An ICC may by special resolution create an IC.
    • Status of ICs – An IC is a legal person separate from its ICC.
    • Transactions – The ICC has no power to enter into transactions on the behalf of its ICs. Similarly, an IC has no power to enter into legal transactions on the behalf of its ICC or any of the other ICs of the ICC.
    • Separate Assets and Liabilities – Directors of an ICC are to keep the assets and liabilities of each IC separate and separately identifiable from those of the other ICs and the ICC.
    • Creditors’ Claims – A creditor of the ICC in respect of a transaction between the creditor and the ICC may not make a claim against the assets of the company’s ICs, while a creditor of the IC in respect of a transaction with that IC, may not make a claim against the assets of the ICC or its other ICs.
    • Constitution – The IC is to file its own by-laws within 21 days of being incorporated as a cell and it may not own shares in its ICC
    • Directors – An IC may have directors other than the directors of its ICC.
    • Registered Office – An IC is required to have the same registered office as its ICC
    • Record Keeping – An ICC is required to maintain separate records of the members of each of its ICs
    • Annual returns – An ICC is required to submit an annual return for each of its ICs and to ensure that its financial statements are not consolidated with the financial statements of its ICs
    • Expulsion – An ICC may apply to the court to expel an IC under one or several of the grounds elaborated in section 356.31(1) of the proposed amended Act.
    • Migration provisions– An IC of an ICC may be transferred to another ICC or to a SCC
    • Winding Up – The same provisions on winding up under the Act which apply to a non-cell company also apply to an ICC, except that an ICC that is being wound up is not to be dissolved until each of its ICs ceases to exist as an IC of the ICC and an ICC which is dissolved will not be struck off the Registry of Companies until each of its ICs has been incorporated independently, merged with a company, continued under the law of another jurisdiction, transferred to another ICC or SCC or wound up.

    Advantages of the ICC Vehicle

    ICCs are a very flexible vehicle and some of the advantages are the:

    • Ease of establishment of cells – Once the ICC is incorporated, it may by special resolution establish any number of cells as it so chooses
    • Portability – An IC of one ICC can be transferred to another ICC or to an SCC
    • Cost efficiency – ICC structures are more cost-efficient than parent-subsidiary relationships as economies of scale can be achieved through shared administrative frameworks
    • Tax liability – Each IC is separate from the ICC and the other ICs for income tax purposes
    • Ability of ICs to enter contracts with each other and with the ICC
    • Absolute protection of IC assets from the risks, liabilities and claims of creditors of the ICC or other ICs.
    • Segregation – The cell structure allows for the segregation of assets and liabilities, risk and investments
    • Unlike some jurisdictions, Barbados’ ICC product is not limited to the insurance sector, but to all financial services activities

    The Companies Act (Amendment) Bill 2016 was debated and passed in the House of Assembly last Tuesday, February 2nd, and is currently before the Senate for debate.

    The international business and financial services sector is one of Barbados’ main foreign exchange earners, accounting for a significant portion of corporation tax receipts and is a major employer.

    Besides Guernsey where it originated, the ICC product already exists in a few other jurisdictions, for example, Jersey, Isle of Man, Malta and the Cayman Islands. The introduction of the ICC product to Barbados is expected to further boost the island’s competitiveness and attractiveness as a preferred domicile for international business.
    The full text of the proposed amendment bill may be viewed here.

     
    Disclaimer: This article is for general information purposes only and is NOT intended to provide legal, investment, financial or any other advice. The Author accepts no liability to anyone who relies on the information in this article. The information was taken from sources deemed to be accurate and correct at the time of publication.

     
    Alicia Nicholls B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. The following information is for general You can read more of her commentaries and follow her on Twitter @LicyLaw.

  • Antigua & Barbuda Uses Trade Policy to help prevent Zika

    Alicia Nicholls

    Antigua & Barbuda is using its trade policy arsenal to help prevent the entry of the Zika virus into that twin-island Caribbean State. According to a news report published by the Antiguan Observer, the Cabinet of Antigua & Barbuda has permitted the removal of import duties on several “mosquito defense systems”, such as mosquito nets, screens and coils, to make them more affordable for the local population there.

    The current Zika virus outbreak is one of the most serious public health threats spreading across the Americas, with cases also being reported in the Pacific and Asia. Though the virus was first identified in Uganda in 1947 and previous Zika outbreaks have happened in the past, this current incarnation appears to be one of the most globally widespread. Based on the advice of the first meeting of the International Health Regulations (2005) Emergency Committee, the WHO Director General declared the Zika outbreak a Public Health Emergency of International Concern on 1 February 2016.

    The Zika virus, colloquially known as Zik-V, is spread by the Aedes Aegypti mosquito, the vector which also transmits dengue fever, yellow fever and the Chikungunya virus. According to the Pan-American Health Organisation, the symptoms of Zika include “a mild fever, skin rash (exanthema), and conjunctivitis”.

    Worryingly, after an increased incidence of infants being born with microcephaly in Brazil, the country worst affected by the current Zika outbreak, it is widely suspected that in pregnant women, the Zika virus could result in the foetus being born with this rare neurological condition which results in the child’s head having a circumference which is small for its age and size.  However, the WHO Emergency Committee  agreed that while a causal relationship between the Zika infection during pregnancy and microcephaly is strongly suspected, it is not yet scientifically proven. Currently, no vaccine or treatment exists for Zika.

    According to the US Centers for Disease Control and Prevention (CDC), the first reported case of local transmission of the Zika virus in the Caribbean was in December 2015. While Antigua & Barbuda has not had any reported or suspected cases of the Zika virus to date, the recent PAHO situation report outlines a total of 33 countries across the Caribbean, Central America and Latin America which have reported cases of the autochthonous transmission of the Zika virus between 2014-2016. In the United States, the Governor of Florida has declared a state of emergency in counties where the Zika virus has appeared.

    For the countries of the Caribbean, the economic implications are high as the virus has made its appearance during the height of the Region’s tourist season. Several countries have issued travel warnings to Zika infected countries and the Caribbean Tourism Organisation is monitoring the situation closely.

    It is instructive to note that in its recommendations included in its situation report, the PAHO/WHO stated that the emergency committee “found no justification for restrictions on travel or trade”. It also stops short of advising pregnant women to not travel to infected areas, by stating “[p]regnant women considering travel to affected areas may wish to consult their health care provider prior to travel and after return”.

    Caribbean countries, through their public health and other authorities, have been employing various Zika preventative and mitigation strategies, such as instituting fogging programmes, launching public awareness campaigns and advising women to delay becoming pregnant for up to two years. The Future Centre Trust, a non-governmental organisation in Barbados, is raising awareness among the general public on the need to reduce opportunities for mosquitoes to breed by eliminating littering and illegal dumping and by mapping illegal dump sites. An article which the Trust authored on the topic may be viewed here.

    At the regional level, the Caribbean Regional Public Health Authority (CARPHA) has published Zika guidelines for travellers and hotels and guesthouses and will brief the CARICOM Heads of Governments on the Zika situation at the Heads of Governments’ Inter-sessional Meeting slated to take place February 16-17. The Caribbean Tourism Organisation has an information page entitled “FAQs on Zika and Caribbean travel” on its website.

    Among the measures recommended by PAHO in its situation report are the use of repellant, physical barriers like mosquito screens and sleeping under mosquito nets. Therefore, the move by Antigua & Barbuda to remove import duties on these mosquito defense systems is a pro-active one, and combined with their use and awareness by the general public, it should help to prevent the spread of the virus there.

    For further information on Zika, please see the PAHO website and the recent PAHO Situation Report of February 5, 2015.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can read more of her commentaries and follow her on Twitter @LicyLaw.