IBCO makes provision for tax-free corporate facilities at highly competitive cost levels.  As an affluent State, Brunei is more concerned with attracting a critical mass of good business than with struggling to achieve a fee-based income stream at a high cost to end-users.  Thus the total Government Fee for company incorporation and year one maintenance is US$500, while renewal fees from year 2 onwards are set at US$400.  Again, the private sector is encouraged to match Government’s approach of charging on a cost-plus basis, and to look beyond establishment to subsequent corporate transactional activity involving Brunei and overseas professionals.

 

International Business Companies may be –

• limited by shares
• limited by guarantee
• limited by shares and guarantee of limited duration
• Dedicated Cell companies (akin to the Guernsey/Mauritius and other models more commonly referred to as “Protected” cell companies)
• created by conversion (akin to continuance), re-domiciled (or discontinued) in Brunei
• foreign, or overseas companies may register branch operations as Foreign International Companies.

 

Foreign or overseas companies may register as Foreign International Companies, and also operate tax free. 

 

IBCs are incorporated by trust companies subscribing to Memorandum and Articles. A Certificate of Due Diligence must be filed with the constituent documents. This Certificate contains an undertaking by the trust company concerned that the IBC complies with applicable provisions of IBCO and that due diligence in respect of beneficial owners and the source of finding has been conducted, or will be conducted prior to commencement of business. A similar certificate is required at every annual renewal.  This unique feature is important in reminding Trust Companies and the Regulator that due diligence must be constantly addressed.

 

IBCO requires the “official” name of an IBC to be in Romanised form.  Chinese and Japanese characters or Arabic or Cyrillic script, or other characters, alphabet or script may, by arrangement with the Registrar of International Business Companies, be adopted in addition.  Such alternative names and all documents in a foreign language are required to be presented with a certified translation.

 

There are simple prospectus provisions relating to invitations to subscribe for share or loan issues. However, an invitation or offer addressed to a restricted circle of persons whereby the invitation is addressed to an identifiable category, group or body of persons to whom it is directly communicated or where such persons are the only persons who may accept the offer and are in possession of sufficient information to be able to make a reasonable evaluation of the invitation or offer are not “invitations to the public”. The number of persons to whom the invitation or offer is communicated cannot exceed fifty. Since “person” includes a body corporate, this is seen as liberal.

Powers of IBCs

Subject to its Memorandum and Articles, an IBC has, irrespective of corporate benefit, power to perform all acts conducive to its business, and may include in its Memorandum a statement that the objects are to engage in any act not prohibited under the laws of Brunei. In which case such objects are by statute attributed to the company in those terms.  Standard Memorandum and Articles for the three classes of limited company are Scheduled and may be adopted in full or as modified.  Other than bearer shares, which are prohibited, an IBC may issue the usual wide range of shares and classes of shares, including Dedicated Cell shares, options, warrants or rights to acquire securities of an IBC, including convertible securities.

 

Powers to purchase, redeem or acquire a company’s own shares are contained in IBCO, and provisions facilitating the acquisition and treatment of Treasury shares are made, subject to solvency and creditor-related requirements.  Assistance to purchase the shares of an IBC may similarly be provided by it.

 

Share capital may be reduced by 75% resolution, subject to solvency and creditor concerns being appropriately addressed.  There is a mechanism whereby the Registrar of International Business Companies may adjudicate on creditor concerns, with power to refer to the Court where necessary.

 

Directors may be individual or corporate, as may secretaries.  A Resident Secretary provided by a Trust Company is mandatory.  Audits are optional (except as required under banking, trust company, insurance and dealing licensing provisions).

 

Filing of charges or a statement of particulars of a charge is provided for and where such a filing is not made, the charge may, so far as creating a security against the assets of the company, be void as against a liquidator or creditor.  Comprehensive Mergers and Consolidation provisions are prescribed, including mergers or consolidations will overseas companies.  The rights of dissenting members are protected.

 

Foreign International Companies are registered under Part XI, on lodgement through a trust company of the specified constituent documents, certain other information and a certificate of compliance and due diligence.  Changes in particulars must be notified in the usual way.

 

Conversion/continuance occurs where permitted by the former domicile, subject to certain requirements including solvency and registration of (IBCO-compatible) Memorandum and Articles.  There is provision for the Court to strike from the Brunei register a company which continues to exist in another jurisdiction following conversion.

 

Dedicated Cell Companies ("DCC") are established pursuant to Part XIIA of IBCO, and subject to the prior consent of the Authority, may be initially established or reconstituted as a DCC.  A DCC is a single legal person and may establish one or more cells for the purpose of segregating and protecting dedicated assets.  The assets are either dedicated assets or general assets, and separate records and protection of dedicated assets by way of segregation and identification must be maintained.  Creditors are restricted in their rights to the cell in respect of which they have made funds available or have a claim. 

There is implied in every transaction entered into by a DCC the following terms -

• That no party may seek to exert any claim against assets attributable to a cell in respect of a liability not attributable to that cell;
• That if any party succeeds to the contrary, he will be liable to the company to repay the value of the benefit.

Further, a person who willfully and without colour of right "attacks" a cell in respect of which he has no rights commits an offence.  Such an unlawful may attract imprisonment and/or a fine.

 

A DCC may by a 75% resolution of the company or of the holders of dedicated shares in a cell of a DCC effect of a reduction of the dedicated share capital (subject as mentioned above in the context of a reduction of capital generally, and without the need for confirmation by the Court) –

1. where the resolution is passed by the company, in respect of any of the company's cells; or
2. where the resolution is passed by the holders of dedicated shares, in respect of the cell in which the dedicated shares are held;

 

Any such reduction of dedicated share capital must comply with the requirements relating to reduction of capital of IBCs generally.

 

Notice of a proposed resolution authorising the reduction of dedicated share capital must be given to:-

1. the DCC (except where the company is itself the applicant);
2. the receiver liquidator or administrator (if any) of the cell, the Authority, all holders of dedicated shares of the cell, every creditor and such other persons as the Authority may direct.

 

The name of a DCC must include the expression "Dedicated cell" or "DCC" or a cognate expression approved by the Authority, the memorandum shall state that it is a DCC, and each cell of a DCC shall have its own distinct name or designation.

 

Disputes as to liability attributable to cells.  The Court may make a declaration in respect of the matter in dispute.

 

A DCC must inform any person with whom it transacts that it is a DCC; and identify the cell in respect of which that person is transacting, failing which the directors may incur personal liability.  The Court may relieve a director of personal liability if such director satisfies the Court that he ought fairly to be so relieved.

 

Winding-up of IBCs

Basically, the provisions of Parts V (Winding-Up) and VI (Receivers and Managers) of the (domestic) Companies Act (Chapter 39) apply to the winding-up of an IBC as they apply to the winding-up of a domestic company.

 

Striking off for failure to pay prescribed fees

If an IBC fails to pay a prescribed renewal fee and the failure continues for over two months, the Registrar shall initiate striking-off. If an IBC has been struck off the register, the former IBC or a creditor, member or liquidator of it may apply to the Court to have the IBC restored to the register.

 

Confidentiality

The records of an IBC may only be searched subject to the prior grant of certain consents, except where circumstances, such as criminal activity, are adjudged by the Registrar to have arisen.  This applies both to the Registrar's records and those of the IBC held at its registered office.