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Short news and ideas

The Seychelles: compulsory change of bearer shares


24/02/2014

The OECD has long been a stern critic of bearer shares. According to the organisation’s recommendations, from the point of view of the financial system a company which has issued bearer shares is classed as “increased risk”, as it is more difficult to identify the true owners of the company. In recent years a significant number of financial institutions were either unwilling to open and operate accounts for companies issuing bearer shares or, if they did open accounts, made it much more difficult. Certain banks even rejected applications from companies in which all the shares were issued as registered shares, if the company’s Memorandum and Articles of Association allowed for the issue of bearer shares.

As a result of pressure from the OECD the Seychellois parliament has decided that in the future offshore companies registered in the Seychelles will not have the possibility to issue bearer shares.

All companies which had earlier issued bearer shares must revoke them and issue registered shares in their place within 6 months of the publication of the law (International Business Companies Act of 1994 as Amended, published: December 16th 2013). Should a company fail to comply by this deadline, then any bearer shares issued earlier will automatically become invalid.

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