A Vanuatu Exempted Company offers foreigners similar benefits to their international companies with fewer public disclosure requirements. Foreigners may own all of the shares in an exempted company.
Exempted companies are formed under the Companies Act and then must apply for an exemption.
Vanuatu is part of an 80 chain islands archipelago near Fiji and Australia. It was colonized by the British and the French resulting in both languages being two out of its three official languages with the third being Bislama (pidgin). In 1980, Vanuatu gained its independence and then adopted a Constitution and became the “Republic of Vanuatu”.
Politically, Vanuatu is a Republic with a parliamentary democracy with an elected parliament and a President elected by a system similar to the U.S. Electoral College.
Vanuatu uses the British Common law judicial system. Its Constitution allows its Parliament to enact new laws, but otherwise the British pre-independence laws continue until either specifically revoked by Parliament or become incompatible with new laws.
The principal laws governing companies are The Companies Act of 1991, the Banking, Insurance, Stamp Duties and Trust Companies Acts along with the International Companies Act of 1993. The government’s Financial Services Commissioner enforces these laws and regulates all companies in Vanuatu.
A Vanuatu Exempted Company provides foreigners with these types of benefits:
• Full Foreign Participation: All of the shares in an exempt company may be owned solely by foreigners.
• Tax Free: Exempt companies are exempt from all taxation. Note: U.S. taxpayers and all other paying taxes on global income must report all income to their governments.
• Limited Liability: A shareholder’s liability is limited to his or her contribution to the company’s share capital.
• One Shareholder: Only one shareholder necessary to form an exempt company.
• One Director: Only one director required to manage the company. The sole shareholder can be the only director for greater influence.
• Filing Exemptions: Exempt companies exempt from filing audited account records, annual financial statements, and file simpler annual returns.
• Privacy: Exempt company’s filings and records kept confidential by the Registrar.
• English: English is one of the three official languages in Vanuatu.
Vanuatu Exempted Company Name
Similar to local and international companies (IC), an exempted company cannot choose a name which is alike or similar to another legal entity’s company name in Vanuatu. Company names may be in English, French, or any other language like Arabic, Chinese, Japanese, or Russian.
Name restrictions apply to suggestions that the company is connected with another country’s government, or a municipal authority, or an international or public organization.
Names suggesting business activities involving licensed industries such as banking, insurance, managing funds or investments, or financing services will require a financial license.
Exempt companies are limited liability companies so they must include the word “Limited” or its suffix “Ltd.” at the end of its company name.
Qualifying for Exemption
The exemption involves avoiding mandatory audits, filing annual accounts and the required annual return is much simpler. To qualify as an exempted company, the company must demonstrate it does not:
• Conduct business inside Vanuatu other than in pursuit of its international business;
• Sells company shares to the public in Vanuatu; or
• Owns an interest in a non-exempt company in Vanuatu.
In addition, exempted companies involved with insurance, banking, trustee services, or sells securities must file audited accounts and the same documents as local companies.
Restrictions on Trading
Exempt companies cannot trade within Vanuatu or own local real property.
Any business conducted in Vanuatu must only be ancillary to its international business activities.
New companies must apply before the Financial Services Commission with a copy of the company’s Constitution which contains the following information:
• Company name;
• Purposes (can be in general terms without being specific);
• Registered local office address and registered local agent’s name; and
• If limited by shares or guarantees.
All documents filed with the Commission can be prepared in English.
After approval, the Commission issues a Certificate of Incorporation.
Exempt companies provide limited liability protection for its shareholders whose liability is limited to their contributions towards the share capital.
Only one shareholder is required to form an exempt company. There are no restrictions as to a shareholder’s nationality or place of residence.
The classes of permitted shares which an exempt company may issue are: registered shares, redeemable shares, preference shares, and shares with or without voting rights.
The minimum requirement for the number of required directors to form an exempt company is one. Directors may be individuals or corporate bodies residing in any country. The sole shareholder can be the only director for better control.
An exempt company must appoint a local resident as the company secretary. The secretary must be knowledgeable regarding local documents and government filing requirements.
Registered Agent and Office
Exempt companies must appoint a local registered agent whose office can be the registered office for the company.
Authorized Share Capital
Exempt companies required minimum authorized share capital is $10,000 USD.
Exempted companies do not pay any taxes to the Vanuatu government. That means no income taxes, no corporate profit taxes, no capital gains taxes, no wealth taxes, no withholding taxes, and no stamp duty.
Note: U.S. residents must disclose all global income to their IRS. In addition, everyone else paying global income taxes must report all income to their tax authorities.
Exempted companies are not required to file audited account records or annual financial statements. Their annual returns are simpler than those filed by other companies.
Exempted companies records held by the Registrar’s Office cannot be disclosed to the public without either written permission from the exempted company or by a local court order.
Time to Form
Expect the preparation of documents and registration to take up to two days.
Shelf companies can be purchased in Vanuatu.
A Vanuatu Exempted Company offers these benefits: 100% foreign owners; no taxes, privacy, exemption from most government filings, one shareholder who can be the only director, and English is one of their three official languages.