Geography, Population, Languages
Vanuatu is a chain of approximately 80 islands in the south-west Pacific, some 2,250 km north-east of Sydney, Australia and 800 km west of Fiji. The islands lie between the latitudes of 13° and 21°, and the climate varies from tropical in the north to sub-tropical in the south. The total land area is approximately 14,700 sq. km. The islands are mainly of volcanic origin, the surface is highland (up to 1,810 m), and there are about 60 volcanoes, 10 of which are active. The climate is tropical humid.
The capital is Port Vila on the Island of Efate. The population is about 209,000. The official languages are English, French and Bislama (pidgin). The language of business and finance is mainly English.
History, Political Structure and Law
The islands were discovered in 1606 by the Spanish seafarer P. Ciros, and in the 1770s were explored by Cook who named them the New Hebrides.
The New Hebrides were the world’s only condominium. This was established in 1906 by agreement between the British and the French (the London Convention of 20th October 1906) which declared the New Hebrides “a region of joint interest”. After years of competition for influence between Britain and France, and others such as Australian and Irish adventurers, the islands gained their independence on 30 July 1980. This was when the Constitution was adopted and the Republic of Vanuatu came into existence.
Vanuatu is a parliamentary democracy, the head of state being the President elected by an electoral college. The position is mainly titular and has very few executive powers. The legislature consists of a single chamber, a 52-member parliament for which general elections are held every four years.
Vanuatu is a Common Law jurisdiction. As a parliamentary democracy based on the Westminster system, Vanuatu has a political and legal system that closely follows that of the UK and its law is based on English law. Its Constitution states that, until otherwise provided by Parliament, pre-independence British laws shall remain in force unless they are expressly revoked or are incompatible with the independent status of the Republic.
Economy and Infrastructure
Vanuatu is connected by excellent telecommunications and flight services to major cities in Australia and New Zealand. There are two international airports in Vanuatu, the main one, Bauerfield, being about 6 km from Port Vila. Vanuatu has two deep-sea ports (Port Vila and Santo) and a number of wharves. Several shipping lines operate regular cargo services from Australia, Europe, New Zealand, the United States and Japan. There are over 1,400 km of roads within Vanuatu with several hundred more due for completion over the next four years.
The country’s economy is mainly agricultural (80 per cent of the working population is engaged in agriculture). The economy is based mainly on copra, followed by beef, cocoa, timber, coffee, cotton, and fish.
Trading, manufacturing, banking and shipping, as well as the country’s tourist industry have undergone development in the recent years.
The development of the islands as an offshore financial centre in 1971 added a new dimension to the economy, and this now contributes significantly to government revenue. The offshore financial sector has also brought to the country increased employment opportunities and an excellent infrastructure for telecommunications, banking, legal, accounting and other financial and commercial services.
The currency is the Vatu. There are no exchange controls in Vanuatu. All major currencies can be deposited in Vanuatu and may be converted freely to most other currencies.
The principal corporate legislation is the Companies Act (Cap 191), the International Companies Act (1993) and the Banking, Insurance, Stamp Duties and Trust Companies Acts, which form the statutory framework for the operation of the financial centre. This framework is administered by the Financial Services Commissioner and adjudicated upon by the Supreme Court of Vanuatu. English is the language of legislation and corporate documentation. Foreign translations of corporate documents can be obtained for a fee.
Two main types of company are used for international trading and investment:
- Exempt Company, incorporated under the Companies Act (Cap 191);
- The International Company (IC), incorporated under the International Companies Act 1993. Incorporation of ICs is preferred over exempt companies. The concept of authorised capital does not apply to ICs. The International Company provides for greater flexibility and minimal compliance.
The following restrictions apply to trading and business activities:
- An International or Exempt Company may not trade within Vanuatu or own real estate there.
- An International Company may not undertake the business of banking, insurance, assurance, reinsurance, fund management, the management of collective investment schemes or the rendering of investment advice, or any other activity that would suggest an association with the banking or insurance industries.
Incorporation procedure for ICs requires one copy of the Constitution. (Two copies of the Certificate of Incorporation are issued by the Vanuatu Financial Services Commission). The powers of an Exempt Company are contained in the Memorandum of Association, but are normally drafted to provide for general powers. An International Company has all the powers of a natural person and therefore can engage in any lawful activity except where restricted by the International Companies Act. A registered office must be maintained in Vanuatu. Off-the-shelf companies are available.
The following requirements and restrictions apply to Company names:
- An The name of an International Company can be in any language and use the characters or alphabet of that language e.g. Chinese, Japanese, Russian, Arabic.
- Restrictions apply to names identical to existing names or names suggesting a connection with a government of another country, a public or international organisation or a municipal authority. Other names may be disallowed on grounds of policy, as may those that are considered generally undesirable or obscene.
- If a name includes words such as Bank, Building Society, Insurance, Assurance, Reinsurance, Fund Management, Investment Fund, Trust, Trustees, Finance or their foreign language equivalents, then consent or a licence is required.
- An Exempt Company must have the word Limited in its name to denote limited liability.
- An International Company may utilise a broad range of internationally accepted abbreviated words as suffixes to denote limited liability.
The minimum number of directors required for both Exempt and International Companies is one. The directors may be natural persons or bodies corporate, may be of any nationality and need not be resident in Vanuatu. However, Exempt Companies must have at least one resident director. An Exempt Company must appoint a company secretary. An International Company need not appoint a company secretary, although it is customary to do so to facilitate signing duties. The minimum number of shareholders for an International Company is one. An Exempt Company requires two.
The standard authorised share capital for an Exempt Company is US$ 10,000. Most International Companies do not have an authorised capital as it is not a requirement and is not provided for in the Act. The capital of Exempt and International Companies may be expressed in any currency.
Classes of shares permitted in Vanuatu are as follows: registered shares, bearer shares, preference shares, redeemable shares and voting or non-voting shares.
Annual Taxation and Fees
Domestic taxation is not payable on the net chargeable profits of Exempt and International Companies. There are no double taxation agreements. An International Company pays an annual fee of US$ 300 per year. An Exempt Company pays a minimum annual fee of US$ 450 per year; this amount may increase if a company has a high authorised capital.
The following rules apply to financial statements:
- There is no requirement for an International Company to file accounts.
- There is no requirement for an Exempt Company to file accounts unless it is licensed.
Both Exempt Companies and International Companies are required to keep accounts that reflect a true and fair view of the financial position of the company.