Commonwealth of Dominica is an island located between the Caribbean Sea and the North Atlantic Ocean, about one-half way from Puerto Rico to Trinidad and Tobago. The total land -area is 754 sq. km., population is 69,655 inhabitants. Roseau is the capital and administrative and commercial centre of Dominica with a population of 20,000 persons. Official language is English and the literacy factor is 94%.
Dominica was discovered by Christopher Columbus in 1493 and it was the last of the Caribbean islands to be colonized by Europeans. Most of its early colonial history Dominica spent changing hands between the French and the English. In 1776 the French finally lost control to the English. Dominica became independent in 1978 and now is a member of the British Commonwealth.
The political system of Dominica is based on the British Westminster Model with Queen Elizabeth II as titular Head of State, represented in Dominica by the President who is elected by the House of Assembly and holds office for a term of five years. Head of government is the Prime Minister appointed by the President. Cabinet is appointed by the President on the advice of the Prime Minister. The legal power is vested in the unicameral House of Assembly (30 seats, 9 appointed senators, 21 elected by popular vote; members serve five-year terms). The judicial power is represented by the Eastern Caribbean Supreme Court, consisting of the Court of Appeal and the High Court (located in Saint Lucia; one of the six judges must reside in Dominica and preside over the Court of Summary Jurisdiction).
The Dominican economy depends on agriculture, although in recent years great strides have been made on diversification into tourism and offshore services. Bananas is Dominica's principal export and it contributes about 80 percent of the GDP. Currency of Dominica is the East Caribbean Dollar, which exchanges with the US dollar at a fixed rate of USD 1 = XCD 2.7.
Dominican law is based on the English Common Law. Principal corporate legislation is the International Business Companies Act, 1996 (amended). Other significant laws include the Offshore Banking Act, 1996, the Exempt Insurance Act, 1997 and the International Exempt Trust Act. Dominica has no double taxation agreements, and thus there is no information exchange between state bodies of Dominica and their counterparts in other countries. Dominica is a member of the United Nations, Organisation of American States (OAS) and the Caribbean Community.
The type of company for the international trade and investment is International Business Company. International Business Company (known as an "IBC") is regulated by the International Business Companies Act, 1996 (with amendments).
There are very few restrictions on the activities of a Dominican IBC, and namely an IBC may not:
- carry on business with any person resident in Dominica;
- own any interest in real property in Dominica, other than the lease of an office;
- carry on banking, trust, insurance or reinsurance business, unless appropriately licensed under the legislation.
The State of Dominica guarantees tax exemption to all international business companies for a minimum of 20 years. That means that any income received by an IBC is exempted from income tax in Dominica. This includes all dividends, interest, rents, royalties, compensations, capital gains realised with respect to any shares, debt obligations or other securities, and any other amounts paid to the company.
To incorporate an IBC, the Memorandum and Articles of Association of a proposed company must be signed by one or more natural or juridical persons, acting as Subscribers, and submitted to the Registry of Companies in Dominica. The IBC Act requires that every IBC has a Registered Office and a Registered Agent in Dominica.
The Memorandum establishes the basic structure of the IBC including the name, the purposes for which the company is formed, authorized capital, details on the shares which may be issued including their par value, denomination, classes and the rights attached, and any other matters which affect the basic existence of the company.
The Articles of Association are essentially the by-laws of the company which govern relations between the various members of the company. They deal with the procedures for calling meetings of shareholders, passing resolutions and transferring shares including any restrictions which may apply.
Once the original M&AA are filed and the proper fees paid, the Registrar of Companies will issue a Certificate of Incorporation, which specifies the name of the IBC, the date on which it was incorporated, and its company number. The Certificate of Incorporation constitutes evidence of the company's legal existence. The M&AA can be changed after incorporation by passing director(s') or shareholder(s') resolutions.
The name of the company may be in any language and must end in the word "Limited," "Corporation," "Incorporated," "Societe Anonyme" or "Sociedad Anonima," or their abbreviations "Ltd.," "Corp.," "Inc.," or "S.A.". The words Assurance, Bank, Building Society, Chamber of Commerce, Chartered, Co-operative, Imperial, Insurance, Municipal, Royal, National and Dominica or any word conveying a similar meaning, cannot be used except with the approval in writing of the Registrar. In addition, names of IBCs may not be identical to those already existing ones and may not suggest a connection with any branch of the Government, a political party, a university or professional association.
Standard authorised capital of an IBC consists of USD 10,000 divided into 1,000 shares with a par value of USD 10.00 each. Shares can be divided into such number of classes and series as the directors may determine by their resolution. The directors are duly empowered to issue shares as registered or to bearer, shares of no par value, preference shares, redeemable shares and shares with or without voting rights. Shares issued as registered shares may be exchanged for shares issued to bearer, and shares issued to bearer may be exchanged for registered shares. Minimum issued capital is one share of no par value or one share of par value.
It should be noted that if the company issues shares to bearer, the registered agent of the company must lodge the share certificate, along with a notarised letter containing the name of the beneficial owner, with an approved fiduciary. An approved fiduciary means a chartered accountant practising in Dominica or a financial institution domiciled in Dominica, approved by the Minister of Finance.
An IBC may have one or more shareholders, individuals or corporations of any nationality or residence. Shareholders need not disclose their identity to the Registrar of Companies.
The day to day management of an IBC is undertaken by the directors. The initial directors are appointed by the subscribers to the Memorandum and Articles of Association, and thereafter these are elected by the shareholders. The minimum number of directors is one. They may be natural persons or bodies corporate of any nationality and need not reside in Dominica. Directors need not disclose their identity to the Registrar of Companies, however a copy of the Register of Directors must be kept at the registered office of the company in Dominica.
International business companies are not required to file any financial reports or tax returns in Dominica. However a company is required to keep financial records reflecting the financial position of the company. Books of account can be kept in any manner in any part of the world.
Dominican IBCs are required to pay annual license fees every year by the date of its respective anniversary. Annual fee for the company with authorised capital not exceeding USD 10,000 is USD 150. For late payment of annual fees there are penalties of up to 50% of the initial fee amount.
No public record is maintained as to the identity of shareholders or directors of Dominican companies. Public records of IBCs consist only of the Certificate of Incorporation, Memorandum and Articles of Association, name and address of the registered agent, the record of payments of the annual fees, amendments to the Memorandum and Articles of Association or agreements concerning arrangements, mergers or consolidations, winding-up or dissolution of the company.
Section 112 of the International Business Companies Act 1996 makes it an offence punishable by a fine of USD 25,000 and imprisonment for two years for any officer, auditor or official liquidator to reveal any information regarding the company except by an order of the Court on an application by the Attorney General relating solely to activities criminal under the laws of Dominica.