Local Companies (LC) are registered in Vanuatu. They may “carry on business”, or just hold assets and real property in Vanuatu or other countries (subject to that country's laws). They require at least one “natural” person as a director but can also have other corporate directors. There is no need for a company secretary. They can operate with a minimum of one share. Banks will readily open trading accounts with them, and they are easily established.
Great caution should be exercised when considering who should be a director. Many people may associate some prestige with being a company director, however, it first comes with responsibilities. If these are not carried out properly or the Company is liquidated, that person is exposed to personal risk. Usually issues regarding control of a Company can be managed by appropriately drafted shareholders/ directors agreements.
KEY REQUIREMENTS. It must:
Keep and maintain company records.
Keep and maintain a share register.
Keep and maintain accounting records.
Pay for and lodge annual returns.
The VFSC website states in respect of companies.
“The following are typical reasons why someone might choose to form a company instead of another business type:
Limited liability– the company is liable for all of the obligations it incurs, not the shareholders. By comparison, a sole trader or a person involved with a partnership will be personally liable for any business debts that cannot be paid by the business. This is the primary reason people choose the company structure.
Shareholder control – the Companies Act allows a good degree of control to shareholders through their to vote on certain decisions, such as removing directors. The shareholder can control the company without the need to be involved with the day-to-day running of the business.
Continuity of existence– a company will usually survive changes of ownership, and will continue to exist until it is removed from the company register. A partnership often ends on retirement or death of a partner.
Shares can be transferred– it is easier to sell and transfer shares in a company than it is to sell or transfer a partnership interest.
A company will also give the business credibility towards third parties, such as lenders and other people it does business with, because certain information is made available to the public and it has to abide by clear rules under the Companies Act.
Under the Companies Act, one person can form a company, by being the only shareholder and the only director. This way they can exercise full control over their business, but also enjoy the above benefits of having a company.”
If you want to incorporate a Vanuatu Local Company, or you want to know more information, please contact us.