What is the main source of law authorising this entity form?

Companies Act Cap. 58A of the 2010 Continuous Revised Edition of the Laws of Grenada

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

Yes, a private limited liability company maintains a separate and distinct personality from that of its shareholders.

(Maximum) period of existence

These companies have perpetual duration, unless they are struck-off from the Companies Register by the relevant authority, or wound up.

Governing document(s)

The governing documents are the Articles of Incorporation and the By-laws of the Company, Notice of Directors, the Notice of Registered Office and Mailing Address.

Liability of incorporators / shareholders

Incorporators and/or Shareholders are liable to the extent of their contribution to the capital of the company but are not personally liable for the company’s liabilities. However, there are certain rare instances when the corporate veil may be lifted by the Courts, resulting in directors and/or shareholders being held personally liable for the acts and/or omissions of the Company.

(Governing) bodies

Subject to Unanimous Shareholders Agreement or Declarations, companies are managed by its Officers and Board of Directors, whose powers are set out in Companies Act, the Articles of Incorporation, By-laws or Shareholders Agreements

Other particularities

a single director cannot also act as company secretary when both roles are required to perform an action

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions and divestitures, equity acquisitions, conversions etc.)?

Yes, unless the Articles of Incorporation restrict the entity from doing so.

Can this type of entity be publicly listed or held, or its securities be issued to members of the public?

Private companies can become publicly listed under Companies Act 58A of the 2010 Continuous Revised Edition of the Laws of Grenada, and securities may be issued pursuant to the Securities Act Cap299A of the 2010 Continuous Revised Edition of the Laws of Grenada.

Can this type of entity be used for a non-profit or charitable organization?

No. The Companies Act separately provides for the incorporation/registration of non-profit companies or charitable organisations.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

Request for Name Search and Reservation are submitted to the Corporate Affairs and Intellectual Property Office (CAIPO). After the company’s name is approved and reserved, the Articles of Incorporation, Notice of Directors, Notice of Address, Notice of Appointment of Secretary and By-Laws are submitted to CAIPO for incorporation of the company.

Involvement of notary, company register, governmental authorities

No notarisation is required. The foregoing documents (except the By-Laws) are to be filed at the Corporate Affairs and Intellectual Property Office.

Timing (estimate)

From the filing of the Articles of Incorporation and Notices to the issuance of the Certificate of Incorporation 3 to 5 business days.

Main costs, including registration and similar fees (excluding legal fees)

Filing Name Reservation US$3.70; Government Fee US$222.22; Company Seal US$27.22; Other charges US$18.51 (approximately). VAT is also chargeable at a rate of 15% on the professional fees and other charges.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

Yes, the Name Reservation Form and the Articles of Incorporation must state the nature of the business the Company is to carry on. The Articles of Incorporation must also state restrictions, if any, on such business.

Minimum number of incorporators / shareholders and residency requirements

A Private Limited Liability Company can be incorporated by a sole incorporator/shareholder. There is no residency requirement for incorporators/shareholders.

Minimum number of directors (or other applicable officers) and residency requirements

A Private Limited Liability Company must have at least 1 (one) Director and a Secretary. There are no residency requirements for Directors.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

No minimum share capital required for incorporation or opening a bank account.

Is the physical presence of incorporators/directors/shareholders required in the jurisdiction for incorporation, formation, or organisation?

No.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

After the incorporation of the company, a tax identification number is issued by the Inland Revenue Department. An application form to register for a tax identification number must be completed on behalf of the company, and submitted to IRD.

What is the title of the applicable company registry?

The Corporate Affairs and Intellectual Property Office is the applicable company registry. It is a governmental agency or body.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles or other formation document, Articles or other formation document, Group structure, Share capital, Directors, Accounts, Insolvency, good-standing, liquidation, Liens and encumbrances on the shares, Liens and encumbrances on assets of the entity, Other (e.g. litigation, tax matters)

Articles or other formation document - Yes

Ownership identification (direct and/or indirect ownership, and/or 'beneficial owners') Yes, the Annual Returns must list the shareholders of the Company.

Group structure - No

Share capital - Yes

Directors - Yes

Accounts – No

Insolvency, good-standing, liquidation - Yes

Liens and encumbrances on the shares - Yes

Liens and encumbrances on assets of the entity - Yes

Other (e.g. litigation, tax matters) – Litigation and tax matters do not have to be filed at CAIPO. Notices of Change of Directors, Change of Secretary and Change of Registered Address or Mailing Address, Articles of Amendment.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Board of Directors. Directors have certain duties and responsibilities as outlined under the Companies Act. They can also be shareholders and or employees of the company. The undermentioned is a non-exhaustive list of the main duties and responsibilities

• Determine the company’s strategic objectives and policies
• Monitor progress towards achieving the objectives and policies
• Appoint senior management
• Provide direction and oversight of senior management
• Account for the company’s activities to shareholders
• Promote the success of the company for the benefit of its shareholders
• Exercise independent judgement, reasonable care and skill in execution of duties
• Consider the interests of employees according to the Companies Act
• Delegate powers to committees
• Declare dividends
• Pass resolutions ordinary and special
• Review and approve organizational structure and controls
• Ensure that senior management is qualified, competent and appropriately compensated
• Review and Approve broad business strategies and policies for major initiatives and activities
• Ensure full accurate accounting and financial records are maintained
• Monitor performance against business objectives
• Ensure adequate succession planning has taken place for critical management positions
• Present the company’s annual audited financial statements and management reports to shareholders
• Account for the company’s activities to shareholders

There should be meetings of the Directors held in accordance with the provision of the By-Laws and Annual General Meetings for Shareholders not later than 18 months after incorporation; and subsequently not later than 15 months after the last preceding annual meeting.

How are the members of the executive body appointed, dismissed and replaced?

Directors are usually elected, removed and replaced by the shareholders at an AGM by an ordinary resolution. A director may also be removed by ordinary resolution at a special meeting to remove a director. A director who is found to be of unsound mind or bankrupt is disqualified from being a director.

Is it possible to appoint corporate directors or must all directors be natural persons?

An entity may be a director.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

No, Any combination is permissible based on whether it is a closely held company or a standard private limited liability company or a subsidiary within a group of associated or affiliated companies with a common parent company.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The persons who own the company are called the shareholders. Shareholders are able to attend and vote at shareholder meetings, execute shareholder agreements, inject capital into the company and receive the company’s annual financial statement and reports, amongst other actions.

The following is a non-exhaustive list of issues for which the shareholders or their proxies vote in a General Meeting:

• Pass resolutions both ordinary and special, including e.g. to amend the articles of incorporation or to wind up the company voluntarily
• Change of the Company’s name;
• Appointment and Removal of Directors;
• Appointment and Removal of Auditors;
• Issues pertaining to mergers or re-organisation of the Company;
• Approval of Extra-ordinary transactions such as the sale, lease or exchange of all or substantially all, the property of the Company other than in the ordinary course of business.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Unless the By-Laws otherwise specifically provides, generally a quorum of shareholders is based on the majority present at a meeting either in person or by proxy , This number can be varied by an amendment to the By-Laws, or to the Articles of Incorporation or to the Shareholders Agreement, which ever is applicable.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Generally no, but no association, partnership, society, body or other group consisting of more than 20 persons may be formed for the purpose of carrying on any trade or business for gain unless it is incorporated. A company which invites applications from the public, or invites offers from the public and those listed on the Eastern Caribbean Securities Exchange are subject to the Securities Act and regulation by the Eastern Caribbean Securities Regulatory Commission. Banks are subject to the Banking Act and the Eastern Caribbean Central Bank regime.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Annual Financial Statements are to be placed before the Shareholders at the Annual General Meeting. The company’s Financial Statements and Tax Returns must be presented to the Inland Revenue Department by 1st March of each calendar year unless an extension of time to submit same is granted.

Is the entity permitted to determine its own financial year?

Yes it is.

Is the entity subject to any statutory (external) auditor obligations?

Yes, the Companies Act provides that an entity may appoint an auditor who prepares and submits Financial Statements on an annual basis.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Every company must have at least one Secretary and any one or more assistant secretaries. Directors may appoint a managing director or a committee of directors and delegate any powers of the directors to same, such appointment includes officers and an auditor. The By-laws will set out the type of officers that can be appointed and their powers including but not limited to a managing director, chairman, president, general manager, secretary, treasurer who shall perform such duties and have such powers as may be assigned to them by the directors.

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares. Ownership of shares is evidenced by Share Certificates.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Yes, an entity may, subject to its Articles of Incorporation (and By-Laws) issue different classes of shares, eg. ordinary or common shares, as well as preference shares and different classes preference shares (redeemable or non-redeemable, convertible or non-convertible)

What documentation is required for the transfer of ownership interests?

Shares of a company may be transferred by a written instrument of transfer signed by the Transferor and naming the Transferee.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

There no requirement for notarisation, stamping or filing the share transfers form, subject to the approval required for non-Grenadians to hold shares and vote at meetings in companies which own land. Upon the transfer being effected the Company Share Register should reflect the new shareholder of the shares. The Annual Return for the year in which legal ownership of the shares changed must reflect the new owner and the number of shares held.

Are there any applicable stamp duties imposed when transferring ownership interests?

No

How are shares issued? (including information on payment obligations, registration requirements)

Shares are issued at the directions of the Board. Shares shall not be issued by a company until it is fully paid in money or in property or past service that is the fair equivalent of the money that the company would have received if the share had been issued for money. The Company Secretary records the share issuance in the company’s share register. Unless it is a public company or publicly listed company, payment arrangements are executed privately between shareholder and the purchaser of the shares.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Yes, Shares can be paid for in property or for past services rendered. The Board takes into account the value of the property or past services rendered for the benefit of the company.

Not applicable in this jurisdiction

Yes, except that the rights associated with shares fully paid up will not be available to shares partially paid in like manner.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Shares acquired may be cancelled in accordance with the provisions of the Companies Act. A company is able to repurchase or acquire its own shares subject to its solvency requirements as set out under the Companies Act

Any requirements with respect to distributions to shareholders?

A company may not pay a dividend out of unrealised profits and is also subject to a solvency requirement test before distributions to shareholders and or the company’s dividend policy.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Minimum of US$1000 to US$175,000 dependent on the size of the company and the nature of the business it carries on.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

Corporation tax is 28% on chargeable income

Summary of any specific matters, e.g. recent or prospective major legal developments

None at present.