Nevis and its corporate laws
Nevis is one of the two islands that make up the Federation of St Kitts and Nevis, an independent Commonwealth country in the Eastern Caribbean. Nevis has its own island administration and its own legislation for international entities. The main statutes are the Nevis Business Corporation Ordinance, which governs companies, the Nevis Limited Liability Company Ordinance, which governs LLCs, and the Nevis International Exempt Trust Ordinance, which governs international trusts.
Supervision of the international sector sits with the Financial Services Regulation and Supervision Department, usually shortened to FSRSD. Registered agents, who form and maintain Nevis entities, are licensed and supervised in Nevis. As with other offshore centres, you cannot form or run a Nevis entity without a local registered agent.
The legal system is based on English common law. The LLC Ordinance, however, draws heavily on the LLC model developed in the United States, which is why American lawyers often find the Nevis LLC easy to work with.
What a Nevis LLC is
A limited liability company is a separate legal entity owned by members rather than shareholders. Members hold membership interests, which carry economic rights to profits and distributions and, usually, a say in how the company is run. The members' liability is limited to what they have contributed or agreed to contribute.
The heart of an LLC is its operating agreement. This is a contract among the members that sets out how the company is managed, how profits are shared, how decisions are taken and what happens when a member wants to leave or dies. The Ordinance supplies default rules, but most of them can be changed in the operating agreement. That freedom of contract is the main attraction. Two LLCs formed on the same day under the same law can work in completely different ways.
A Nevis LLC can be managed in one of two ways:
- Member managed. The members run the company directly, much like partners in a partnership. This suits a single owner or a small group who all want a say.
- Manager managed. The members appoint one or more managers, who may or may not be members, to run the company. This suits families, investment clubs or structures where a trustee or professional manager takes decisions.
Which model you choose affects who signs documents, who opens accounts and who a payments provider will treat as controlling the entity.
Features owners look for
The features that draw people to the Nevis LLC are mostly about flexibility and protection.
- Single member LLCs are allowed. One person or one entity can own the entire company.
- Contractual governance. The operating agreement can be tailored to the family or business, including classes of interest, voting arrangements and restrictions on transfer.
- Charging order protection. The Ordinance limits what a creditor of a member can do. In broad terms, a creditor's remedy against a member's interest is a charging order over distributions, which does not give the creditor management rights. The scope of this protection is a matter for legal advice.
- Privacy of members. Member details are not on a public register, though the registered agent must know who the beneficial owners are.
- Continuation. Entities from other jurisdictions can in some cases continue into Nevis as LLCs, and Nevis LLCs can move out.
None of these features is unique to Nevis, and some can be overstated in marketing material. An LLC protects lawfully held assets in an orderly way. It does not shield assets that were moved to defeat existing creditors, and courts in many countries will look hard at transfers made after a claim has arisen.
Uses in asset holding
Most Nevis LLCs that come to a payments provider are holding vehicles. The patterns we see most often include:
- Investment portfolios. An LLC holds a brokerage account, fund interests or a private equity portfolio for a family.
- Real estate. An LLC owns property directly or holds the shares of local property companies in several countries.
- Trust underlying companies. A trust, often a Nevis or Cook Islands trust, owns the LLC, and the LLC holds the actual assets. The trustee controls the LLC through its membership interest, while day to day management can sit with a manager.
- Intellectual property and royalties. Less common, and it raises substance and tax questions in the countries where the work is done.
- Personal assets such as yachts or aircraft. Usually alongside specialist registration in the flag state.
The trust and LLC combination deserves a closer look, because it is common and often misunderstood. The trust owns the membership interest. The trustee, acting as member, appoints a manager, who might be the settlor, a family member or a professional. The manager signs cheques and opens accounts. To a payments provider, that means it needs to understand both the trust and the LLC: who the settlor, trustee, protector and beneficiaries are, and who the manager is and how they were appointed. See our guide to Cook Islands international trusts for how trustees approach this.
Formation and core documents
A Nevis LLC is formed when the registered agent files articles of organisation with the registry in Nevis. Once accepted, a certificate of formation is issued. The articles are short. Most of the substance sits in the operating agreement, which is not filed.
The document set for a Nevis LLC usually includes:
- Certificate of formation. Confirms the LLC's name, registration number and date of formation.
- Articles of organisation. The filed constitutional document, naming the LLC, its registered agent and, often, whether it is member or manager managed.
- Operating agreement. The private agreement among the members setting out governance and economics. Payments providers almost always ask for a full signed copy.
- Register or schedule of members. Shows who holds the membership interests and in what proportion. Often included as a schedule to the operating agreement.
- Appointment of managers. Where the LLC is manager managed, a written consent or resolution of the members appointing the manager.
- Certificate of good standing. Issued in Nevis to confirm that annual fees are paid and the LLC is current.
- Certificate of incumbency. Issued by the registered agent, summarising members, managers and the agent.
Because so much depends on the operating agreement, it is worth reading it before you send it to anyone. Old templates sometimes name a manager who has since stepped down, or set out a profit share that no longer reflects reality. Update the agreement, or document the changes with written consents, before applying for an account.
Identifying the beneficial owners
For a corporation, the beneficial owners are usually found by following the shares. For an LLC, you follow the membership interests and the management rights, which do not always point to the same people.
A payments provider will generally want to identify:
- Every individual who ultimately holds a significant membership interest, directly or through other entities.
- Every individual who controls the LLC, which in a manager managed LLC includes the managers and anyone who can appoint or remove them.
- Where a trust is a member, the trustee, settlor, protector and beneficiaries, or classes of beneficiary.
- The authorised signatories on the account.
Expect identity documents, proof of address and a source of wealth statement for each individual. Where an asset protection motive is part of the reason for the structure, be prepared to explain where the assets came from and when they were transferred in. That is a routine question, and a calm, documented answer is the best response.
Payments considerations for Nevis LLCs
Nevis LLCs tend to have a quiet payment profile. Money comes in from the sale of an asset, investment income or a capital contribution, and goes out to pay property costs, professional fees, investment calls or distributions to members. That profile is usually easy to understand, provided it is described accurately at onboarding.
A few points help:
- Describe the assets. Say what the LLC holds, where those assets are and roughly what they are worth. Providers use this to judge whether expected flows make sense.
- Explain distributions. If the LLC pays members, explain how distributions are decided under the operating agreement and who receives them.
- Keep capital contributions documented. A member who sends funds to the LLC should be able to show the source of those funds.
- Use the LLC's own name. Payments for the LLC should be made by and to the LLC, not mixed with the members' personal accounts.
- Think about currency. A Nevis LLC holding European property may receive rent in euros and pay a manager in US dollars. Converting at spot when needed, rather than holding the wrong currency, keeps the books simpler.
Some providers are cautious about Nevis because of its reputation for asset protection. A complete file, a transparent chain of ownership and a clear explanation of purpose do more to address that caution than anything else.
Keeping a Nevis LLC current
A Nevis LLC stays in good standing by keeping a registered agent and paying annual fees on time. Missing the annual fee can lead to the LLC being struck off, which in turn will freeze any account held in its name. Diarise the renewal date and make sure the registered agent has current contact details for whoever pays.
Inside the LLC, keep a file with the operating agreement and all amendments, written consents of members and managers, a current schedule of members, and the accounts or at least a ledger of income and expenses. When the provider carries out a periodic review, this file answers most questions on its own. If the members, managers or purpose change, tell your provider with the supporting documents at the time, rather than waiting for the next review.
General information only
This article is general information about Nevis limited liability companies and how payments providers approach them. It is not legal or tax advice, and asset protection in particular needs proper legal advice in each relevant country. CCYFX does not form entities or advise on structuring. If you manage a Nevis LLC that needs FX or international payments, our Nevis page explains how CCYFX works with Nevis entities.
