By Jeanelle Pran
Establishing a business is much like joining a music band – it’s about identifying the instruments required, hitting the right notes, keeping with the rhythm and knowing when to improvise. Whether you are a foreign or local entity looking to commence business operations in Trinidad and Tobago (T&T), it is important to have an understanding of the legal and regulatory landscape. By thoroughly understanding local regulations, cultural nuances and market conditions, businesses can streamline their entry process and avoid costly mistakes.
This article will explore some of the questions which businesses may have when entering the local market.
What Are The Common Forms of Business Structures?
There are various types of legal entities that are recognized in T&T, each with its own advantages. Some of the more common forms of business structures are as follows:
- Incorporation of a limited liability company – The most common form of a limited liability company is a company limited by shares where the liability of shareholders for debts and expenses will be limited to the unpaid amount on their shares. This can be an attractive option for foreign entities wishing to establish a prevalent local presence and integrate into the local commercial atmosphere.
- Registration of an external company (branch) – An external company is one where the incorporated body is formed under the laws of another jurisdiction. An external company is required to register with the local Companies Registry within 14 days after establishing a place of business in T&T. Upon registration, the external company can conduct business in T&T and operate in a similar manner as a locally incorporated company.
There are various steps and costs involved in establishing either a limited liability company or an external company in T&T and once incorporated/registered, there are on-going corporate filings applicable in order to maintain good standing (including the filing of annual returns and beneficial ownership forms).
Can Foreign Persons Serve As Directors?
Where a local entity is established, one of the questions which can arise is whether only local persons can serve as directors. In this regard, persons not resident in T&T can be directors of the local company. However, from a practical perspective, there is benefit in having local directors who are located in T&T as this can facilitate the ease of doing business. For instance, certain documents or filings may require signatures to be in wet-ink (as opposed to electronically) and if there are directors resident and easily accessible in T&T, this can facilitate ease of conducting business (in contrast to couriering a document abroad to a director each time it needs to be signed, which can potentially lead to delays and unnecessary costs).
It is noteworthy to add that, as of February 2023, the Companies Registry Online System (CROS) was launched which seeks to facilitate electronic and remote transaction of business with the Companies Registry. All individuals who wish to use CROS must be registered and must have an individual electronic identification by way of a Company Registry Account (CRA). Therefore, in order to commence business in T&T, all directors and secretaries, as the case may be, must be registered with CROS. Registration with the platform requires the provision of certain information including the individual’s full name and any former name, nationality at birth and current nationality, date of birth, current residential address and postal address, as well as copies of photo identification.
Are There Any Tax Registrations?
Newly incorporated or registered companies are required to comply with all tax filings and payment obligations. In order to do so, appropriate tax registration forms would need to be submitted by the company to the relevant authorities so that the company can obtain its unique tax registration numbers. Registrations are generally required for corporate tax purposes, employee payroll income tax deduction, national insurance and VAT where the commercial supplies of the company exceed the prescribed threshold.
Apart from the above tax registrations, companies should consider obtaining appropriate taxation advice when seeking to commence operations in T&T.
Can Non-resident Persons Work In T&T?
Under the Immigration Act, a non-resident foreign national would require a work permit to work in T&T save that a foreign national can engage in gainful employment in T&T for a period not exceeding thirty (30) days in every twelve (12) consecutive months. Work permits are issued for a fixed period and generally, will not be granted to non-nationals unless there are no locals who are capable of filling the specified post.
Are There Any Foreign Investor Requirements?
The Foreign Investment Act sets out certain licence and notice requirements relating to foreign investors. In particular:
- A licence must be obtained prior to:
- acquiring in Trinidad more than one (1) acre of land for residential purposes and five (5) acres for trade or business;
- acquiring any land in Tobago; and
- acquiring shares in a local public company where the holding of such shares, either directly or indirectly results in 30% or more of the total cumulative shareholding of the company being held by foreign investors.
- A notice to the Minister of Finance is required to:
- incorporate a private company in T&T;
- acquire shares in any private company incorporated in T&T;
- acquire shares in a local public company in T&T; and
- acquire land below the thresholds set out above.
Notably, the foreign investment regime in T&T is not expressly limited to any specific sectors but, as evident from the above, it would be most applicable to business transactions involving the incorporation of a private company and the purchase of land or shares in a local private or public company.
Is Permission Required Before Any Development?
Under the Town and Country Planning Act, permission is required for any ‘development’ of land. Development is defined as the carrying out of building, engineering, mining or other operations in, on, over or under any land, the making of any material change in the use of any buildings or other land, or the subdivision of any land. The Town and Country Planning Act specifies certain activities which do not constitute development. Among these is the carrying out of works for the maintenance, improvement or other alteration of any building, if the works affect only the interior of the building or do not materially affect the external appearance of the building.
A provisional permit from the Municipal Corporation must also be obtained prior to commencing any work. This permit may specify (as a condition to its grant) those licences, permits and approvals which may be required from other utility companies, government agencies and regulators for the proposed development.
Can Parties To A Contract Choose a Foreign Law?
In the case of a foreign entity who is seeking to establish a local presence, one of the considerations might be which law will govern the contractual relationship with local persons or entities. In T&T, where a contract contains an express choice of law clause, that choice will generally be considered the law which will be applied to the contract. That said, there are certain circumstances when the express choice of law may not be followed, such as where it prevents the application of mandatory domestic statutory rules and provisions.
Similarly, if a contract expressly provides for a specific jurisdiction other than T&T to be the jurisdiction to hear and adjudicate on any disputes, this will generally be deemed to be the jurisdiction governing the contract. In the absence of an express jurisdiction clause however, it is likely that the parties to the contract would be deemed to be submitting to the jurisdiction of the courts of T&T.
To Sum It Up
When considering whether to commence operations in T&T, there are many factors to consider, only some of which have been touched on above. Businesses should seek to understand any legal and regulatory requirements which would apply to its intended operations, so that steps can be taken to comply with them, thereby establishing a solid foundation and facilitating smoother operations, with minimal unforeseen obstacles.
