After breaking the news earlier this week, Finance Magnates can confirm in more detail the regulatory changes that are occurring in Vanuatu. David Woliner, the Head of Financial Regulation at law firm Nir Porat & Co., elaborated on the changes.
Financial licenses have been divided into three distinct classes with each dedicated to specific authorized activities. The A, B, and C classes are each carrying their own definitions and financial firms will need to examine in detail which category is most suitable to their needs.
Aside from the above, the changes to the directorship requirements also include increases in the regulatory fees. Coupled with the increase in the amount that brokers need to park at the regulator to $50,000, which was introduced in a previous round of regulations, the costs in Vanuatu continue to increase.
The biggest changes to the regulatory framework in Vanuatu have been associated with directorships. Woliner elaborated that every company’s director will be required to have at least five years’ experience dealing in securities.
But this is not the most-drastic of changes. “The manager or director of the company shall reside for 6 months within each year in Vanuatu,” Woliner elaborated.
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In addition to the above, a corporate presence on the Pacific island becomes mandatory. every firm will need to have a physical premise located in Vanuatu which shall maintain a certain list of software systems. All of the independent auditors dealing with the affairs of the licensee must receive prior approval from the VFSC before performing an audit.
Financial firms willing to operate with a Vanuatu license are also subjected to a professional indemnity insurance requirement. The minimum insurance cover for a licensee has been set at about $45,000 for each claim with an aggregate cover of not less than $450,000 and a maximum deductible amount of $4,500.
All of the changes that have been related by the regulator to brokers are due to apply immediately on new applications and as of July 7, 2019 for existing licensees.
After managing to reduce the number of licensees from over 500 to just below 150, Vanuatu’s financial authorities are continuing with an industry cleanup. While many chose offshore destinations to set up, the jurisdictions where they are attractive are not that many.
“The VFSC understands the above changes will affect the industry that still remains in Vanuatu and they do not want to close it, so they approach industry members and representatives such as us to seek counsel as to how these changes should be applied and when, given the complexity of issues to handle and the relatively short time frame,” Woliner explained.
The representative from Nir Porat & Co. elaborated that in all likelihood the VFSC will grant more time than called for in the last changes to the regulatory framework. He also explained that these latest changes are not likely to be the last. Many issues are set to be clarified in an upcoming circular which it is not expected before the end of spring 2019.