Electronic Commerce Ordinance 2001
Protected Cell Companies Ordinance 2001
Tax Reform
The most significant pieces of legislation enacted in Gibraltar within the last six months in relation to financial services are the Electronic Commerce Ordinance 2001 and the Protected Cell Companies Ordinance 2001.
Electronic Commerce Ordinance 2001
The E-commerce Ordinance was introduced in March 2001 and is designed to:
- facilitate the use of electronic means to transmit and store information;
- provide that agreements concluded by electronic means are binding; and
- establish the framework within which electronic service providers operate.
Recently, Gibraltar has been successful in attracting e-commerce operations. This follows the extensive use of e-commerce facilities in both financial services and gaming industry activities.
The new ordinance supports the development of the e-commerce sector. To a large extent the legislation follows the framework introduced in other jurisdictions. It also takes into account the EU Directive on E-commerce (2000/31/EC) and the Electronic Signatures Directive (1999/93/EC), which apply to Gibraltar.
Section 5 of the ordinance makes clear that any agreement between parties (subject to various exceptions) can be concluded by electronic means. Excluded agreements concern the conveyance or transfer of land and rights of succession under a will or other testamentary instrument.
The legislation provides that an 'established service provider' is a service provider that uses a fixed and continuing establishment in Gibraltar for providing information services. Under Section 7 of the ordinance any contract entered into through an established service provider is considered to have been entered into in Gibraltar, and the law of Gibraltar applies unless the parties agree otherwise.
Codes of conduct and prescribed standards are expected to be published by the government for service providers in due course. The codes and standards may relate to:
- the description of services;
- the type of information that may be contained in data messages;
- the contractual application of such codes;
- the procedure for dealing with complaints; and
- other matters that are considered appropriate.
As is usual in legislation of this type, there is provision for accreditation certificates in respect of electronic signatures. An electronic signature (supported by an accreditation certificate) has the same effect in law as its handwritten counterpart and is admissible in evidence in any legal proceedings.
The legislation also allows the storing of information by technical means if appropriate circumstances and conditions are met.
The ordinance introduces a number of offences. In particular, where an offence is committed by a corporate body and is shown to have been committed with the consent or connivance of (or to be attributable to any neglect on the part of) any director, manager or other such individual, they, as well as the body corporate, shall be guilty of that offence and will be liable.
Protected Cell Companies Ordinance 2001
In July 2001 the long-awaited legislation to provide a statutory framework for protected cell companies was introduced.
The legislation is welcomed by practitioners in various areas. In recent years Gibraltar has witnessed the use of contractually based cell arrangements. The provisions of the ordinance will provide a useful statutory framework within which future arrangements may be structured.
Section 3(1) provides that a company may be incorporated as a protected cell company or, if so authorized by its articles, converted into a protected cell company.
Under the ordinance a protected cell company is regarded as a single legal entity, notwithstanding the fact that it may have one or more cells. The creation of a new cell does not create a separate legal entity.
The position of creditors is dealt with extensively. Cellular assets that are attributable to a cell of a protected cell company shall be available only to the creditors of that cell. Cellular assets shall be absolutely protected from creditors of the company who are not creditors in respect of that cell.
Currently, the use of protected cell companies (at least to the extent to which the statutory framework is to be relied upon) is limited to either insurance companies and collective investment schemes, or a company which is established principally for the purpose of issuing bonds, notes, or other debt securities or instruments. Furthermore, consent is required from the appropriate authorities before such a company can be incorporated or converted into a protected cell company.
A general provision allows for the extension of the category of activities to which protected cell company legislation can be applied.
The introduction of the protected cell company is likely to boost certain sectors significantly. The success that other jurisdictions have enjoyed with statutory protected cell companies is likely to be repeated in Gibraltar. Similarly, the legislation will provide new opportunities in the development of securitization and other financial services vehicles.
Protected cell companies will be subject to the same stringent safeguards and regulatory standards that apply to such activities generally. The introduction of the legislation follows extensive industry lobbying and careful assessment of comparable measures in other jurisdictions.
Gibraltar continues to be actively involved in the consideration of tax reform proposals. The process has been given a major push following the listing by the European Commission of various Gibraltar tax measures as potentially breaching EU state aid rules. These are part of an EU-wide list of tax measures that will be the subject of a European Commission enquiry. The move is likely to accelerate changes to the Gibraltar tax system. The reform will have as its main objectives the removal of measures that may potentially fall foul of EU rules and the maintenance of a fiscal regime that continues to ensure Gibraltar's competitiveness as an international business and financial centre.
For further information on this topic please contact Peter C Montegriffo at Hassans by telephone (+350 79000) or by fax (+350 71966) or by email ([email protected]).