Corporate Governance Rules for Seychelles IBCs (Director Duties and Liabilities)

Directors of Seychelles International Business Companies (IBCs) are subject to statutory duties and liabilities under the IBC Act and related compliance regulations.

The International Business Companies Act, 2016, Effective as of 1 December 2016, repealed and superseded the International Business Companies Act 1994 in its entirety. The act sets out the legal framework governing corporate governance for IBCs registered in Seychelles.

While Seychelles IBCs are often praised for their flexibility and low regulatory burden, directors must still comply with a defined set of legal obligations. Failure to do so can result in civil or even criminal penalties, depending on the nature of the breach.

If you’re deciding between IBC vs LLC, refer to our article, Seychelles IBC vs LLC: Choosing the Right Structure.

Legal Basis: The IBC Act and Related Regulations

The principal legislation that governs Seychelles IBCs is the International Business Companies Act, 2016, which replaced the earlier 1994 Act. This Act modernized IBC law in Seychelles and aligned it with evolving international transparency standards. Under this law, directors have a legal duty to act in the best interest of the company, maintain certain records, and ensure the company remains in good standing.

Complementary regulations such as the Beneficial Ownership Act, 2020, and anti-money laundering (AML) laws also impose legal expectations on directors, particularly around transparency, record-keeping, and compliance reporting.

“The modern IBC regime in Seychelles is designed to strike a balance between privacy and international compliance,” says Manar Bakeer, Legal Affairs Officer at OVZA. “Directors must be aware that these obligations are enforceable both locally and under international cooperation frameworks.”

Director Appointment and Legal Standing

Every Seychelles IBC must appoint at least one director, who can be an individual or a corporate entity. There is no nationality or residency requirement, which adds to the jurisdiction’s appeal for international investors.

However, once appointed, directors are considered officers of the company with fiduciary duties enforceable under Seychelles law.

A director’s authority must be set out in the IBC’s Memorandum and Articles of Association, and their appointment must be formally recorded. Failure to register changes in directorship may result in administrative penalties or invalidate certain corporate actions.

Fiduciary Duties of Directors

The fiduciary responsibilities of a Seychelles IBC director include the duty of care, which requires directors to act with due diligence, competence, and attention in managing the company’s affairs. They must also uphold the duty of loyalty by acting in good faith, prioritizing the company’s best interests, and avoiding conflicts of interest. Additionally, directors have a duty to act within the powers granted by the company’s constitutional documents and Seychelles law. They are also bound by a duty of confidentiality, meaning they must protect the company’s sensitive information, including its financial records and strategic plans.

These duties are enforceable both internally by the company or its shareholders and externally, particularly by regulatory authorities in cases involving fraud, negligence, or misconduct.

Statutory Record-Keeping and Reporting Obligations

A key legal responsibility of directors of a Seychelles IBC is ensuring that the company maintains proper corporate records. The IBC Act mandates that every International Business Company must keep a register of directors, a register of members, and a register of charges. In addition, the company must maintain accounting records that are sufficient to explain its financial transactions and determine its overall financial position.

These records must be kept for at least seven years and may be maintained either in Seychelles or in another jurisdiction, provided the company notifies its registered agent of their location. Directors who fail to comply with these obligations may be subject to penalties or face issues during regulatory investigations or audits.

While Seychelles IBCs are not required to file financial statements with public authorities, directors must ensure that records are available for inspection by the registered agent or Seychelles Financial Intelligence Unit if needed, particularly in the event of a tax exchange request under CRS or other transparency mechanisms.

Director Liabilities Under Seychelles Law

Contrary to the common belief that offshore jurisdictions offer blanket immunity, directors of Seychelles IBCs can be held personally liable for specific violations. These include fraud, willful misconduct, gross negligence in fulfilling fiduciary duties, failure to maintain statutory company records, and authorizing ultra vires acts, which are actions beyond the company’s legal authority.

Liability can arise through civil proceedings, often brought by shareholders or other directors, or through criminal prosecution, particularly in cases involving breaches of Seychelles’ AML laws.

It is worth noting that limited liability does not shield directors from personal accountability for illegal actions, especially in today’s global regulatory environment.

Here is a table that outlines common director violations and their consequences under Seychelles law

Protection Measures: Indemnity and D&O Insurance

To mitigate risks, many Seychelles IBCs include director indemnity clauses in their Articles of Association. These clauses can protect directors from personal financial loss incurred in the course of lawful duties, except in cases of fraud or gross misconduct.

Additionally, international directors may opt for Directors and Officers (D&O) liability insurance, particularly when managing IBCs involved in high-value transactions or cross-border operations. While not mandatory, this is a recommended corporate governance safeguard.

Regulatory Oversight and Enforcement

Although Seychelles maintains a business-friendly offshore regime, enforcement mechanisms exist to ensure that IBC directors fulfill their legal responsibilities. The Financial Services Authority (FSA) oversees the conduct of International Business Companies and has the authority to investigate breaches of the IBC Act or related statutes, impose administrative fines for non-compliance, suspend or strike off companies that fail to meet statutory obligations, and share information with international regulators under transparency agreements such as OECD CRS and FATCA.

In severe cases, such as money laundering, fraud, or willful misrepresentation, directors may face prosecution under Seychelles’ Anti-Money Laundering Act or Penal Code, with potential criminal penalties including imprisonment.

This makes it essential for directors -not just beneficial owners- to understand the limits of legal protection and the real-world implications of failing to uphold their duties.

Director Removal and Resignation Procedures

The removal or resignation of a director must be handled in accordance with the IBC’s internal governance documents and the IBC Act. This process generally includes passing a board or shareholder resolution, depending on what is specified in the Articles of Association, notifying the company’s registered agent, and updating the company’s Register of Directors within 30 days.

Failure to update the register can invalidate certain corporate actions or trigger compliance issues. For example, a Seychelles IBC that fails to maintain an up-to-date Register of Directors may not be able to open a bank account or sign a valid contract in another jurisdiction.

Conclusion

A Seychelles IBC offers strong privacy, tax neutrality and operational flexibility but directors must manage these advantages within the legal guardrails set by the IBC Act and related laws. Clear governance, lawful conduct, and diligent compliance not only protect the company but also shield directors from unnecessary risk.

For more information, visit the Seychelles Company Tax Advantages and Seychelles Offshore Company Benefits.