In the Turks and Caicos Islands (TCI), a company limited by shares is the most common form of corporate/business organisation. Other options include:

• a private company limited by guarantee that is or is not authorised to issue shares; 
• an unlimited private company that is or is not authorised to issue shares; 
• a protected cell company;
• a non-profit company may be established solely or primarily for charitable, religious, cultural, educational, social or fraternal purposes or for the purpose of benefiting the public; and
• general and limited partnerships may also be formed.

A company (other than a non-profit company) may be registered as an international company. 

A non-profit company may be established solely or primarily for charitable, religious, cultural, educational, social or fraternal purposes or for the purpose of benefiting the public. 

The Companies Ordinance, Companies Regulations, Beneficial Ownership Regulations, Companies and Limited Partnership (Economic Substance) Ordinance – along with the company’s articles – are the principal sources of corporate governance requirements for companies. 

Partnerships are governed by the Partnership Ordinance, Limited Partnership Ordinance, Companies and Limited Partnership (Economic Substance) Ordinance and any Partnership Agreement between partners. 

There is no stock exchange in TCI so there are no corporate governance requirements for TCI companies as it relates to publicly traded shares.

However, the Companies Ordinance recognises 40 listed international exchanges and provides that a listed company or a listed share is subject to the listing rules of the jurisdiction where it is listed. Any additional rules, procedures or requirements that the listed company or share would be subject to would be specific to the listed exchange. 

Current “hot topics” in corporate governance in the TCI, similar to other Caribbean jurisdictions, include:

• continued anti-money laundering and financing of terrorism monitoring and reporting;
• increased focus on disclosure and reporting of ultimate beneficial ownership in the region;
• adequacy of oversight of ESG, crisis management and executive pay; and
• attention to board diversity.

As in many other jurisdictions in the Caribbean, ESG is an emerging issue in the TCI. There are currently no statutory requirements in respect of ESG for companies in the TCI.

Given the unique vulnerability of the TCI and other Caribbean jurisdictions as islands facing the climate crisis, growing recognition of ESG is expected. 

In the TCI, every company must have a board of directors, which governs the company together with the shareholders. The board may consist of one or more directors and is responsible for the daily management of the company. The directors have a duty to manage the company in its best interests. The company’s shareholders have powers to make decisions about the company in certain circumstances, as discussed in 3.2 Decisions Made by Particular Bodies.

The Companies Ordinance grants company directors all power which is necessary to manage, direct and supervise the company’s affairs.

The board of directors typically makes decisions with respect to the general and day-to-day operation of a company which affect the company’s business and affairs. These decisions may include:

• appointing additional directors;
• entering into contracts;
• appointing agents of the company;
• authorising a distribution of dividends to shareholders; and
• calling a meeting of the shareholders.

Certain decisions are reserved for shareholders including the removal of directors from office, altering the company’s articles of incorporation, and any other decision reserved for shareholders in the company’s articles of incorporation.

The articles of incorporation may grant directors the power to make decisions that are otherwise reserved for the shareholders in the Companies Ordinance. 

Decisions made by shareholders of a company must take the form of shareholders’ resolutions, which can be passed at a shareholders’ meeting or in writing in lieu of a meeting (ie, written resolutions). Decisions are made by voting. A company shareholder has one vote for every share that they hold in the company. Written shareholder resolutions are passed by simple majority unless the company articles require otherwise. 

Decisions made by directors must take the form of directors’ resolutions passed at a meeting of the directors or by written resolutions of directors. A directors’ resolution is passed on a simple majority of the directors entitled to vote with each director having one vote. Board decisions may also be made by written resolution in lieu of a directors’ meeting by unanimity or, where the articles permit, by a majority of the directors entitled to vote.

There are no statutory requirements for the structure of boards of directors. A company must have at least one director and can appoint as many directors as it sees fit in accordance with the Companies Ordinance and the articles. A company’s articles may prescribe a minimum and maximum number of directors.

The directors are at liberty to form committees amongst themselves to oversee specific areas of the company’s affairs. If committees are formed, the board of directors may delegate certain powers to the committee for the carrying out of their designated role. 

While all directors have the same powers and joint responsibilities within and over the company, a director may be appointed as executive director in addition to being appointed to the board of directors. If this happens, the executive director would be employed within the company’s business and given set duties and roles within their employment contract in exchange for a salary.

In addition, one of the directors acts as chairman of each board meeting and the company articles may provide for the chairman to have a casting vote. 

There are no composition requirements for a board of directors of a company. A company must have at least one director unless it is a non-profit company which must have at least two directors at any given time. The articles of incorporation may fix the number of directors for a company.

Company directors are typically appointed by shareholders unless the articles provide otherwise. Directors may appoint additional directors if this is permitted by the company’s articles of incorporation. Company officers like secretaries can be appointed by directors, although there is no longer a requirement to have a company secretary.

Directors may resign from office by giving written notice to the company which specifies the date from which the resignation takes effect. Directors are removed from the board of directors by the company shareholders in a shareholder meeting or by a special resolution of the shareholders by at least 75% of votes from shareholders entitled to vote.

Any person can be a director of a company except the following persons who are deemed ineligible pursuant to the Companies Ordinance:

• persons under the age of 18;
• persons who are restricted or disqualified for the purposes of the Insolvency Ordinance;
• undischarged bankrupt persons; and
• persons who are disqualified for the purposes of the specific company’s articles of incorporation.

A director is required to exercise their duties and skill in a manner that a reasonable director would.

A director is entitled to:

• make use of and consider necessary information and records given to them by reliable and competent employees of the company;
• seek and rely on expert advice of professional experts and advisers of a particular matter; and
• rely on information provided by other directors on matters over which those directors have authority.

Where a conflict of interest exists in a transaction or proposed transaction, a director must disclose this to the board of directors and ensure that their interest is recorded in the company’s register of directors’ interests. A director will not have to disclose their interest where the transaction is between themself and the company or where the transaction is being entered into in the ordinary course of business and on usual terms for the company. 

The principal duty of directors is to act honestly, in good faith and in the best interests of the company.

Where the company is a subsidiary and its articles allow, the duty of acting in the best interests of the company is discharged if the directors act in the best interests of the parent company. Likewise, that duty is discharged if the directors act in the best interests of the company’s shareholders when carrying out a joint venture between the shareholders and the company’s articles so allow.

In exercising their powers and performing their duties, directors must exercise the care, skill and diligence that a reasonable director would exercise in the particular circumstances. 

In 2018, the common law duties owed by directors – namely the fiduciary duties of trust and confidence – were incorporated into the Companies Ordinance in the TCI.

Directors’ duties are primarily owed to the company.

A director must carry out their duties with the care, diligence and skill that a reasonable director would exercise in the circumstances. These are now codified in company law legislation. 

A company or its shareholders can enforce a breach of directors’ duties.

The consequences will depend on the nature of the breach. Available remedies will include asset recovery and orders against the director to compel compliance with their duties or to restrain them from engaging in conduct that would breach their duties.

Pursuant to the Companies Ordinance, there are statutory remedies available where a shareholder has been unfairly prejudiced, oppressed or unfairly discriminated against by a company or its directors in the conduct of its affairs. Relief may include court orders for the shareholder’s shares to be acquired by the company, compensation to the shareholder, amendment of the company’s articles, or that a decision of the company be set aside where the decision breached the Companies Ordinance or company’s articles. 

A shareholder may also seek leave under the Companies Ordinance to bring a derivative action on behalf of the company.

In addition to the Companies Ordinance, there are remedies available to shareholders, among others, under the Insolvency Ordinance, such as seeking the appointment of a receiver or liquidators.

The Registrar of Companies has the power to strike a company off the register for certain reasons including the company’s failure to make filings with the Companies Registry or failure to pay the annual fee as required under the Companies Ordinance.

There are various offences for non-compliance with directors’ obligations (either by directors individually or collectively as a board) under the Companies Ordinance, which are typically punishable by fine. These include:

• failing to provide copies of articles to shareholders upon request;
• issuing bearer shares (which are prohibited);
• failing to disclose an interest in company transactions; and
• failing to keep or make available for inspection specified corporate documents (eg, company articles, registers of directors and shareholders, register of charges) at the registered office.

These offences may be enforced by the shareholders or the Registrar of Companies. 

Criminal offences are prosecuted by the Office of the Director of Public Prosecutions (ODPP). If a complaint is raised with respect to a breach of directors’ duties, the ODPP would decide whether to bring these charges.

Breaches amounting to criminal conduct will also likely give rise to civil remedies by which shareholders may seek to compel performance of directors’ duties.

Directors may be indemnified against acts performed in the course of their directorship. However, if a director does not act in good faith and in the best interests of the company or had reason to believe that their conduct was unlawful, that director would not be indemnified by the company for any expense incurred, fines or judgments against them as a result of a breach of their duties.

The liability of a director can continue even after that director vacates office.

There are no requirements in relation to or restrictions on the remuneration of directors in the TCI. Subject to the company’s articles, remuneration may be agreed in a contract between the director and the company.

There are no requirements for the disclosure of directors’ remuneration, fees or benefits paid to directors and officers in the TCI.

Shareholders are owners of the company. The relationship between shareholders and the company is governed by the articles of the company.

As discussed at 3.2 Decisions Made by Particular Bodies, directors manage the general and day-to-day operations of a company.

Shareholders will vote on (that is, decide) the matters that are reserved to them in the Companies Ordinance and company’s articles such as (i) the appointment and removal of directors and (ii) the appointment of a registered agent by resolution.

Shareholders can direct the management of the company to take, or refrain from taking, certain actions in the business if the board of directors or the company engages in, or proposes to engage in or has engaged in, conduct that contravenes the Companies Ordinance or the company’s articles. A shareholder can make an application to the court for an order directing the director or the company to comply with or refrain from engaging in such conduct.

The Companies Ordinance does not require shareholder meetings. A decision of the shareholders may be made by a written resolution of shareholders.

Shareholders can be called by:

• the director(s) of the company;
• a person(s) authorised by the company’s articles to call the meetings; or
• written request of a shareholder(s) entitled to exercise at least 30% of voting rights in relation to matters for which the meeting was requested. 

Not less than seven days’ notice of a shareholder meeting is required. If notice is not given, the attendance of shareholders holding 90% voting rights would constitute a waiver of the requirement to provide notice of the meeting of shareholders.

If the company’s articles do not specify the quorum for a meeting of shareholders for the purpose of a resolution of shareholders, a meeting of shareholders is properly constituted provided that at the start of the meeting shareholders entitled to exercise at least 50 % of the votes are present (in person or by proxy). 

A shareholder of a company may bring an action against the company for breach of duty owed by the company to the shareholder. Where other shareholders are also affected, they can appoint a shareholder to bring the action on their behalf. As set out at 4.8 Consequences and Enforcement of Breach of Directors’ Duties, the Companies Ordinance provides a broad range of statutory remedies for shareholders, including derivative actions and relief from unfair prejudice/oppression.

As at 5.2 Role of Shareholders in Company Management, shareholders can apply to the court for a restraining or compliance order against the company or its directors for conduct that contravenes the Companies Ordinance or the company’s articles. 

The TCI has a modern insolvency regime, found in the Insolvency Ordinance 2017. Under this legislation, a shareholder is empowered to act against directors where they participate in fraudulent trading and/or insolvent trading, among other available remedies.

As discussed at 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares, the TCI does not have a stock exchange and, where a company is listed on a recognised exchange, the company remains subject to the disclosure and regulatory obligations of that foreign exchange. 

There is no statutory requirement for financial reporting for TCI companies. 

However, in each accounting period, a company is required to submit economic substance returns. Non-profit organisations (NPOs) are required to prepare and submit annual financial statements to the NPO supervisor, which includes their revenue and expenditure. NPOs must also provide records to the NPO supervisor, including financial records that show and explain their transactions, within and outside the TCI, and their gross annual income.

A company must disclose the names and addresses of its directors. 

When applying to incorporate the company, the Financial Services Commission must be provided with the prescribed beneficial information in relation to each person who will, on incorporation of the company, be a registrable person in relation to the company.

The Financial Services Commission (FSC) through the Registrar of Companies oversees the incorporation and registration of companies in the TCI.

Companies in the TCI are no longer required to file annual returns with the Registrar of Companies but must pay their annual fees to remain in good standing.

A company incorporated and registered must file the following with the Registrar of Companies:

• a notice of first members of the company within 14 days of members being entered on the register of members;
• a notice of change in members of a company within 14 days of change in members;
• an application to change its name as directed by the Registrar;
• a notice of appointment of registered agent, endorsed by the registered agent with their agreement to act as registered agent;
• a notice of the resolution where there has been a change of the company's registered office or registered agent (with accompanying notice of appointment of the new registered agent);
• a notice of amendment with respect to a resolution passed to amend the articles of the company;
• a notice of appointment of directors and notice of any subsequent changes; and
• a notice of change of directors upon the appointment of a director or a director vacating office.

The FSC may impose a financial penalty on a company where it fails to file the following: 

• an application to change its name as directed by the Registrar;
• a notice of appointment of a registered agent;
• a notice of appointment of directors; or
• a notice of change of directors.

Over the past five years, there has been a trend toward restricting the information that can be accessed in respect of companies in the TCI. Today, the names and identities of shareholders are not publicly available in the TCI with a company search. 

Prior to 2018, any person upon paying the prescribed fee could inspect any index, register or record maintained by the Registrar of Companies or the contents of any file or bundle relating to any company. Documents bearing information about shareholders could be inspected.

Since 2018, there have been limits to what a person may inspect on the Registers maintained by the Registrar of Companies. Shareholder documents are now excluded from inspection. 

A person may only inspect membership documents if the company has provided written notice to the Registrar, consenting to that person inspecting and being provided with extracts of its membership documents.

Pursuant to the Companies Ordinance, a company must keep records that are sufficient to show and explain the company’s transactions and will, at any time, enable the financial position of the company to be determined with reasonable accuracy, including all underlying documentation.

However, there is no requirement for a company to have audited accounts or to file financial statements.

There are no statutory requirements for directors in connection with the management of risk and internal controls in the company.