The Dutch Caribbean Securities Exchange: A multi-purpose solution for financing, investments, wealth planning and tax optimization
Amicorp is well placed to assist with your listing on the Dutch Caribbean Securities Exchange (DCSX) – and Curaçao offers an excellent jurisdiction which accomodates clients that consider listing.
The DCSX is a self-regulatory international exchange for the listing and trading of securities. Supervised by the Central Bank of Curaçao and Sint Maarten, the DCSX provides a timesaving and cost-efficient facility for both international and local corporations and investment funds, and other financing structures in a reputable jurisdiction furnishing a high quality alternative to the regional exchanges in the Caribbean and beyond. The DCSX offers the opportunity to the issuers to add the necessary value, market awareness, prestige and profile to their organizations, as well as a time and cost-efficient transparent listing process and securities placement with corporations and investment funds.
Along with the core business of an exchange, listing securities is also used as a wealth planning, privacy and tax optimization tool. In order to timely prepare and stay compliant in the era of global tax transparency, Amicorp can assist you with your listing, public or private placement on the DCSX.
Who may benefit from a DCSX listing?
- Latin American, Pan-European and Asian markets;
- Entrepreneurial platforms for start-up companies, innovation companies (SMEs) looking for alternative sources for capital and an alternative to crowdfunding;
- Large privately/family held companies seeking private listing;
- International and local funds / corporations (creating liquidity or testing the waters in preparation for a listing on larger exchanges);
- “Technical listings”; and
- Local corporations (both private and Government owned) in need of additional/alternative financing needs to expand their business; this in addition to the traditional bank financing possibilities.
A multilingual mid-shore location close to Latin America with a developed and reputable financial services industry: a recognized jurisdiction.
Benefitting from the new Tax Arrangement between the Netherlands and Curaçao (“TANC”)
A rate of 0% Dutch dividend withholding tax (instead of the current rate of 8.3%) applies to a shareholding of at least 10% by the dividend receiving entity, if at least one of the following criteria is met:
- Its shares are traded on a recognized securities exchange (direct securities exchange test);
- At least 50% of its shares are held directly by a shareholder whose shares are traded on a recognized securities exchange (indirect securities exchange test);
The DCSX in Curaçao qualifies as a “recognized securities exchange”.
What Amicorp can do for you
We coordinate and manage the pre- and post-listing process of securities on the DCSX and other exchanges. We play a defining role for both issuers and investors as we ensure that the securities to be listed will fulfill the exchange’s requirements and its obligations to inform the public of market relevant data. We can also introduce the issuer to a select group of professional advisors who have the required expertise in project/corporate finance to efficiently structure and place offerings. Additionally, we can manage the issuance process in which the appropriate issuance partners are selected and the possible approaches to raise finance in the international capital market are analyzed.
These services include, but are not limited to:
- Floating eligibility and SPOs: company corporate management & finance analysis
- Selection of advisors / partners: business plan, due diligence and initial public offering (IPO)
- Structuring, legal documentation and Securities Law Disclosure
- Market analysis and research coverage
- Marketing and placement: registration and listing, road show, pricing
- Securities issuance and allocation
- Post-issuance management: ongoing disclosure obligations and communications
Foreign Direct Investment / Family Structures
The added value of listing as compared to classic structures include:
- Sustainability: particular clauses for listed companies in LOB rules;
- In some jurisdictions the UBO does not have to be disclosed;
- Market value: the company’s profile is elevated;
- Flexibility: easy allocation of shares in case of many shareholders; and
- Cost – effective: DCSX fees are quite competitive.
- A subsidiary (IBC1) of a Local Co. wants to purchase the shares of another company (IBC2).
- The acquisition is normally executed on a private basis via a Sale and Purchase Agreement (SPA).
- This procedure may be monitored by the local authorities arguing lack of both transparency and fair value in the purchase.
- Substance and transparency will be provided by listing the IBC2 on the DCSX, and executing the purchase transaction via the exchange.
- The transaction now takes place at fair market value, for purposes of the tax or other authorities in the home jurisdiction.
Minimizing capital gains taxes and transfer pricing rules
- The Holding Co. acquires Local Co. for 12 and lists its own shares on the DCSX with value 12
- Hold. Co 2 buys listed Holding. Co for 50
- A capital gain of 38 is made without capital gains taxes in Curaçao (DCSX)
- No capital gains in Holding Co jurisdiction
- Capital gain tax savings can be achieved at the Local Co. level
- A new market value of 50 for the Local Co. has been achieved
- Avoidance of applicable transfer pricing rules by having an unrelated third party setting market price
Alternative to a Business-to-Business loan
- UBO1 wants to inject capital to the Local Co. without issuing equity, but issuing debt instead (to avoid dilution).
- The Int’l Holdco. issues a bond.
- The bond is listed on the DCSX and offered on a private basis.
- UBO1 purchases the bond via a banker or an SPV (e.g. EEMF).
- The local Co. receives fresh capital.
- The UBO does not have to be identified.
- The bank or SPV charges a risk free commission/transactional fee.
- The operation has the substance of a public transaction.
DCSX Listed Bond may qualify for UK withholding tax exemption
- Traditionally UK advisors use SPVs in countries like the Netherlands and Luxembourg that have double tax treaties with the UK in order to minimize withholding tax
- Due to international initiatives like BEPS and CRS, financing structures and SPV’s in general are under scrutiny
- Underlining substance, recognized DCSX listed bonds provide a viable alternative solution for withholding tax relief
Investment funds opening up for institutional investors
Institutional investors are restricted to invest in certain investment funds only, such as funds incorporated in reputable jurisdictions and/or listed on an exchange such as the DCSX.
(Existing) Investment fund
An (existing) investment fund as well as a solution for families whereby different members hold different share classes.
Contrary to what many imagine, a listing on the DCSX is not complex. Furthermore, Amicorp’s coordination of your listing alleviates all the concerns and makes sure your issue and the listing runs smoothly. Dependent on the particular situation and client interests, listing can fulfil financing, company profile elevation, estate planning, exit possibilities and value creation needs.
It is recommended to discuss with your financial / tax advisor the benefits a listing can bring you. Amicorp can participate in these discussions from the beginning.
Finally, in view of the global tax transparency initiatives like FATCA, CRS and BEPS, listing can contribute to a better structure for the entrepreneur and his enterprise(s).
For further information, including information on fees/pricing, and how the DCSX can best work for you, please contact:
Frank LammersDirector – Business Development - Curaçao