Overseas companies, looking to establish a presence in Jamaica, are sometimes faced with the challenge of how to structure this move. One of the questions they are likely to grapple with, is whether they should register a branch of their existing entity, or, perhaps, set up/incorporate an entirely new entity in Jamaica, such as a subsidiary. This article seeks to provide a high-level review of this question, by looking at the process for establishing both structures, and some of the benefits and/or drawbacks of either branching out, or setting up.

The Process

For an overseas company to register a branch in Jamaica, it will be required to deliver to the Registrar of the Companies Office of Jamaica (“COJ”) certain documentation. This documentation includes a completed Form 31A, which will request, in addition to other details, the location of the established place of business in Jamaica, particulars of the directors and company secretary of the overseas company, the name(s) and address(es) of the persons resident in Jamaica authorised to accept service on behalf of the overseas company, and the members of the overseas company. This form will need to be accompanied by a certified copy of the constituent documents of the overseas company, which may include, a certified copy of the charter, statutes, or articles of the company. With the fairly new requirements surrounding the provision of beneficial ownership information, a Beneficial Ownership Return Form A (BOR A) will also need to be submitted with the Form 31A, and this form, as its name suggests, will request details of the beneficial owners of the overseas company.

For incorporating a new company, which may be a subsidiary of the overseas company, the overseas company would need to complete and deliver to the COJ, the requisite incorporation documents. These are the Business Registration Form (BRF 1), which will request, among other information, details of the company name, the company’s activities, director’s details, and secretary details; the Form 1A- Articles of Incorporation, which will request information including the number of shares the company is authorised to issue, the minimum number of directors that the company may have, and set out the shareholder(s) of the company; and the BOR A.

Practically, the process for either registering a branch, or incorporating a company are comparable from a “paperwork” perspective, and the fees are also relatively comparable.  

Pros and cons

In making a decision on whether to register a branch, or set up a new company, an overseas company will need to look at some of the benefits of doing so, while weighing the potential risks. While the list below is not exhaustive, this article attempts to isolate some critical pros and cons:

  1. A company will have a legal identity that is separate from the overseas company. A branch will not be a separate legal entity.
  2. Since a company will be an independent entity from the overseas company, the liability for the debts or undertakings etc. of the company, will be separate from those of the overseas company itself. In a branch, the liabilities are not separate. The liabilities of the branch will be those of the overseas company, and the branch will be affected by what affects the overseas company.
  3. In a branch, however, it is possible that there will be a greater level of control over the activities of the business, because it is not a separate entity.
  4. With a branch, there are no additional constituent documents and administration, as there would be in forming a new company. A new Jamaican company will have its own set of constituent documents, registered with the COJ, and these will be based on Jamaican companies legislation.
  5. A company offers more flexibility in its operations than a branch. A company can, for example, issue or transfer shares, and arrange for its shareholding and structure, independent of the overseas company. A branch cannot do so.
  6. A branch may require less filings on an annual and time-to-time basis, such as the annual return which is required to be filed yearly by a company, and various other notices regarding changes. 
  7. Even though the initial process and costs are comparable, over time, with respect to compliance, a branch may be cheaper to maintain than a company.
  8. From a tax perspective, it is possible that a branch may prove more tax efficient e.g. in mitigating double taxation.
  9. The process of closing a branch is easier than the process of winding up a company.

The decision of branching out, or setting up, is a critical one for an overseas company, and one that should be taken with care, after all proper due diligence. This should involve speaking with a knowledgeable Jamaican attorney, to discuss the business of the overseas company, in order to ascertain the best structure, and also speaking with a reputable tax advisor, on the possible tax implications to the overseas company, relative to whichever structure it decides to choose.