U.S. citizens can establish limited liability companies in Nevis.
In July 2015, the Nevis Assembly amended an ordinance, and in doing so improved the asset protection benefits of a Nevis LLC.
Nevis LLC Management
A single member can now hold all interests in a limited liability company, and owners of Nevis LLCs maintain control over all corporate assets. Additionally, single-member LLCs file IRS Form 8832 to qualify as “disregarded entityies” which don’t affect U.S. income tax calculations. The icing on the cake: Nevis doesn’t have any accounting, reporting, or auditing requirements for earned off-island income.
The single-member management involves “charging orders,” which disallows creditors to force liquidation or seize the interests of liable parties. Creditors can only receive future distributions.
Furthermore, no adverse tax consequences will befall U.S. citizens who transfer assets to offshore single-member LLCs. Plus, U.S. creditors must solicit a Nevis court to enforce and collect judgments.
Overall, the new legislation limits fraudulent transfer claims and makes it more difficult for creditors to get their hands on Nevis LLC assets. Additionally, corporations can start new ventures without being hindered by creditors.
Nevis LLC Law Change Amendment
Foreign Judgments Not Automatically Enforced
To execute a judgment in Nevis, the creditor must first retain a Nevis attorney, who under local rules may not work on a contingency basis. That means the creditor is paying legal fees from day 1. The creditor must also post a cash bond to cover any costs incurred by potential counterclaims. Nevis is also a “loser-pays” jurisdiction; the prevailing party is generally entitled to have its legal fees reimbursed by the loser.
“charging order” Only Available Creditor Action
Creditors only have the right to future distributions made from the business to the liable member. They can’t interfere in the business or foreclose on the ownership interest. Nevis doesn’t have a winding-up mechanism for LLCs, making the charging order the only way creditors can recover assets from a Nevis LLC.
Named Defendants Limited To LLCs
A judge can dismiss lawsuits against a Nevis LLC that also names members or managers as defendants. This procedural requirement makes it more challenging to attack member interests.
Membership interest Trumps fraudulent conveyance
Under Nevis law, transferring assets to an LLC is not considered fraudulent conveyance even for single-member corporations. As long as the transferor receives a corresponding equivalent membership interest in the LLC, it’s all good.
Enhanced burden of proof For Creditors
For a creditor to prevail in a fraudulent conveyance claim, local law requires proof “beyond a reasonable doubt.”
Frivolous Litigation Protections
In the unlikely event that a Nevis court deems a money or property transfer fraudulent, creditors can only collect actual damages, not punitive ones.
Connect With A Business Law Attorney
If you’re curious about establishing an LLC in Nevis — or if you have any other business law questions — give us a ring.
To learn more about our business law firm, start here. If you’re ready to speak with someone about your situation, get in touch.Connect With A Business Law Attorney Today »