Etiqueta: ZEDE

Limited Liability Companies (LLCs) in Roatán, Bay Islands

In 2019, Próspera ZEDE, a local government within the Caribbean island of Roatán, a former British colony, enacted the Roatán Common Law Code (RCLC). The RCLC is comprised of the American Law Institute’s Restatements of the Law, and several uniform and model acts published by the American Bar Association and the Uniform Law Commission, including the uniform Limited Liability Companies Act (2006). The local government, Próspera ZEDE, operates under the special Zones for Employment and Economic Development (ZEDE) regime, which is anchored in the National Constitution, CAFTA-DR, and Bilateral Investment Treaties.

Limited Liability

The Roatán LLC is an entity with a legal existence separate and distinct from its owners, it has perpetual duration, and may have any lawful purpose, regardless of whether for profit. The capital structure of LLCs is based on membership interests, and they can be either member-managed or manager-managed; the manager of the company may be a natural person or a legal person. Members and managers are not personally liable, directly or indirectly, by way of contribution or otherwise, for a debt, obligation, or other liability of the company solely by reason of being or acting as a member or manager.

Freedom of Contract

The Roatán LLCs are based on the principle of freedom of contract, allowing ample flexibility for the management and organization of the company. The members of the LLC are required to authorize an Operating Agreement, which is a private contract that will govern the relationship amongst the company’s members, the rights and duties of the manager, the procedure for amending the agreement, and all activities and affairs of the company. The Operating Agreement may be kept private and is not required to be filed to the public entities registry.

Through the Operating Agreement, the parties may determine nearly all aspects of their relationship with one another. The parties may provide for various classes of members or managers (each with different rights, powers, and duties), or even classes of limited liability company interests or assets. To the extent that a member or manager has duties (including fiduciary duties), the Roatán LLC operating agreement may expand or restrict or eliminate such duties (other than the implied contractual covenant of good faith and fair dealing).

Ease of Formation

The LLCs can be formed by filing a Certificate of Organization with Próspera’s General Service Provider (GSP) and will then be registered in the Próspera Entities Registry. There is no minimum capital required. All members of the company are required to have, at least, an e-residency agreement with Próspera, which allows the parties to do business within the jurisdiction and use its e-governance system. The applications for e-residency can be made at eprospera.hn

Regulation and Insurance

The LLC and its members are required to obtain a liability insurance policy from a qualified insurance service provider in the jurisdiction (See, Financial Responsibility Statute). If the company operates in a regulated industry, supplemental insurance is required.

The regulated industry company can elect to do business under the regulatory code of any of 30 Best Practice Peer Countries (Australia, Austria, Belgium, Canada, Chile, Denmark, Dubai, Estonia, Finland, France, Germany, Iceland, Ireland, Hong Kong, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Spain, Sweden, Singapore, Switzerland, United Kingdom, and the United States of America). The company must declare its regulatory choice in the Entities Registry and must disclose it in all of its contracts (See, Industrial Regulation Statute).

Low Taxation

The Roatán LLC is taxed only on income sourced from within the Próspera ZEDE jurisdiction. Because the jurisdiction operates under a territorial tax system, income derived from foreign sources or operations is not taxed. Business income sourced in Próspera is taxed at a 1% rate on gross income; there is no capital gains tax, asset tax, solidarity tax, or any other tax on profits or income. There is a 2.5% sales tax on retail activity sourced within Próspera. The Roatán LLC is also subject to a 1% Land Value Tax, without accounting for improvements.

Non-residents are subject to a 1% withholding tax on the payment of dividends, service contracts, interests, royalties, rent, or any other sort of business income. There is a 5% withholding tax on labor compensation and pension payments to non-residents. The Próspera Tax Statute offers a Most Favored Nation treatment that allows companies to apply to sufficient tax credits and exemptions to match a lower tax burden that may be offered by another tax jurisdiction or special regime.

Próspera is also a free port, allowing the resident companies to import goods and services with zero taxation, tariffs, duties, charges or surcharges.

Cost Structure

An e-residency agreement for natural or juridical persons has an annual cost of US$130.00; currently, the general liability insurance policy required for both the founding member and the company has a cost of US$260.00; additionally, an LLC must have a registered agent within the jurisdiction, whose annual cost is usually around US$250.00, depending on the provider; finally, the LLCs are subject to an annual report filing obligation, which has a US$100.00 fee. The total annual cost of a Roatán LLC with a single member is US$1,130.00

Investment Protection

Investors in Próspera ZEDE enjoy the Most Favored Nation Treatment without regard to their nationality, granting them any better treatment afforded to any commercial partner country. Próspera ZEDE’s autonomy and legal stability are guaranteed by the National Constitution, by Bilateral Investment Treaties, and, since its Promoter and Organizer is United States of America based company, by the Central American Free Trade Agreement (CAFTA-DR).

Zonas de Empleo y Desarrollo Económico (ZEDE)

El régimen especial de las Zonas de Empleo y Desarrollo Económico (ZEDE) fue creado en el 2013 mediante una reforma constitucional a los artículos 294, 303 y 329 de la Constitución de la República y la aprobación de la Ley Orgánica de las ZEDE. The ZEDE are territorial and political subdivisions of the Republic of Honduras that enjoy broad levels of political, administrative, legal, and economic autonomy. The ZEDE are subject to the Constitution only on matters related to sovereignty, territory, application of justice, elections, national defense, foreign relations, and issuance of identifications and passports, including the International Treaties ratified by Honduras, but are otherwise autonomous and not subject to most of the national legislation. The only national laws that apply within a ZEDE are the ZEDE Organic Law, legislation concerning territorial waters and national symbols, and the criminal legislation of Honduras; upon these foundations, the ZEDE are free to build and adapt their own forms of local government, policies, and norms.

Las ZEDE are authorized to adopt their own norms and policies(legislación comercial, laboral, civil, procesal, etc.), design and adopt an independent fiscal and financial regime, but must share 12% of tax revenue with the national government; the ZEDE government can develop its own local public administration, commercial and property registries, local security forces, investigation, and criminal prosecution bodies. The ZEDE are Free Ports, and companies operating within their jurisdiction are not subject to any import or export taxes, tariffs, duties, charges, or surcharges; the ZEDE have authority to control ports and airports within their jurisdiction, as well as to regulate aerial and maritime navigation. Furthermore, the ZEDE are not subject to the Central Bank of Honduras (BCH) or the National Commission on Banks and Insurance (CNBS) and are authorized by law to adopt their own monetary policy.

The ZEDE are subject to the exclusive jurisdiction of a Special Judiciary appointed by the national Judicial Power, from a list of 10 persons nominated by the CAMP. The ZEDE special judiciary allows for national and foreign persons to act as judges and is authorized to operate under a common law legal system or any other legal system that provides, at least, as much protection for human rights as afforded by the Constitution of Honduras.

The ZEDE are governed by a Technical Secretary and the governing bodies they may establish by exercising their administrative and political autonomy. All ZEDE are supervised and authorized by the Comité para la Adopción de Mejores Prácticas (CAMP), which was originally appointed by the President of the Republic and ratified by the National Congress, but future members can only be elected by the CAMP itself. This selection procedure insulates the CAMP and the ZEDE regime from the fluctuations and changes in national politics, enabling it to provide legal certainty and stability to national and foreign investors.

A ZEDE can be set up by a private developer known as “Promoter and Organizer” in low population density private lands within the Departments of the Bay Islands, Cortés, Atlántida, Colón, Gracias a Dios, Valle, and Choluteca. There are currently three authorized ZEDEs in Honduras: a) a) Próspera ZEDE,impulsada por Honduras Próspera, Inc. ; y, b) Ciudad Morazán,, promoted by Centroamerican Capital & Consulting; and c) ZEDE Orquidea, promoted by an agroindustrial exporting business group in the Choluteca Department. Economic researchers from Universidad Francisco Marroquín in Guatemala have calculated the economic potential of Próspera ZEDE, concluding that Honduras could raise its current Per Capita Income from US$ 2,500.00 to US$ 20,000.00 in 40 years, if at least 11% of the population goes on to work and live under Prospera’s jurisdiction. Within the Próspera, the economists estimate that GDP per capita could exceed US$ 40,000.00 in the same period of time.

El medio oficial de publicación de la normativa de Próspera ZEDE: https://pzgps.hn/

El medio oficial de publicación de la normativa de Ciudad Morazán: https://www.morazan.city/laws/

The official source of ZEDE Orquídea norms: https://zedeorquidea.com/

Antecedentes. Regiones Especiales de Desarrollo (RED)

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