By Admin. Updated 1:48 p.m., Saturday, August 29, 2026, Atlantic Standard Time (GMT-4).
Prime Minister Dr. Godwin Friday has defended the Government’s Companies (Amendment) Bill 2026 Chapter 143 of the Laws of St. Vincent and the Grenadines as a necessary step towards making St Vincent and the Grenadines more competitive for investment, while Opposition Leader Dr. Ralph Gonsalves has warned that some of the proposed changes could weaken regulatory oversight and expose the country to greater international scrutiny.
The contrasting positions emerged during Thursday’s parliamentary debate (August 27), on the legislation, which seeks to amend the Companies Act by removing certain registration requirements for external companies, reducing penalties for specified breaches, extending compliance deadlines and providing a six-month period of temporary relief on certain outstanding fees and penalties.
Friday, who moved the Bill, described the proposed amendments as a corrective measure to address what he said were unintended consequences arising from changes made to the Companies Act in 2016.
“This is, in a sense, tweaking legislation that is there to try to get it right,” Friday told Parliament.
He argued that experience since the 2016 amendments had demonstrated that some of the measures were not working as intended and had created excessive administrative burdens for companies seeking to do business in SVG.
Gonsalves, however, took a sharply different view, describing the Bill as “a bad bill” and arguing that it would primarily benefit companies that had failed to comply with existing requirements, as well as the lawyers representing them.
Government: Need to create a more competitive environment
Friday framed the legislation within the Government’s broader economic strategy, arguing that SVG must create an environment capable of attracting both domestic and foreign private investment.
He said the Government’s constrained fiscal position and public debt meant that greater emphasis had to be placed on private-sector investment to generate economic growth, employment and tax revenue.
“The private sector is the engine of growth, not government,” Friday said, adding that Government’s role was to facilitate investment while making the country an attractive place for businesses to operate.
According to the Prime Minister, the existing regulatory framework for external companies had become unnecessarily onerous and had made SVG less competitive with other jurisdictions in the Caribbean and beyond.
He said practitioners in the industry had been calling for changes to the system for years.
Gonsalves disputed the Government’s justification that the amendments would significantly benefit investment.
“This doesn’t benefit investment in St Vincent and the Grenadines. All that is a smoke screen,” he said.
He argued that the principal beneficiaries would be foreign companies that had accumulated substantial penalties through years of non-compliance, along with lawyers who had acted as their local representatives.
Dispute over Section 338E
One of the most significant areas of disagreement concerns provisions dealing with external companies and corporate ownership structures.
Friday explained that an external company is generally a company incorporated in another jurisdiction that registers in SVG because it intends to conduct business or own property here.
He said the 2016 amendments went further by requiring affiliated companies further up a corporate ownership chain to register locally in certain circumstances, even where those companies did not themselves conduct business or own property in SVG.
According to Friday, the requirement had created additional layers of compliance and administrative costs.
He argued that removing the relevant provision would mean that the company actually owning property in SVG would remain subject to the registration requirement, while companies further up the ownership chain would no longer have to register solely because of their indirect connection.
Friday said the existing arrangement had become sufficiently burdensome that lawyers and advisers had stopped recommending external companies as a vehicle for foreign investment and property ownership.
He maintained that some foreigners were instead choosing to hold property in their personal names because of the additional requirements.
Gonsalves strongly challenged the proposed removal of the provision.
He argued that the relevant requirements, introduced through the 2016 amendments, were intended to strengthen oversight of foreign ownership through complex corporate structures.
“The Prime Minister… must answer why his government is removing indirect ownership of land in our country through a corporate structure as a basis for requiring an external company to register in SVG,” Gonsalves said.
He warned that removing the requirement could create opportunities for abuse and reduce the ability of the Commercial and Intellectual Property Office (CIPO) to monitor corporate ownership arrangements.
The $350 daily penalty
The proposed reduction in penalties for unregistered external companies was another major point of contention.
Under the existing framework, an external company that fails to register can incur a penalty of EC$350 for each day it remains in default.
The Bill would replace that with a penalty of EC$135 per month, subject to a maximum equivalent to US$10,000.
Friday argued that the current daily penalty was excessive and could become disproportionate to the underlying breach.
He acknowledged that registration itself is a reasonable requirement for companies conducting business in SVG, but questioned whether accumulating hundreds of dollars per day was an effective way of encouraging compliance.
“What is the intention of the fines? Is it to make money or is it to encourage compliance?” he asked.
The Prime Minister argued that businesses could quickly accumulate penalties running into thousands of dollars for relatively straightforward administrative failures, potentially prompting them to reconsider whether it was worthwhile continuing to operate in SVG.
He also said he had been advised that comparable jurisdictions in the Caribbean did not impose penalties of the same magnitude.
Gonsalves, however, questioned whether the proposed replacement penalty would be sufficiently effective as a deterrent.
He pointed out that, with the registration fee remaining at EC$3,000, a company could potentially avoid the registration requirement for a prolonged period while incurring only EC$135 per month.
“Why should a company avoid a $3,000 registration fee and incur only EC$135 a month in violation? Does it make any sense?” he asked.
Gonsalves characterised the change as a drastic reduction in the financial consequences for companies that fail to comply.
More time to file changes
The Bill would also extend the period within which external companies must file documents relating to fundamental changes.
Friday explained that such changes could include alterations to a company’s name, governing instruments, objects or directors.
The existing period of 30 days would be extended to 60 days.
The Prime Minister said the additional time recognises the practical difficulties involved in cross-border compliance, since documents may first have to be filed in the jurisdiction where the company was incorporated before certified copies are submitted to CIPO in SVG.
He said the current 30-day period, combined with the existing penalty of EC$100 per day, could result in unnecessary financial burdens.
The Bill would reduce that penalty to EC$50 per month.
Friday argued that the changes would reduce the administrative burden on external companies while retaining a penalty for non-compliance.
Six-month amnesty
Perhaps the most significant immediate relief proposed by the Bill is a six-month amnesty covering certain outstanding fees and penalties incurred before the legislation comes into force.
Friday said the provision would apply to both local and external companies with specified outstanding liabilities, including fees arising from the late filing of annual returns and certain fundamental changes.
Eligible companies would be able to settle those liabilities by paying 50 per cent of the outstanding amount within the six-month period.
Friday said the measure was prompted in part by the number of companies that have accumulated substantial liabilities over time.
He said some companies currently approach Cabinet seeking discretionary relief from penalties, with some outstanding amounts reaching tens or even hundreds of thousands of dollars.
Rather than continuing to deal with such cases individually, Friday said the Government had opted for a legislative solution that would apply across the board.
“This is a good opportunity for those companies to take advantage of it,” he said.
He also argued that the amnesty could generate revenue for Government while bringing delinquent companies back into compliance.
“Half a loaf is better than none,” the Prime Minister said.
Gonsalves questioned whether Parliament had been given sufficient information to assess the financial implications of the concession.
Among the questions he said remained unanswered were how many companies would benefit, how much was currently owed, how much revenue would effectively be written off and how much Government expected to collect through the amnesty.
Fairness questioned
Gonsalves also challenged the Government on what he regarded as an issue of fairness.
He argued that businesses which had consistently complied with the law and paid their fees would receive no comparable benefit, while companies that had failed to file documents or pay penalties could receive a 50 per cent reduction.
“A compliant company that filed every year and paid every fee receives nothing from this bill,” he said.
He questioned why similar relief was not being offered to Vincentians facing other Government obligations, including property taxes.
Friday countered that the purpose of the amnesty was not to reward non-compliance, but to create a practical mechanism for companies to regularise their affairs and begin operating within the law.
He said companies that failed to take advantage of the six-month opportunity should not expect to subsequently approach Cabinet seeking the same discretionary relief.
Under the proposed system, he said, the relief would be available equally to qualifying companies rather than being dependent on individual applications or Cabinet discretion.
International financial scrutiny
The debate also raised questions about SVG’s international obligations and reputation.
Gonsalves warned that changes affecting corporate ownership transparency and enforcement could attract scrutiny from the Caribbean Financial Action Task Force (CFATF) and the global Financial Action Task Force (FATF).
He referred to the January 2024 CFATF Mutual Evaluation Report and argued that SVG’s existing assessments in areas relating to beneficial ownership transparency made the proposed changes particularly sensitive.
“Given the fact that the mutual evaluation report has already flagged SVG, this will doubly flag it,” Gonsalves warned.
Friday, however, maintained that the Government was not seeking to weaken the country’s enforcement framework.
He said the objective was to make the business environment more efficient while continuing to protect SVG’s reputation and maintain appropriate regulatory oversight.
“We are seeking to make our space business-friendly in any way, every way we can legally do, while at the same time protecting the interests of St Vincent and the Grenadines as a destination to do business,” Friday said.
He insisted that the Government remained committed to vigilant enforcement, while arguing that regulation should not become so burdensome that it discourages legitimate investment.
Different prescriptions for the same problem
At the heart of the parliamentary disagreement was therefore not simply whether companies should comply with the law, but how Government should achieve that compliance while encouraging investment.
Friday argued that excessive penalties and administrative requirements can become counterproductive, driving potential investors away and making it harder for existing companies to regularise their affairs.
Gonsalves argued that lowering penalties and removing aspects of the registration framework could instead reduce the effectiveness of regulatory safeguards and reward companies that had failed to comply.
Friday maintained that the Government was responding to problems that had emerged in practice since the 2016 amendments.
Gonsalves maintained that the proposed solution could create new problems, particularly in relation to ownership transparency, enforcement and the country’s international obligations.
Call for withdrawal
Gonsalves ultimately urged the Government to withdraw the Bill, conduct further consultation and return to Parliament with revised proposals.
“I know you have the numbers, but put a halt… go back to the drawing board and we can come again,” he said.
Friday, however, defended the legislation as part of a wider effort to stimulate private-sector activity and attract investment at a time when, he argued, SVG must find new ways to generate economic growth.
He said the country could not rely solely on Government spending to overcome its economic challenges and argued that greater private-sector activity was essential.
“We need that investment,” Friday told Parliament, referring to both domestic private investment and foreign direct investment.
The Companies (Amendment) Bill therefore places two competing priorities at the centre of the parliamentary debate: the Government’s push to create a more competitive and investment-friendly business environment, and the Opposition’s concern that regulatory safeguards should not be weakened in pursuit of that objective.
The bill was read a third time and passed. Once it receives the Governor General’s assent the amendments it has made will become statutory law. The final product reflecting the amendments will be the Companies Amendment Act 2026.
After the debate and vote on the bill, Parliament was adjourned to Tuesday, 6th October at 10:00 a.m.
END
