Under the Companies Ordinance 1930 all incorporated companies in Gibraltar are required to prepare accounts and have them audited by independent accountants.

Auditors, who are individuals, are appointed by the directors of a company, must be independent of the company, and must be registered under the Auditors Registration Ordinance

The European Commission announced in 2001 that it would begin a review of Gibraltar's exempt and qualifying company regimes, but after Gibraltar sued the Commission to prevent the review, the European Court of Justice ruled in Gibraltar's favour in April 2002.

However, in July, 2002, Gibraltar's Chief Minister, Peter Caruana announced the territory's new corporate taxation policy to be applied from July, 2003, which includes the abolition of the existing corporate forms which allowed zero taxation, the Exempt and Qualifying companies, although there is no news yet about the possible grandfathering of existing companies.

Gibraltar Limited Companies are incorporated under the Gibraltar Companies Ordinance 1930 which is based on the English Companies Act 1929. The basic rules are as follows:

Shareholder can be a nominee company holding a share on trust for the other shareholder; the maximum number of members is 50; the Memorandum and Articles of Incorporation state that the company is private, restrict the transfer of shares, and prohibit public offerings of the shares;

Annual returns must be made to the Registrar, and details of the shareholders and capital structure are held on the public files;

Only one director is required; secretaries are not mandatory, and they may be corporate;

There must be a registered office in Gibraltar where the statutory books are kept;

There is no requirement for accounts to be filed; tax-resident companies however have to submit accounts to the tax authorities;

A Gibraltar company can be incorporated within 7 working days and ready made companies are available for immediate use.

There is a 0.5% duty on authorised share capital (minimum duty £G10);

There is an annual tax of £G225 payable by a limited company.

The Company Limited by Guarantee, and its sibling, the Company Limited by Guarantee and having Shares, have the nature of mutual companies, and as such have normally been used essentially for charitable and non-profit purposes.

Lately they have come to be used sometimes for private family foundations in place of discretionary trusts. In addition, they have been used for proprietary and members' clubs in the international leisure and timeshare resort industry, where they meet all the requirements of modern EU (and Spanish) law.

It was Gibraltar that originated the exempt company form, which has been widely copied by other jurisdictions. The low set up cost makes them ideal for property and investment holding, international trading and sales agencies, particularly if trade is being carried on between two high tax jurisdictions.

The Gibraltar 1992 Company was introduced to implement the EU Parent/Subsidiary Directive 90/435. The 1992 Company is a normal private company limited by shares which conforms with the following conditions:

the company's main objective must be to invest in holdings in other companies incorporated in or outside Gibraltar amounting in each case to a minimum of 5% of the voting share capital;

at least 51% of the company's annual income should be derived from such investments;

the company must have business premises in Gibraltar of at least 400 sq.ft and employ a minimum of two employees;

persons who are normally resident in Gibraltar cannot own shares in the company;

the company must maintain a satisfactory debt to equity ratio (not defined).

A company which is incorporated in Gibraltar (whether or not exempt), owned by non-residents of Gibraltar and managed and controlled by directors who reside and hold board meetings outside Gibraltar is considered to be non-resident.

A non-resident company pays Gibraltar corporation tax only on its income derived from or remitted to Gibraltar.

A non-resident company pays an annual tax of G£200.

Partnerships are governed by the Partnership Ordinance, which is based on the English Partnership Act 1890. Partners may be individuals or companies. In a general partnership, a partner's liability is unlimited. 

Under the Business Names Registration Ordinance, partnership names must be registered if they differ from the surnames of the partners. Partnership agreements and financial accounts do not have to be filed although a partnership that is resident in Gibraltar must submit accounts annually to the Commissioner of Income Tax. Partnerships are, of course, fiscally transparent. The minimum number of partners is two, and the maximum number 20, although this does not apply to professional firms.

Limited partnerships are governed by the Limited Partnership Ordinance, which is based on the English Limited Partnership Act 1907. Partners may be individuals or companies. A limited partnership consists of one or more general partners with unlimited liability, and one or more limited partners, who are liable only to the extent of their capital contributions. 

A limited partner does not take part in the management of the partnership and is not entitled to dissolve the partnership by notice. 

A limited partnership must file a statement with the Registrar of Companies giving details of general and limited partners, and the amounts of capital contributed, in order to benefit from limitation of liability. A limited partnership must have its principal place of business in Gibraltar.

The basic law of trusts is contained in the Gibraltar Trustee Ordinance, which is virtually a copy of English trust legislation. Gibraltarian legislation affecting trusts also includes the Perpetuities and Accumulations Ordinance, the Trustee Investments Ordinance, the Bankruptcy Ordinance and the Trusts (Recognition) Ordinance. Appeal is to the Privy Council.

The Hague Convention has been implemented, but there are no provisions for the exclusion of foreign inheritance laws or for the nonrecogition of foreign judgements.

Under the Bankruptcy Ordinance there is statutory protection against creditors for asset protection trusts, providing the settlor is an individual, and was not insolvent at the time of the disposition, nor became so as a result of it.

Trust documents are in English, and there are no requirements for registration except that Asset Protection Trusts must be registered with the Registrar of Dispositions. There is no stamp duty. The normal perpetuity period of a Gibraltar trust is 100 years. There are no restrictions on the accumulation of income during the perpetuity period.

Legislation has not yet been introduced to provide for purpose trusts.

The Gibraltar Private Foundation Ordinance 1999 establishes a regime for foundations as 'vehicles for the holding of private assets endowed on the foundation for the benefit of identified persons or classes of persons', and is effective from 1st January 2000.

Foundations may not carry on trading or financial services business.

A foundation is established by a deed of endowment or by a deceased person's will, either of which constitute the Memorandum of Endowment.

A foundation has officers, with prescribed duties, a secretary, a registered office in Gibraltar, and a supervisory board.

A foundation must be registered with the Registrar, who must be sent an annual return. A Register must be kept at the registered office with details of the various parties associated with the foundation.

A foundation may re-domicile into or out of Gibraltar.

Banking regulation is exercised under the Banking Ordinance 1992 by the Banking Commissioner (who is also the Financial Services Commissioner). Day-to-day supervision is carried out by the Banking Supervisor (on secondment from the Bank of England). The Ordinance protects banking secrecy and confidentiality, although pre-existing anti-drug-trafficking legislation provides for certain breaches of secrecy.

Banks with licenses issued by other EU jurisdictions have only to notify the Gibraltar authorities before commencing business there; banks which require Gibraltarian authorisation and licenses must conform to criteria set out below.

Licensed banks must maintain a solvency ratio of 10%. There is an annual fee of G£5,000 payable to the Financial Services Commission.

Banks providing local services are taxable on their profits in the same way as ordinary companies, banks working 'offshore' can apply for a 'qualifying' certificate  allowing them to pay tax at a rate between nil and 35% as agreed with the authorities.

The Banking Ordinance 1992 (as amended) repealed the previous distinction between 'A' onshore and 'B' offshore licences, and introduced a single banking licence. Thus Gibraltar licensed banks can in theory take advantage of 'passporting' opportunities and branch out across the EU and EEA without the need for further authorisation (except for notification).

Difficulties which remained with regard to EU recognition of local regulatory authorities will hopefully have been eased by the Anglo-Spanish agreement in April 2000 which unblocked the relevant EU legislation

Directors, controllers and managers to be fit and proper persons: the Commissioner takes into account probity, experience, skills, judgement and likely degree of diligence; good reputation and the absence of a criminal record are also important; and the nature of a person's other business interests is also considered;

'Four eyes principle': the Commissioner will want to be assured that at least two individuals contribute on a continuing basis to the formation and execution of policy, so that every signifcant decision reuslts from the exercise of at least two persons' judgement;

Business to be conducted in a prudent manner: applicants for a license are required to provide sufficient information about the proposed business and its conduct and development, including the availability of capital to support planned levels of lending or investment, for the Commissioner to be able to form a view of the stability of the institution; it is normally unlikely that a new banking formation will be able to achieve the right level of credibility unless it has the support of an existing and soundly-based bank;

Paid-up capital and reserves will be adequate to protect the interests of depositors; large exposures to a single entity are a major negative factor;

Liquidity must be maintained at a satisfactory level in relation to the schedule of liabilities;

Adequate provision is and will be made for bad and doubtful debts and for contingent liabilities;

There will be adequate accounting and other records and control systems to ensure stability and predictability in the business;

The necessity that the institution itself will behave with the highest professional, ethical and business standards;

The Head Office needs to be in Gibraltar - meaning that the majority of board meetings will take place there, and that the management and direction should be exercised there; regular influence on managerial decisions by a dominant shareholder would be a negative factor, especially if the shareholder was not resident in Gibraltar.

The basic law of trusts is contained in the Gibraltar Trustee Ordinance, which is virtually a copy of English trust legislation. Gibraltarian legislation affecting trusts also includes the Perpetuities and Accumulations Ordinance 1986, the Trustee Investments Ordinance, the Bankruptcy Ordinance and the Trusts (Recognition) Ordinance which implemented the Hague Convention. Appeal is to the Privy Council.

There are no provisions for the exclusion of foreign inheritance laws or for the nonrecogition of foreign judgements. Legislation has not yet been introduced to provide for purpose trusts.

As in the UK, in Gibraltar the essential requirements of a trust are that it is created orally or in writing and that a settlor conveys legal title to real property (land) or personal property (property other than land) into the name of one or more trustees to be administered in accordance with the wishes of the settlor for the benefit of one or more beneficiaries.

Trust documents are in English, and there are no requirements for registration except that Asset Protection Trusts must be registered with the Registrar of Dispositions. There is no stamp duty. The normal perpetuity period of a Gibraltar trust is 100 years. There are no restrictions on the accumulation of income during the perpetuity period

Gibraltar's asset protection trust legislation falls under the provisions of the Bankruptcy Amendment Ordinance 1992. This is unusual for offshore asset protection , which is dealt with under the law on fraudulent conveyancing laws in most offshore jurisdictions, as for instance in the Cayman Islands and the Bahamas.

Fraudulent conveyancing laws depend for their effect on the statutory definition of 'intent' to defraud. By contrast, under bankruptcy law, which contains no definition of intent, the only direct action which can be commenced is a bankruptcy proceeding, which has a significantly tighter test of intent.

For a bankruptcy proceeding to succeed, it is necessary to show that the target (the settlor) is resident or domiciled in the jurisdiction, and that an 'act of bankruptcy' was committed there. Since most asset protection trusts are settled via exempt companies, whose owner (= the settlor) cannot be resident and a beneficiary, this will be difficult or impossible in many cases

Gibraltar has not entered into any bilateral Mutual Assistance Treaties. However, the 1997 EU Directive on the Exchange of Tax Information with Member States applies to Gibraltar. It is not yet clear how the Directive will be interpreted in Gibraltar when it is put to the test.

The Criminal Justice Ordinance 1995 (implementing EU Directive 91/308) provides inter alia for the confiscation of the proceeds of drug-trafficking. Neither it nor any other piece of Gibraltar legislation deals with tax evasion.

In the year 2000 various international organisations issued 'offshore lists' in which Gibraltar fared quite well:

In June 2000 the Gibraltar Government wrote a 'Letter of Commitment' to the OECD's Financial Action Task Force in which it promised to comply with international standards of transparency and mutual assistance.

Gibraltar did not feature on the FATF's blacklist of jurisdictions that were considered to have inadequate money laundering controls.

It was in the middle group of the Financial Stability Forum's "could cause instability" list along with Bermuda and Malta

However, three of its offshore company types were included in the Primarolo Committee's list of 'harmful tax practices' in the EU. This is perhaps the most serious of the offshore lists for Gibraltar but it is politically improbable that the Code of Conduct Committee is going to achieve much considering that virtually every member state figures on the list, mostly with quite significant low-tax regimes.

Nonetheless, in July, 2002, Gibraltar's Chief Minister, Peter Caruana announced the territory's new corporate taxation policy, with effect from July, 2003, which will include the abolition of the existing corporate forms which allowed zero taxation, the Exempt and Qualifying companies, although there is no news yet about the possible grandfathering of existing companies.

In fact, Gibraltar had halted the Commission's action in its tracks at the European Court of Justice on a technicality, but has evidently accepted that sooner or later the overtly 'offshore' corporate forms would have to go.