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Commercial Law
Memorandum On The Registration
Of Local Agents Of Foreign Governments Or Foreign Enterprises Act
1980
1. By this Act:-
(a) Everybody who is an “Agent” of a “Foreign
Government” or “Foreign Enterprise” must ensure
that his Agreement in respect of his Agency is in writing and
subject to the laws of Trinidad and Tobago and he must not enter
into a contract providing for such an Agency otherwise than in
accordance with this provision on penalty or a fine on summary
conviction of $20,000.00 or five years imprisonment.
(b) In respect of a Contract of Agency established after the
commencement of the Act (namely the 8th December 1980) the Agent
must within sixty (60) days of execution of the Contract:-
(i) lodge a copy of the Contract with the Board of Inland Revenue
together with a Declaration that no other Contract exists between
the parties relating to the subject matter of the Contract being
lodged; and
(ii) register with the Registrar General and lodge with the
Board of Inland Revenue his name and address in Trinidad and
Tobago and the name and address of the foreign Government or
foreign enterprise of which he is Agent; and on failure to do
so or if a false declaration is knowingly given he may suffer
a penalty as above.
(c) In respect of a Contract of Agency existing at the date of
the commencement of the Act such Contract must be brought in all
respects within the provisions of the Act within twenty-eight
(28) days of such commencement (i.e. on or before Tuesday 6th
January 1981) on pain of penalties as above.
(d) Subsequently if there is a change of name or address of the
Agent but not of the foreign enterprise or the foreign Government
(see Note 3(1) below) he shall within thirty (30) days of the
change notify the Registrar General and the Board of Inland Revenue
and where there is a change in the terms of his contract he shall
within thirty (30) days of the change notify the Registrar General
and the Board of Inland Revenue and where there is a change in
the terms of his Contract he shall within thirty (30) days notify
the Board of Inland Revenue; on pain of fine on summary conviction
of $10,000.00 or imprisonment for three (3) years.
2. The crucial words in inverted commas in paragraph
1 above are specifically defined in the Act. By Section 2:-
“Agent” means a resident individual,
company or firm, carrying on business on behalf of a foreign Government
or a foreign enterprise under a contract and includes a consultant.
(See Note 3(2) below as to the expression “carrying on business”).
It seems clear that the definition automatically embraces a “Consultant”
even though a Consultant as defined would not appear to be necessarily
a person carrying on business on behalf of a non-resident at all.
“Consultant” means a resident individual,
company or firm rendering financial, legal or other professional
or specialist advisory services to a foreign Government or a foreign
enterprise either directly or through the Agent of that foreign
Government or foreign enterprise.” This language seems very
wide indeed and the services referred to would appear to be only
limited by the wo4rds “professional” or “specialist
advisory”.
“Foreign Enterprise” means a non-resident
individual company or firm carrying on business whether in Trinidad
or Tobago or elsewhere;
“Foreign Government” means a Government
other than the Government of Trinidad and Tobago;
“Resident” and “Non-Resident”
have the meanings respectively ascribed to them in the Exchange
Control Act. It would therefore appear that a foreign company
which is carrying on business in Trinidad through a branch which
is resident here under the Exchange Control Act would not be a
foreign enterprise within this Act but could of course be an “Agent”.
3. Notes
(1) The actual language of Section 6(1) reads
“where there is a change of name or address of an Agent
of the foreign Government or foreign enterprise for which he acts
he shall within thirty (30) days of the change notify the Registrar
General …”. Although this language reads strangely
there was a change from the language in the Bill intended apparently
to restrict the relevant change of address to that of the Agent
only. Certainly as the language stands there could be no ground
for argument that it extends also to the address of the Foreign
Government or Enterprise.
(2) The expression “carrying on business
on behalf of” in the definition of “Agent” leaves
considerable room for doubt. This language would not normally
be appropriate for somebody retained to do a particular act, e.g.
to clear certain goods or collect a debt but would imply that
there is to be some continuity in the transaction of business
as in the case of a Commission Agent obtaining orders for a foreign
company and accepting such orders on behalf of the foreign company.
But there would still be doubt if such Commission Agent merely
canvassed for orders. In such circumstances he could scarcely
be said to be “carrying on business” on behalf of
such principal. Certainly a distributor who has a franchise on
behalf of a foreign manufacturer but imports all the goods in
question on his own account could not be said to be carrying on
business on behalf of such manufacturer. However, in such circumstances
such distributor might in fact have authority to do various acts
such as advertising on behalf of his “Principal” and
it might be argued that because of this the Act applied to him.
4. Having regard to the somewhat draconian penalties
of this Act we feel that most clients will wish to comply with the
apparent intention of the law and will not be minded to litigate
doubtful points. To such clients our advice on the practical basis
is as follows:-
(a) Obviously if you have a written contract in force on 8th
December 1980 in respect of an “Agency” and which
is clearly subject to Trinidad and Tobago law you should take
steps to register it and we enclose simple forms of letter to
the Board of Inland Revenue and the Registrar General respectively
for this purpose (see forms 1 and 2 attached).
(b) If you are “Agents” but have no written contract
or if your contract is not or may not be subject to Trinidad and
Tobago law then you must take immediate steps to procure such
a contract in writing. Attached are very simple forms containing
the minimum language needed to satisfy the Act for simple “Agents”
(Form 3) and “Consultants” (Form 4). If the circumstances
of your particular Agency require more elaboration particular
advice may be required.
(c) A problem arises in respect of the time limit of twenty-eight
(28) days given for compliance with the Act particularly having
regard to the vagaries of the postal system during the Christmas
season. It may not be possible in practice to get your agreement
once prepared back to you signed within the time limit which expires
on January 6th. In this respect we can only suggest:-
(i) you prepare the contract and send it in duplicate signed
by yourselves and dated needed only the signature of your principal;
(ii) you request your principal to inform you by phone or telex
of the execution of the Contract and the manner of execution
(i.e. by whom it is signed on principal’s behalf). On
receipt of such information you would complete a copy and comply
with the lodging and filing requirements of the Act.
(iii) if your principal fails to inform you of the execution
in time to meet the deadline you simply file a copy showing
the name of the principal on the assumption that it has in fact
been signed. We must advise however that unless at such time
the principal had in fact signed the Contract there would be
no “written contract” to file and you would not
be in compliance with the law. However, we believe you would
be seem demonstrably to have done your best which hopefully
would save you from the more extreme penalties provided;
(iv) but in the case of existing complicated “commission
agency” agreements under which orders are made here on
behalf of foreign principals it seems very unlikely that it
will be possible for the “Agents” to renegotiate
such documents by 6th January 1981, or possibly at all. It takes
two to make an agreement which the Act seems to ignore. They
could have cancelled the agreement before 8th December, but
that would be a breach and expose them to damages.
We can only suggest that the Chamber of Commerce puts this position
to the Attorney General and asks how its members are expected
to comply with the law.
(d) We should perhaps mention the question of stamp duty. A contract
in writing such as this would normally attract a 25¢ adhesive
stamp. It might be argued of some such contracts that they attract
a $5.00 stamp as being a “letter or power of attorney mandate
or other instrument in the nature thereof”. As a practical
matter it is not an offence not to stamp such an Agreement. If
you are ever required to produce it in Court it would then have
to be stamped and an appropriate penalty might have to be paid
increasing over the years. This Act does not require you to file
a stamped copy of the Agreement. You may therefore either stamp
the Agreement or arrange for the original to be retained abroad
(requesting your principal to send you a photocopy) or disregard
the question of stamping and take the risk that the contract in
question would never be required to be produced by you in Court,
which of course would be the usual position in the case of contracts
of this kind.
5. Although clients may feel inclined to persuade
their principals to sign formal contracts to comply with the Act
and hence avoid the risk of prosecution, we must advise that there
could be tax risks for the foreign enterprise in such a course.
Such an agreement would imply that the principal was carrying on
business in Trinidad through the Agent. And such an agreement might
also provide evidence of a “permanent establishment”
here for the purposes of various Double Taxation Treaties.
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