New citizenship by investment regulations for Grenada to ensure equity commitment
May 16th 2019
Policy makers in Grenada passed new regulations which require developers to commit equity to projects intended for the Citizenship by Investment (CBI) programme. Business people in the region believe the law reform is a good thing for commerce making sure that developers do complete projects.
The investment rules agreed by Dr Keith Mitchell, Prime Minister, require that a minimum amount of 20% of the completed price of the development must have been spent before applying for citizenship by investment. The new law is set up in section 11 (1) of the statute.
Positive step for the Grenada CBI Programme
The majority of people in the industry, especially those of Caribbean origin, see the new regulation as a positive step forward for the programme, which has in previous years struggled due to projects that have failed to materialise. Troublesome properties are strewn over the beaches in this area; some have not been constructed at all while others will never be finished. The new law will offer a great deal of reassurance and protection to people who live in the area by those applying for investment.
Sam Bayat speaking on the issue, mentioned how Grenada was going back to business with CBI real estate developers investing real cash funding into projects. Sam Bayat works at Bayat legal services as a senior lawyer and managing director. Bayat does not understand how an applicant can have faith in a scheme where the promoter is not putting his own money into the programme and that this measure will enhance the integrity of the plan and spotlight legitimate developments. These thoughts were also echoed in the financial services business.
Jean Francois Harvey, who is a global manager for Harvey Law services is pleased with the news about the new 20% legislation, which is in line with worldwide standards. It is possible to find identical changes in programmes such as EB-5, for instance.
The concept also lives up to Kimpton Kawana Bay’s own high expectations for due diligence when offering a plan for prospective customers. We have already made a significant investment in the project, over and above the 20% minimum requirement and this demonstrates how advanced the project now is.
Grenada has struggled with poor project success historically, only recently the government announced that it was inspecting a CBI firm that was meant to be building and establishing a shrimp farm in the region of St Mark. In 2017, a CBI business known as Grenada Sustainable Aquaculture began the Shrimp farm operating on a zero- water exchange basis. The firm received funding for the construction but did not deliver the goods. Mitchell reported how disappointed they had been.
Mitchell went on to say that they have not carried out the investment and due to this they are making some drastic changes to the way individuals will receive funding from the CBI scheme. As a result of this, funding will be placed in escrow accounts and businesses will regularly need to demonstrate the work they have done to the government in order to be able to access it. Whilst some businesses disapprove of this, the country requires protection.
Onlookers argue that it is heart-breaking for the residents of St Mark and the businesses investing. However, it is positive that the government of Grenada are taking action against developers who do not deliver the work.
Minimum investment amount lowered
The Grenada Government has now agreed to accept $220,000 as the minimum investment under the new regulations. The minimum limit puts Grenada at an equal footing to similar developments in Moldova and Montenegro, with many individuals stating they feel the Caribbean offers superior value.
The new rules allow developers who hold a minimum of 20% capital to sell their shares at $220,000, however developers who have not invested up to this level can only sell their shares for $350,000.
With developments such as Kimpton Kawana Bay, a huge change is starting to take shape in Grenada as it becomes one of the leading Caribbean islands for quality and exclusivity. Grenada is on the right path towards generating a strong economic growth which can only be considered as a positive for the local population with money being put back into the communities surrounding such projects as the Six Senses.