Holding Grenada Land Through a Company or Trust: Licence Rules

Many foreign buyers arrive in Grenada used to holding property through a company or trust at home, for privacy, estate planning, liability protection or simply habit. It is natural to ask whether the same structure works for land in Grenada, and whether it changes anything about the Alien Landholding Licence.

The short answer is that a company does not make the licence disappear. The Aliens (Land Holding Regulation) Act looks through to who owns and controls the company, and an entity controlled by non-citizens can be treated as an alien for land purposes. A trust raises similar questions about who really benefits from the land.

There can still be good reasons to use a structure, particularly for a development project or a jointly owned property. This article looks at how the licence applies, when a company makes sense, and the mistakes that cause problems. Corporate and trust structures involve legal and tax questions in more than one country, so specialist advice from a Grenadian attorney, and often from a tax adviser at home, is essential.

How the Act treats companies

Under the Act, the concept of an alien extends beyond individuals. A company may be treated as an alien where it is owned or controlled by non-citizens, whether through share ownership, voting control or the composition of its board. A company incorporated in Grenada is not automatically Grenadian for land purposes simply because it was registered at the Corporate Affairs and Intellectual Property Office in St George's.

In practice, this means a foreign individual who sets up a local company to buy land will usually find that the company needs a licence, just as the individual would. The application then involves the company's documents: certificate of incorporation, articles, register of directors and shareholders, and information about the people behind it.

A foreign company, incorporated elsewhere, can also apply for a licence, but it adds layers of documentation and due diligence. Officials and banks will want to know who the ultimate beneficial owners are, and documents from foreign registries may need to be certified or apostilled before they are accepted in Grenada.

Reasons buyers choose a company

Several owners. Friends or family buying together sometimes find a company easier to manage than joint ownership, with shares reflecting each person's contribution and rules for what happens if someone wants out.

Development projects. Building several units, a guesthouse or a small resort is usually done through a company, which can hold the land, contract builders, employ staff and borrow.

Succession. Transferring shares on death may be simpler in some cases than transferring land, though inheritance law and any licence implications still apply.

Liability. A company can separate business risks, such as running a rental operation, from personal assets.

Tax planning. Some owners use companies for tax reasons in their home countries. This needs specialist advice, because the benefits depend on rules outside Grenada and can be outweighed by the costs.

Costs and complications to weigh

A company is not free to run, and the extra burden is easy to underestimate when the main goal is simply to own a plot of land. Before choosing one, consider:

• Incorporation fees and the attorney's work to set up the company properly.
• Annual returns and fees to keep the company in good standing with the registry.
• Accounting and tax filings with the Inland Revenue Division, even if the company has little activity.
• Bank account opening, which for companies with foreign owners involves extensive due diligence.
• Additional documents and scrutiny in the licence application.
• Possible licence implications if shareholders or control change later.
• Tax treatment in your home country, which may disregard or penalise the structure.
• Complexity for heirs, who may need to deal with company law as well as land law.

Changes of ownership after the licence

One feature of company ownership that catches buyers out is what happens when the shareholding changes. If the licence was granted to a company on the basis of a particular group of owners, selling shares to a new foreign investor or bringing in a partner may raise questions about whether a new licence or approval is required. The same can arise when shares pass to heirs on the death of a shareholder.

This is an area where attorneys will advise case by case, and where licence conditions may set specific requirements. The practical lesson is not to treat the company as a vehicle for passing land between foreign owners without licences. Any transfer of control should be discussed with your attorney before it happens, not afterwards.

If you are buying shares in a company that already holds Grenadian land, the same caution applies in reverse. Check whether the company holds a valid licence, whether its terms were met, and whether the share purchase itself needs approval. Due diligence on the company is as important as due diligence on the land.

Trusts and nominees

Trusts are less common for Grenadian land, but some buyers use them for estate planning. If a trust holds land for the benefit of non-citizens, the Act's concern with who holds or benefits from land is likely to be relevant. An attorney will need to consider who the trustees and beneficiaries are, and whether a licence is required, before the trust acquires land.

Nominee arrangements, where a Grenadian holds land in their own name on behalf of a foreigner, deserve a firm warning. They are sometimes suggested as a way to avoid the licence fee. They leave the foreign party exposed: if the nominee dies, falls out with the buyer, borrows against the land or sells it, the foreigner's position may be weak or unenforceable. They can also amount to an evasion of the Act with legal consequences.

If privacy is the aim, discuss legitimate options with an attorney. If cost is the aim, it is far better to budget for the licence than to risk the land itself.

Pitfalls to avoid with structures

Most problems with company or trust ownership of land come from a handful of recurring errors:

• Assuming a locally registered company is Grenadian for licence purposes regardless of who owns it.
• Setting up an offshore company to hold land without considering the documentation and banking burden.
• Letting the company fall out of good standing by missing annual returns, which can complicate a later sale.
• Changing shareholders without checking licence implications.
• Using nominees to avoid the licence.
• Choosing a structure for tax reasons without advice from a tax professional in the home country.
• Failing to plan how shares will pass on death, leaving heirs with two sets of legal problems instead of one.
• Mixing personal and company money, which undermines the separation that made the company worthwhile.
• Letting directors who live abroad become unreachable, so documents cannot be signed when a sale or loan needs them.

A simple test for whether a structure is worth it

Before setting up anything, write down in one sentence what the structure is meant to achieve. If the answer is "to avoid the licence", the structure will almost certainly disappoint, because the Act looks through to who controls the land. If the answer is "to let four friends own a house together with clear rules", "to run a guesthouse as a business" or "to keep a development project separate from our personal assets", a company may well be the right tool.

Next, estimate the annual cost of keeping the company alive: registry fees, accounting, tax filings and the attorney's time. Compare that with the value of the benefit over ten or twenty years. For a single family plot, individual or joint ownership with good wills is often simpler and cheaper.

Finally, think about the end of the story. Ask your attorney how the land would be sold, or passed to heirs, under each option, and what licence questions each path raises. The structure that looks neat on day one is not always the one that is easiest to unwind.

Frequently asked questions