Backgroud

Gibraltar, a British possession since 1704, over the last decade has expanded its role as a principal offshore financial centre, against a background of political stability and administrative and legal systems derived from the English models. The absence of any exchange control restrictions together with exemptions and concessions from domestic taxes to certain categories of companies, non-resident individuals who do not work in Gibraltar itself and trusts administered for non-residents, has created many opportunities for offshore investors and led to substantial growth in the Financial sector services. This has been augmented by strong investor protection legislation passed in 1990 and 1991 leading to the creation of the Financial Services Commission and the appointment of the Financial Services Commissioner.

Geography

Gibraltar is a peninsula with an area of 2.75 square miles linked to the southern tip of Spain, facing the northern coast of Africa and dominating the entrance to the Western Mediterranean. One of the world's famous landmarks, the Rock of Gibraltar rises approximately 1.300 feet and has been a key strategic site of many centuries.

Climate

The climate is Mediterranean and mild with an average noon summer temperature of 23'C and a winter average of 13'C.

Population

The Rock now has about 30,000 inhabitants, 26,000 are native Gibraltarians, the balance being made up British expatriates and other European nationalities. English is the official language, however most of the locals are bi-lingual - English and Spanish.

Government and Internal Affairs

Constitutionally, Gibraltar is now an overseas territory, with internal self-government, the United Kingdom being responsible for defence, foreign affairs, financial stability, internal security and the supervision of the Financial Services Commission. It has its own Parliament, which consists of fifteen elected members and two nominated members. There is a Council of Ministers which consists of the Chief Minister and seven other Ministers, who are responsible for "defined" domestic matter such as trade, economic development, education, public works and services, and housing. Other matters are dealt with by the Gibraltar Council, which consists of the Governor, the Chief Minister, four other Ministers, the Deputy Governor, the Attorney General, the Financial and Development Secretary and the Deputy Fortress Commander. Gibraltar is a member of European Community, having joined with the United Kingdom in 1973, under the provisions of the Treaty of Rome relating to the European dependant territories. However, it is excluded from the Common External Tariff, the Common Agricultural Policy and the requirements to levy Value Added Tax.

Legal System

The legal system in Gibraltar is based on English Common and Statute Law with variations introduced by local Statute Law of "Ordinances". The administration of justice in Gibraltar is undertaken by a Chief Justice; there are three courts, a Magistrates Court, a Court of First Instance and a Supreme Court. The ultimate Court of Appeal is the Privy Council in the United Kingdom. There is a generous number of both local and international Law firms to choose from.

The Economy

The economy's main sources of income are from the service industries, port facilities, tourism, trans-shipment and perhaps, most importantly, the financial services sector. The rapidly expanding economy has meant the construction industry has also benefited with multinational companies linking with local firms to build hotels, office blocks and other commercial and residential accommodation.

Banking

A wide range of banks provide both domestic and offshore banking facilities on the Rock. 1992 saw the implementation by the House of Assembly of the new banking Ordinance which brings Gibraltar's banking legislation in line with current EC banking directives. The Ordinance is administered by the Commissioner of Banking with the day to day supervision being carried out by the Banking Supervisor.

The major implication of the new Ordinance is that Gibraltar licensed banks may branch out into Europe with only the need for notification between supervisory authorities to be put into effect and vice versa.

The minimum capital required for a new banking licence has been increased to ECU 5 million, also bringing it into line with EEA minimum requirements.

Current Banking Supervisory practices in Gibraltar are based substantially on Basle Committee recommendations and Bank of England guidelines. Gibraltar's current solvency ratio for all Gibraltar registered operations is 10%(2% above the Basle minimum requirements) and is calculated in accordance with Basle/EEA recommendations.

Currency and Exchange Controls

The unit of currency in Gibraltar is the Pound Sterling although there is a local note and coinage issue which is at par with Sterling. In addition in 1991 Gibraltar was the first EC state to issue ECU based coinage which is legal tender. There are no exchange control restrictions in force, there being complete freedom to remit funds into and out of Gibraltar and to convert funds into other currencies.

Transport and Communications

Gibraltar's strategic location at the entrance to the Mediterranean places it at the centre of a network of communications. Gibraltar has both an international airport and a harbour which continues to be a prime port of call for many of the world's shipping lines as a result of both its location and its free port status. In Spain the airports at Seville, Jerez and Malaga are all within two hours' drive of the Rock and allow access to a wide variety of Spanish domestic and international flights.

Following the recent installation of a fully digital network, Gibraltar has excellent telecommunications with the rest of the world.