How To Use a Tax Free Offshore Company As An Introducing Broker (“IB”)

Acting as an Introducing Broker (“IB”) is an activity which lends itself well to an Offshore Corporate Structuring Plan.

 

To summarise, how it would work is:

 

  • You set up a zero tax Offshore Company eg an International Business Company (“IBC”) with a tax haven based Nominee Director
  • You are appointed as the IBC’s Authorised Representative via a Consultancy Contract
  • You negotiate terms with the Broker that you will introduce to
  • The IB agreement/contract is signed Offshore by the Nominee Director
  • The source of the income is the contract
  • Because the contract was concluded offshore, in a nil tax environment, there should be no tax payable on income generated by the contract where the Company is incorporated and potentially where you live (ie assuming you structure and administer the Company in a certain way).
  • When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of IB commissions generated)
  • That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are tax resident though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home)
  • The majority of trading profits could be reinvested Offshore potentially tax free

 

Note there are other ways to access monies banked Offshore by your tax free International Business Company. Please contact us for details.

 

SAINT VINCENT AND THE GRENADINES (SVG) COMPANIES

The State of Saint Vincent and the Grenadines (“SVG”) is as an idyllic Island Archipelago in The Eastern Caribbean Sea made up some 18 islands known historically as The Windward Islands.

 

A former British colony, SVG gained independence from the British in 1979 but retains all the key signature traits common to most ex British colonies ie English is the first language, it boasts an English system of Law/Justice and it has retained the Westminster system of government (Britain’s monarch Queen Elisabeth is the head of state, represented locally by a Governor General).

 

Whilst the key pillar of the Economy remains tourism (SVG is a popular stop-off point for cruise ships) Financial Services is a key contributor along with agriculture (primarily banana farming). SVG is also a popular and growing International banking centre with a historical commitment to preserving privacy.

 

The following is a summary and brief overview of the statutory, legal and commercial environment in St. Vincent & the Grenadines (SVG) in relation to International Business Companies (IBC’s).

 

 

1              LAW

 

SVG is a common law jurisdiction.  The legal system of St. Vincent & the Grenadines is similar in most respects to that of the United Kingdom.  SVG’s court of final appeal is Her Majesty’s Judicial Committee of the Privy Council in London, England.

 

 

2              FORMS OF BUSINESS ENTITY

 

IBC – International Business Company

 

There are five variants of the IBC as follows:

 

1.            Companies limited by shares

2.            Companies limited by guarantee

3.            Companies limited by guarantee and authorized to issue shares (ie a hybrid company)

4.            Companies limited by shares and duration (“LDC” or limited duration company).

5.            Unlimited companies

 

 

3              LEGISLATION

 

•             The key piece of Legislation giving rise to the IBC Regime in SVG is The International Business Companies (Amendment and Consolidation) Act 2007 and its regulations (A copy of the Act can be accessed via the website of the SVG Financial Services Authority, www.svgfsa.com in the section entitled “Law and Regulations”.

 

 

4              FORMATION

 

The following information is required to form a SVG Company:

 

1.            Company Name

2.            Amount of Authorised Share Capital required (ie for Companies Limited by Shares or Hybrid Companies)

3.            Type of shares required (both bearer shares and registered shares are permitted, thought bearer share certificates must be held in SVG by a licensed Custodian)

4.            Class of shares (eg ordinary shares, shares of no par value, preference shares, redeemable shares, shares with or without voting rights etc.)

5.            Due diligence information on ultimate beneficial owners

6.            Consent of Directors to serve on Board of Directors

 

 

5              CAPITAL REQUIREMENTS

 

A company can have any authorized share capital if/as desired and formation fees are not affected by the level of authorized capital.  Typically clients choose an authorized share capital of US$50,000-$100,000 but any number can be chosen. (For an explanation of what Authorised Share Capital is Click on this link: http://offshoreincorporate.com/faq/whats-the-difference-between-authorized-and-paid-up-share-capital/).

 

 

6              DIRECTORS AND OFFICERS

 

•             A SVG company must have at least one director.

•             Directors may be individuals or corporate entities.

•             Directors are not required to be resident in SVG.

•             Officers are optional.

 

 

7              CORPORATE DIRECTORS

 

•             Corporate Directors are permitted

 

 

8              ACCOUNTS

 

•             No requirements to file annual accounts with any authority

•             A SVG Company shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the company.

•             Accounts do not have to be audited

 

 

9              SHAREHOLDERS / MEMBERS

 

•             A company shall have at least one shareholder / member.

•             Shareholders do not have to be SVG resident

•             Shares may be held by nominees/trustees

 

 

10           CLASSES OF SHARES

 

•             Ordinary

•             Preferred

•             Multi-class

 

 

11           ANNUAL GENERAL MEETINGS

 

•             No requirement for annual general meetings of shareholders unless written into a company’s by-laws.

 

•             Subject to the Articles or By-Laws of the IBC, the Directors may convene a meeting of the shareholders at such times and at such places as the directors consider necessary or desirable.

 

 

12           CORPORATE ACTIVITIES

 

Registered Agent & Office

 

•             A SVG Company must have a SVG registered agent.

•             A SVG Company must have a registered office which can (and usually is)  the office of the Registered Agent.

 

Books and Records

 

•             A SVG Company must have a share register which shall be kept at such place as the directors may determine

 

•             A SVG Company shall keep:

 

(a)          minutes of all meetings of

 

(i) directors,

(ii) shareholders,

(iii) committees of directors,

(iv) committees of officers, and

(v) committees of shareholders; and

 

(b)          copies of all resolutions consented to by:

 

(i) directors,

(ii) shareholders,

(iii) committees of directors,

(iv) committees of officers, and

(v) committees of shareholders.

 

•             The books, records and minutes referred to above shall be kept at the registered office of the company or at such other places the directors may direct in writing

 

Taxes

 

•             SVG Companies can elect to be tax exempt (no taxes) or to be taxed at 1% on its annual profits

 

Board Meetings

 

•             No rules in relation to location of board meetings.  Board meetings can be held anywhere.

•             No rules in relation to nationality of directors.  Directors can be of any nationality.

•             Company may convene meetings of the Board of Directors at such times and in such manner as deemed necessary or desirable by the Directors.

 

 

13           REDOMICILIATION

 

SVG recognizes transfer of domicile.  Companies can be transferred into and out of the jurisdiction.

 

 

14           PUBLIC DISCLOSURE

 

•             No requirement to file names of shareholders or directors with the Registrar when incorporating companies.

 

 

15           CORPORATE CAPACITY

 

A SVG Company can engage in all types of business except:

 

1.            Banking Business (Acting as a Bank)

2.            Mutual Funds Business (Acting as a Fund)

3.            Insurance Business (Acting as an Insurance Company)

4.            Trust Business (i.e. “Offshore Representation”–Acting as a Registered Agent, Trustee or Financial Fiduciary)

 

Special licenses are required if the company wishes to engage in any of the above activities (banking, insurance, etc.).

 

Other limitations:

 

1.            A SVG Company cannot offer its goods and services to persons resident in St. Vincent & the Grenadines.

 

 

16           CERTIFICATION

 

•             Commons Seals are optional

 

•             Contracts may be entered into on behalf of an international business company as follows:

 

(a)          a contract that, if entered into between individuals, is required by law to be in writing and under seal, may be entered into by or on behalf of the company in writing under the common seal of the company, and may, in the same manner, be varied or discharged;

 

(b)          a contract that, if entered into between individuals, is required by law to be in writing and signed by the parties, may be entered into by or on behalf of the company in writing and signed by a person acting under the express or implied authority of the company, and may, in the same manner, be varied or discharged; and

 

(c)           a contract that, if entered into between individuals, is valid although entered into orally, and not reduced to writing, may be entered into orally by or on behalf of the company by a person acting under the express or implied authority of the company, and may, in the same manner, be varied or discharged. 

 

•             Without affecting paragraph (a) above, a contract, agreement or other instrument executed by or on behalf of a company by a director or an authorised officer or agent of the company is not invalid by reason only of the fact that the common seal of the company is not affixed to the contract, agreement or instrument. 

 

•             A document requiring authentication or attestation by an international business company may be signed by a director, a secretary or by an authorized officer or agent of the company, and need not be under its common seal.

 

 

 

17           REGISTRATION OF CHARGES

 

•             Charges on a company’s assets may be registered / filed with the Registrar.  Filing of charges is optional.

 

 

OCI SVG COMPANY FORMATION SERVICES

 

At OCI we believe in giving you more for your money than would the average IBC formation service. Hence included in the incorporation package for your SVG Company is the following-

 

Services:

 

•             Unlimited name availability inquiries

•             Advice from an experienced International Corporate Lawyer on how to structure your company

•             Preparation (overseen by a lawyer) of application to incorporate the company

•             Preparation (overseen by a lawyer) of the company’s memorandum of association

•             Preparation (overseen by a lawyer) of the company’s articles of association

•             Attending to filing incorporation request with the company registry

•             Attending to payment of government filing fees

•             One year’s Registered Agent service in the country of incorporation

•             One year’s Registered Office service in the country of incorporation

•             Mailing address in the country of incorporation

•             Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)

•             Unlimited free legal consultations for 12 months

 

Documents included in your Incorp pack:

 

•             Certificate of incorporation

•             2 sealed/stamped copies of the company’s Memorandum of Association

•             2 sealed/stamped copies of the company’s Articles of Association

•             Resolution appointing first director/s

•             Resolution appointing first shareholder/s

•             Up to 5 share certificates

•             Resolution to open a bank account

•             Resolution to rent an office

•             Resolution/s to engage a Phone, Internet & Website service provider

•             Resolution to hire a staff member/s

•             Resolution to appoint a company lawyer

•             Resolution to appoint a company accountant

•             Resolution appointing you as the company’s authorised representative in commercial negotiations

•             Resolution issuing a Power of Attorney in your favour

•             Agreement authorising you to represent the company in commercial negotiations

•             Power of attorney authorising you to sign documents on behalf of the company

•             Register of directors

•             Register of shareholders

•             Expression of wishes (ie an “Offshore” Will)

•             Lawyer authored User Guide (“How to Use Your Offshore Company”)

 

Price (all inclusive): $US 1,300

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): $ 1,700

 

Every effort has been made to ensure that the details contained herein are correct and up-to-date, but this does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.

 

 

Panama Financial Services Companies

 

This week’s article continues the examination of venues where one could consider establishing a Brokerage Business Offshore.

 

Anyone looking to set up a Forex Brokerage Business should consider establishing a Panama Financial Services Company and then apply for a Financial Services License.

 

Such a license empowers a Panama Company to carry out any of these activities:

 

•             Asset Management

•             Account Management

•             Currency Trading/FX

•             Payment processing

•             Factoring

•             Leasing

•             Forex Brokerage

•             Precious metals trading

•             Other associated activities

 

The benefits of a Panama Financial Services License are:

 

•             Low cost to setup and fast, 15 days for the corporation, 30 days for the license and bank account setup in 15 business days

•             No requirement to maintain an office or staff in Panama

 

Fine Print

 

Applicants must have a paid-in capital of US$150,000, as well as:

1. Be exclusively dedicated to activities related to the broker-dealer house business.

 

2. Articles of Incorporation which have a corporate purpose adequate to the activities related to the broker-dealer house business and social capital of at least US$150,000 in registered shares.

 

3. A Board of Directors or its equivalent composed by at least three individuals (no corporate directors), all of them individuals of “proven business and professional integrity. At least one third of the members of the Board of Directors shall also possess knowledge and experience in subjects related to the stock markets or the financial sector in general. It shall be understood that individuals with a record of respect for the commercial laws and other laws regulating the economic and business activities, as well as good business and financial practices, possess commercial and professional honorability. In any case, it shall be understood that individuals lack such honorability, when the individual is under one of the causes of incompetence to hold offices, pursuant this Agreement. Only individuals who have performed duties as principal executives or other similar responsibilities in other public and private entities for a period of at least 2 years, are deemed to have appropriate knowledge and experience.

 

4. Have the number of principal executives that the broker-dealer house business volume requires, who must have the corresponding licenses issued by the Commission. Every broker-dealer house must at least appoint one person as Principal executive.

 

Our fees for assisting to apply this type of license application would be in the vicinity of US$7,500 to $US10,000. Registration fees for a brokerage house are US$5,000. On a yearly basis a supervision fee must be paid to the Superintendent equivalent to 0.0025% of yearly trades (min $5,000.00 max. $100,000.00).

 

If you’ve any questions about the Panama Financial Services Company please contact us.

 

New Mexico LLCs

A relative newcomer to the LLC market the New Mexico LLC is attracting a lot of interest on account of its unparalleled privacy features. (Principally, ownership information does not have to be revealed at registration and there is no requirement to file an annual return).

 

And as typical with an LLC a New Mexico LLC is treated by the American Tax authorities as a partnership for tax purposes ie provided all income is distributed to members by years end the LLC is not liable for tax either in New Mexico (“NM”) nor to the US Federal tax authorities.

 

Prime features of the New Mexico LLC Include:

 

1.         Low Cost: New Mexico has the lowest government filing fees in the US for an LLC

2.         Low Maintenance: There is no requirement to file an annual report.

3.         Easy of set up: The Company can be incorporated simply by filing Articles of Organization.

4.         Privacy: A nominee can be listed in the Articles as Organiser

 

NEW MEXICO LLCs BENEFITS

 

New Mexico LLCs offer distinct benefits:

 

•          One-time filings

•          You only need to form the LLC in New Mexico. There is no other government maintenance or licenses to file after you complete the Articles of Organization.

•          There is no disclosure to the authorities of owners or managers details

•          The address at which company records are to be kept (“ie the “Principal Business Address”) can be anywhere in the world

•          New Mexico LLCs do not have annual reports.

•          Low government fees

•          A NM LLC may be managed (ie Directed) by either a member or non-member manager.

•          A NM LLC may be managed/directed by another LLC/Company.

•          Simplicity – No annual reports needed and simple Articles of Organization requirements.

•          Asset Protection – New Mexico has some of the best limited liability coverage for an LLC (explained in depth below), especially when it comes to protecting LLCs from other members.

 

THE UNIQUE ADVANTAGES OF A NEW MEXICO LLC

 

Forming a limited liability company (LLC) in the state of New Mexico has unique advantages: simplicity of operations, federal and state tax exemption, protection of your assets from personal liability, and ease of raising capital with no investor ceiling. A New Mexico LLC combines the taxation benefits of a sole proprietorship or partnership, and the limited liability of a corporation, for the best of both worlds. New Mexico LLC formation is regarded as a separate legal entity, with the advantage of protecting the owners from business liability.

 

Simplicity 

 

A New Mexico LLC is uniquely flexible and simple to form. The cost is low, and maintenance is minimal. The LLC has the advantage of setting its own policies on corporate governance such as: capital or asset contributions by the members; taxation planning; accounting model; recordkeeping and minutes-keeping; frequency of member meetings; management structure; officer appointments; buy-out provisions; management rights, duties and obligations; date of LLC dissolution; and resolutions, voting rights or operational duties and requirements.

 

Tax Exemption

 

A Mexico LLC is tax-exempt under state and federal law. It has the advantage of taking the limited liability features of a corporation and combining them with “flow-through” tax benefits of a sole proprietorship or partnership. Your business losses, profits and expenses flow through the company to the individual members to avoid being taxed on both a corporate and individual level. Your LLC corporation has the flexibility of setting its own dividend policy, rather than having to follow mandatory distribution of earnings on a dollar-per-share basis.

 

Asset Protection

 

A New Mexico LLC offers the unique advantage of the same benefits of asset protection as Nevada corporations and offshore entities, without the premium prices and high maintenance fees. Under the LLC, your personal assets are separated from corporate liability and any potential future creditor action. To protect your privacy, only the following are required for the Articles of Organization: the name of the company and the address of the principal office; the name and address of the registered agent; and the duration of the LLC. Membership interests may not be seized to satisfy a creditor’s claim against the member. This is due to a statutory provision known as “charging order protection”. The creditor can only receive the right to allocations of profit and loss that the member would otherwise receive. However, a properly worded LLC Operating Agreement will allow for profits to be retained within the company and “expensed out” or funneled to the member via alternative means (such as LLC management fees.)

 

Unlimited Investors

 

The advantage of raising capital for a New Mexico LLC is that any number of investors can contribute, including individuals, trusts, pensions or even other LLC corporation entities, unlike a sub-chapter S corporation, which is limited to 75 shareholders. By building your capital base and with an operating history, you have an advantage in securing various credit facilities.

 

OCI New Mexico Incorporation Packages

 

At OCI we believe in giving you more for your money than would the average IBC formation service. Hence included in the incorporation package for your New Mexico LLC is/are the following-

 

Services:

 

          Unlimited name availability inquiries

          Advice from an experienced International Corporate Lawyer on how to structure your company

          Preparation (overseen by a lawyer) of application to incorporate the company

          Preparation (overseen by a lawyer) of the company’s Operating Agreement

          Preparation (overseen by a lawyer) of the company’s Articles of Organisation

          Attending to filing incorporation request with the company registry

          Attending to payment of government filing fees

          One year’s Registered Agent service in the country of incorporation

          One year’s Registered Office service in the country of incorporation

          Mailing address in the country of incorporation

          Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)

          Unlimited free legal consultations for 12 months with our In House Lawyer ( call us anytime at no cost for advice on how to structure/document transactions, how to administer your Company, how to move money, compliance requirements etc)

 

Documents included in your Incorp pack:

 

          Certificate of incorporation

          2 sealed/stamped copies of the company’s Operating Agreement

          2 sealed/stamped copies of the company’s Articles of Organisation

          Resolution appointing first Manager

          Resolution appointing first Members

          Up to 5 Membership Unit Certificates

          Resolution to open a bank account

          Resolution to rent an office

          Resolution/s to engage a Phone, Internet & Website service provider

          Resolution to hire a staff member/s

          Resolution to appoint a company lawyer

          Resolution to appoint a company accountant

          Resolution appointing you as the company’s authorised representative in commercial negotiations

          Resolution issuing a Power of Attorney in your favour

          Agreement authorising you to represent the company in commercial negotiations

          Power of attorney authorising you to sign documents on behalf of the company

          Register of Managers

          Register of Members

          Expression of wishes (ie an “Offshore” Will)

          Lawyer authored User Guide (“How to Use Your Offshore Company”)

 

Price (all inclusive): $US $650

 

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): $ 1,050

 

From 2nd year costs $450 (+ $400 if Nominees are required). Included in the annual fee from 2nd year are the following services:

          Attending to payment of government filing fees

          One year’s Registered Agent service in the country of incorporation

          One year’s Registered Office service in the country of incorporation

          Mailing address in the country of incorporation

          Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)

          Provisions of New Mexico  business address

          Attending to and updating the Directors register

          Attending to and updating the Share register

          Attending to and updating the Asset register

          Recording details of any changes to Directors or Shareholders

          Unlimited free legal consultations for 12 months with our In House Lawyer ( call us anytime at no cost for advice on how to structure/document transactions, how to administer your Company, how to move money, compliance requirements etc)

 

If you’d like to know more about New Mexico LLCs Please Contact Us

 

Every effort has been made to ensure that the details contained herein are correct and up-to-date, but this does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.