An LLC (Limited Liability Corporation) is, effectively, a hybrid of a Limited Company and a Partnership.
An LLC is like a Company in that that liability of the Company is limited to the capital invested and assets purchased by the Company.
Like a partnership an LLC is a flow through entity: An LLC does not have to file a tax return; the nett profits are passed through to the members of the LLC (members are to an LLC what shareholders are to a Limited Company) who are responsible for taxes (if applicable) in their country of tax residence (ie same tax treatment as Partners in the case of a Partnership).
From a member/partner’s viewpoint, in terms of liability, an LLC is superior to a Limited Partnership (“LP”) because in the case of a Limited Partnership (which is constituted by a Limited Partner and a General Partner) one partner can be made liable for the debts of the partnership. In the case of an LLC the liability of the members is limited to the extent of the member’s capital contribution (unless a personal guarantee has been given by a member to a supplier of the LLC).
LLC members can fully participate in the management of the LLC (which is different to an LP – in the case of an LP the Limited Partner usually can’t participate in the management of the enterprise without risking his/her Limited Liability status).
Key Benefits of the Belize LLC include:
- Privacy: There is no public register of owners/members or Directors/Managers in Belize
- Tax Effectiveness: Belize LLCs are not liable for corporate tax or business tax or any other form of tax in Belize
- Simplicity: There is no requirement in Belize to prepare annual accounts or appoint an auditor
- Flexibility: Belize LLCs can be used to own/operate a wide range of businesses as of right
- Asset Protection: Before you can sue a Belize LLC you have to pay into Court a deposit being an amount equal to the greater of (i) one half of the amount claimed or $US50,000 whichever is the greater
Other features of the Belize LLC Law include:
1. A Belize LLC:
(a) can be structured according to its own rules rather than being dictated to by statute
(b) is a legal entity with separate rights and liabilities distinct from its members & managers. This means no-one other than the LLC itself can be made liable for the debts of the LLC, (save for the case of a personal guarantee)
(c) Somebody suing a Belize LLC member at best can only have the members rights assigned to him/her; he/she can’t participate in the management of the LLC
2. Belize doesn’t recognize foreign judgments. Only a judgment made by a Belize Court can be executed against a Belize LLC
3. LLCs from other jurisdictions can migrate to Belize and vice versa (ie a Belize LLC can redomicile and become eg a Nevis LLC)
4. Civil legal proceedings against a Belize LLC must be held in private (and there are penalties for unauthorised disclosure).