Monthly Archives: August 2019

In early 2019 the BVI passed a raft of new legislative changes introducing economic substance requirements for all companies which are incorporated in and tax resident in the BVI.

The new Law (The Economic Substance Act) requires that each such Company must provide proof to its BVI Registered Agent of where the entity is tax resident and must be ready to relay that information to the BVI’s competent authorities. The new Legislation also provides that in the even that is tax resident in the BVI, it must demonstrate economic substance.

The new law however only applies to Companies carrying on a “relevant activity”. Relevant activity as defined includes:

• Banking business
• Insurance business
• Shipping business
• Fund management business
• Finance and leasing business
• Headquarters business
• Holding business
• Intellectual property business (IP legal entities will be facing more onerous requirements and are encouraged to seek legal advice).
• Distribution and service centre business

In so far as applicability of the new law to British Virgin Islands IBCs (International Business Companies) is concerned here’s what you need to know:

1. If the Company has no BVI sourced income will the Company be liable to pay tax in BVI (and if so at what rate) – With respect to the new Economic Substance Act, the company should only be deeply concerned about BVI taxes if it is conducting one of the relevant activities outlined in the ES Act.  If the company does carry on a relevant activity taxes will only be payable on the employees the company is required to have in the BVI in order to show “substance with respect to its activities.  The BVI does not have an income tax system, therefore the company’s income is not in question in relation to BVI tax rates.
2. What documents/records must a BVI IBC keep? And how must those records be kept (ie can they be kept in soft format?) and where must those records be kept  If the company is conducting a relevant activity and it decides to comply with the ES Act and prove substance in the BVI, then the necessary documents that a BVI company operating in the BVI is required to keep would be expected, eg. Financial audits, tax documents, etc.
3. Must a BVI IBC keep books of account (& if so what kind of Accounts must be kept)? If the company is conducting a relevant activity and it decides to comply with the ES Act and prove substance in the BVI, then the necessary documents that a BVI company operating in the BVI is required to keep would be expected, eg. Financial audits, tax documents, etc.
4. Must a BVI Company’s Accounts be audited (& if so by whom eg a BVI Licensed Auditor? Or?) It is a standard expectation that BVI companies should audit their books for good record keeping.  The BVI tax office requires that a copy of the audited financials be submitted to them annually
5. Does a BVI IBC have to file a tax/annual return? Annual tax filings are to be filed with the local tax office for BVI companies
6. If a BVI IBC must now file an annual return or tax return what info must be included in the return?  The BVI tax office provides standard forms to be completed, which mainly relates to total payroll paid per year and taxes deducted and submitted.   If there is any difference in the taxes submitted and the taxes that were to be submitted the company would be expect to submit a check to the tax office upon filing of the returns.
7. What physical presence must a BVI have in the BVI? If there is a physical presence requirement moving forward does it only apply to newly formed Companies or old Companies (if the latter when does the new regulation begin to apply to previously incorporated BVI IBCs(?)  Once a company is conducting relevant activities it must show substance in the BVI by conducting the core income generating activity in the BVI, having management and directors in the BVI, employees in the BVI  and office space in the BVI.   The ES Act applies to new company as of January, 2019 and for old companies as of June 2019.  The companies are required to file with the BVI Government within 18 months of the above dates indicating their tax status, (i.e whether they are tax resident in the BVI or outside the BVI.  If they are tax resident in the BVI they are required to show substance by the deadline.  If they are not tax resident in the BVI they are required to submit a form indicating such.)  Please bearing in mind that the Government’s filing platform and forms for submission are not yet ready.
8. Is there a publicly accessible register of Directors in the BVI? If not do you have to (privately) file Directors details with the Registry (and when, in what instance/s could this info be shared?)  There is no publicly accessible register of directors in the BVI.  However, the BVI Government does keep a private Register of Directors but only the regulators are able to view the information that has been filed.   The information will only be shared in the case of a criminal investigation.
9. Is there a publicly accessible register of Shareholders in the BVI? If not do you have to (privately) file Shareholders details with the Registry (and when, in what instance/s could this info be shared?)  There is no publicly accessible register of shareholders in the BVI

10. Is there a publicly accessible register of Beneficial owners in the BVI? If not do you have to (privately) file UBO’s details with the Registry (and when, in what instance/s could this info be shared?)  There is no publicly accessible register of beneficial owners in the BVI.  However, there is a requirement to file the beneficial owner with the Government but it is privately held.   Again the information is only shared in cases of a criminal investigation.

Note the above information is current as of 5 July 2019.

If you have/own a BVI IBC and are concerned about the Legislative changes you have the option of redomiciling the Company to a comparable jurisdiction (eg Seychelles, Belize, Nevis, Anguilla etc). OCI can assist you to redomicile your BVI IBC (and we can provide guidance on which jurisdiction/s you could/should be considering moving to).

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

The Republic of Marshall Islands (“RMI”) is a pristine group of islands in the North Pacific Ocean located approximately halfway between Hawaii and Australia. Following “discovery” by British Naval Captain John Marshall in 1882 the islands were ultimately annexed by Germany before being passed to the United States who administered the country on behalf of the UN from the end of World War 2 until 1986 (when the nation gained Independence).

With a hybrid system of government based on both the British and US system, the US dollar as its official currency and a Corporate Law framework based on the English Common Law model the Marshall Islands is becoming an increasingly popular jurisdiction for incorporation of tax free Offshore Companies.

Key features and benefits include:

Zero Tax: IBCs registered in The Marshall Islands are not liable to pay tax on business profits locally and dividends can be remitted into and out of the Company tax free.

Nominees Permissible: Nominee Shareholders and Professional Directors are permissible in The Marshall Islands (and a Company can be appointed Director).

Bearer Shares available: Bearer Shares are permissible for Marshall Islands companies (& can be freely held ie no official custodian is required).

Easy to Establish: Marshall Islands IBCs only require as a minimum one director and one shareholder.

Speedy incorporation: Marshall Islands IBCs can be incorporated in as little as 48 hours

Privacy: There is no public register of Directors, shareholders or beneficial owners in The Marshall Islands.

Other features include:

• Minimal Paperwork – There is no requirement to file annual returns or to have accounts audited for Marshall Islands IBCs
• Ease of communication – English is the official language of the Marshall Islands
• Language  Choice – Non English company names are permitted and can be included on a Company’s Certificate of Incorporation
• Flexibility – Board meetings can be held anywhere in the world
• Easy to Manage – Marshall Islands IBCs are not required to hold an annual General Meeting
• Inexpensive to Establish – Minimum paid up share capital required is just US$1.
• Private – The Marshall Islands has not signed Tax Information Exchange Agreements with any major EU state save for The Netherlands
• Reliable Legal Framework – The Marshall Islands Corporations Law is based on that of Delaware and New York (USA)

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 Marshall Islands IBC 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 1,100

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): $ 1,500

From 2nd year $790 (or $1,190 if Nominees are required)

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

It is still possible to form a Company with bearer shares but the jurisdiction options are not what they once were…

This article should answer any questions you might have about where you might form a Bearer Share Company Offshore and what legal conditions exist in relation to the creation, storage and transfer of such Companies’ bearer shares.

What are “Bearer” Shares?

In short bearer shares are a form of Company Shareholding whereby when the Company is formed and the share certificate is printed the name of the shareholder on the certificate reads “The Bearer hereof”. In other words whoever physically holds the share certificate is considered to be the shareholder of the Company. (Company Law 101: If you own 100% of the issue shares in a Company you own the Company).

Historically in the case of a Bearer Share Company, in the share register the name of the recorded shareholder reads “Bearer”. To transfer ownership of a Bearer Share Company you simply hand over the share certificate to the new owner. (That said, for the transfer of ownership to be complete at law ideally a share sale/purchase agreement should be entered into and consideration ie payment tendered).

Where Can You Form a Nil Tax Bearer Share Company?

Whilst 90% of tax advantaged jurisdictions have abolished the use of Bearer Shares there are 4 tax haven jurisdictions that still permit the use of Bearer Shares ie Panama,  Marshall Islands The British Virgin Islands (“BVI”) & St Vincent & The Grenadines.

BVI Bearer Share Companies

A BVI International Business Company (“IBC”) can issue a wide range of shares including Bearer Shares (although a significantly higher government incorporation/annual renewal fee applies to Bearer Share Companies incorporated in the BVI).

The new BVI IBC legislation provides:

(a)       that all bearer shares must be “immobilized”. What this means is that any BVI IBC share certificates issued to Bearer must be held by an approved/licensed custodian (eg a Bank or Law Firm or Licensed International Corporate Service Provider).

(b)       In the custodian’s file a written declaration must be held noting the actual identity and address of the owner of such shares.

(c)       It’s not possible to transfer ownership of a Bearer Share Certificate by just handing over ownership to the new owner/holder. A Written instrument of transfer must be executed and KYC provided (eg proof of identity and address) to the Custodian as regards the new owner.

Panama Bearer Share Companies

Like the BVI a Panama Company can issue a wide range of shares, including Bearer Shares.

In 2015 however Panama passed legislation to effectively immobilize Bearer Share Certificates. In short, like in the BVI you can incorporate a Company in Panama with Bearer Shares but the share certificate/s must be held by an approved/licensed Custodian and KYC provided to the Custodian as regards the shareholder/owner’s ID and address.

Approved categories of Custodian in Panama include (a) local authorized custodians, and (b) foreign authorized custodians. Categories of local custodian include:

(i)        A bank holding a general license

(ii)       Trust companies authorized by the Panama Bank Superintendence

(iii)      Brokerage houses and securities clearing houses authorized by the Securities Market Superintendence; &

(iv)      Attorneys at law certified as such by the Supreme Court of Justice in Panama.

Non local Banks, trust companies, and financial intermediaries may be foreign authorized custodians if they hold a license for practicing of such business in their jurisdiction of domicile AND providing that jurisdiction is (a) a member of the Financial Action Task Force (FATF) on Money Laundering or (b) is an associated member that is registered with the SBP.

Rights over Certificates in Custody in Panama

The ownership of shares held by a Custodian may be transferred without need for the physical delivery of the certificate/s, provided (i) that the owner advises the Custodian that he/she has made the transfer and (ii) that the acquirer submits a sworn statement to the custodian that includes the required information (name and identification data, as well as contact data as regards the new owner).

The Panama law provides also for an interesting pledge system that allows for the creation of an encumbrance on bearer shares in custody, by the owner merely giving notice to the authorized custodian whereby he/she advises the pledging of the shares as well as the lienholder’s full name, physical address, telephone number, and email address.

Uniquely, a special inheritance disposition system has been created for Panama Company bearer shares that allows the owner of such shares to automatically dispose of their shares on death to a nominated successor, without need for the transfer of ownership such shares being subject to a formal granting of probate (That is a process whereby a competent Court approves a Will and the distribution of assets pursuant thereto).

Marshall Islands Bearer Share Companies

In March 2018 the Republic of the Marshall Islands (“RMI”) amended its IBC Legislation to provide for several changes including changes as regards to the use of Bearer Shares.

The effects of the RMI amendment in relation to Bearer Shares are:

(a)       Marshall Islands Bearer Share Companies must now take all reasonable steps to maintain up-to-date records of all shareholders and beneficial owners of bearer shares (as well as any later share transfers).

(b)       In order to maintain the validity at law of bearer shares in a Marshall Islands Company (including any and all rights and privileges attaching to such shares), the above-referred records must be filed/kept with the corporation’s registered agent in the RMI.

(c)       Bearer share information is recorded with the registered agent by completing the forms “Declaration of Holders and Beneficial Owners of Bearer Shares” or “Declaration of Transfer of Bearer Shares”. The forms can be obtained by either contacting your RMI Company Formation Agent or the RMI FSA directly.

Interestingly in the RMI Bearer shares do not have to be held by an approved Custodian.

St Vincent & The Grenadines Bearer Share Companies

St Vincent & The Grenadines (“SVG”) IBCs are still permitted to issue bearer shares save that, like in Panama and the BVI, such shares must be held by an approved custodian.

Conclusion

It is still possible to incorporate a Private Tax-Free Company with bearer shares however its becoming increasingly harder to open bank accounts for Bearer Share companies.

If you want to form an Offshore Company without your name appearing in any official record as the shareholder of the Company (and have the widest choice of banks) you’d probably be better off to incorporate a Company with a (nil tax jurisdiction resident) Nominee Shareholder (which most CSP firms, like OCI, can provide).

Moreover if you don’t want your name appearing in any official records as the “beneficial owner” of an/your Offshore Company (which in most cases would give rise to reporting/tax obligations onshore) you’d be wise to include a Private Foundation as part of your Corporate structure (in particular a Seychelles Foundation). Check these links for details:

https://offshoreincorporate.com/private-interest-foundations/

https://offshoreincorporate.com/seychelles-foundations/

https://offshoreincorporate.com/seychelles-foundations-fact-sheet/

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

Wearing a crypto coin on her necklace, Grace Wong is upbeat about the future of cryptocurrency as Facebook gets set to enter the space with Libra.

“We’re basically making blockchain very easy and making it very usable for normal people to use,” Wong says.

As cryptocurrencies begin to climb again following a prolonged slump, Ms Wong, the co-founder of loyalty startup Liven says if Facebook succeeds in launching Libra midway through next year as planned it will boost startups in the sector.

Liven raised $10 million earlier this year for its dining rewards platform in which its 500,000 users earn cash rewards for eating out and can use Liven’s digital currency, LVN tokens, to buy food and drinks.

Giving Users a Crypto Incentive

Wong is back at her desk after spending a week on entrepreneur Richard Branson’s Necker Island with the Virgin founder and some of the Facebook team behind Libra. She believes Liven will complement the cryptocurrency when it is launched.

“We basically give people a real business incentive,” she says. “Why are restaurants working with us? Why are customers using us, not because of Bitcoin, not because of crypto, but because it helps them make life easier.”

Wong says Facebook is trying to target the billions of people who are “unbanked” without credit cards or bank accounts and so can use Libra to make and receive payments.

Lending legitimacy

Alan Tsen, chair of Fintech Australia, says established players such as Facebook entering the market validates interest in blockchain technology and cryptocurrency.

It’s a view shared by Kain Warwick, founder of synthetic asset trading platform Synthetix, who pivoted his startup last year from a stablecoin offering (a cryptocurrency designed to minimise volatility).

“Part of the reason we pivoted was we saw this trend emerging of large multinationals like JP Morgan and Facebook moving into this space,” he says. “It lends legitimacy that this is a sector it is worth paying attention to. That provides opportunity for other startups and fintechs in the space to get attention.”

Regulatory Concerns

United States regulators are very skeptical of the motivation for Facebook for launching a payments network.

Warwick says we are in the midst of a “crypto Spring” with increased volume on exchanges and Bitcoin back over $10,000, its highest value since mid 2018.

However, he warned it still remains to be seen as to whether Facebook can launch from a regulatory perspective.

“United States regulators are very sceptical of the motivation for Facebook for launching a payments network,” he says.In contrast Warwick says Australian regulators have been “fairly permissive” when it comes to cryptocurrencies.

Regulators are watching Facebook closely with the tech giant’s head of blockchain projects, David Marcus, testifying before the Senate Banking Committee and the House Financial Services Committee in the US last week.

Marcus faced criticism for plans to headquarter and regulate the Libra Association in Switzerland.

A spokesperson for Facebook Australia declined to comment on Libra’s launch in Australia.

Why Banks should fear Facebook’s Libra?

“The next stage will be to gather feedback and work through our proposals with global regulatory bodies,” the Libra spokesperson said.

Wong concedes some customers are sceptical about Facebook’s involvement in cryptocurrency given the concerns that have been raised about privacy and trust at Facebook.

“That’s because people don’t understand the fact that Facebook doesn’t own the currency,” she says. “Facebook is just one of many other founding members. For Facebook it is actually the best approach because people don’t trust them, with a block chain it is all about transparency and about accountability.”

Sydney Morning Herald

Are You Looking to Launch a Crypto Token or a New Cryptocurrency?

If so you’ll be pleased to know that such a business lends itself well to a (potentially tax free) Offshore Corporate Structuring Plan. in particular the jurisdiction of Seychelles has recently given the green light for Utility Token Startups to incorporate, as of right, as a tax free IBC (International Business Company): Such a business can now be incorporated in Seychelles without needing to apply for any form of Special License!

For details in regards to Seychelles and Seychelles IBC Formations check this link: https://offshoreincorporate.com/seychelles-offshore-companies/

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com