We are often asked by clients How do I buy or make or place an investment using my Offshore Company?

 

(This article assumes that you’ve already set up an Offshore Company and that you’ve deployed a Nominee Director as part of your Corporate/legal structure).

 

The starting point here is that you would or should have been appointed, via a consultancy agreement/contract, as an authorised representative/agent of the Company.

 

Such an appointment, in effect, gives you (or should give you) the authority and the power to go shopping for investments on behalf of your IBC/Offshore Company.

 

Typically you would also have the power to negotiate the price of the investment and the terms of the purchase.

 

Once (ie acting as Agent for the company) you’ve reached agreement with the seller/investment provider as regards the price and terms of the investment:

 

• You would make certain recommendations in writing to the Company Director ie to place XYZ investment. In short you’d need to explain what the particular investment/opportunity is that you’ve found and why you think/believe the particular investment/opportunity you’ve found is or would be a good investment for the company. Ideally, at the same time you would email the documents that need to be signed by the Company in order to proceed with the investment to your International Corporate Services Provider/the Company Director; and
• Your Company would then call a Board meeting authorizing the Company to proceed with the transaction
• The Company director would then sign the board resolution and the purchase documents.

 

NOTE: If you need to close the sale quickly the Board could provide you or your local Lawyer with a Limited/Specific Power of Attorney enabling you/your Lawyer to sign the Purchase/Sale Contract

 

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

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

Are you looking to set up an Online Gaming Business or a Payment Processing Business? If so you might want to consider applying for a Data Processing License in Costa Rica (“CR”).

 

Costa Rica Background

 

Costa Rica is a small (population 5 million) Central American country (bordered by Panama, Nicaragua, the Pacific Ocean and the Caribbean Sea) and is arguably the most politically and economically stable country in the region.

Historically the Costa Rican economy centred around agriculture but, since the dawn of the new millennium, CR has diversified its economic focus, in the process creating a boom in tourism, finance, and corporate services. Costa Rican residents now enjoy a high standard of living, social stability and some of the foremost education in Central America. Spanish is the first language but English is commonly spoken particularly in business circles.

 

In summary what you/we will need to do here is incorporate a Costa Rican Company (ie an S.R.L.) AND then apply for a Data Processing License (“DPL”).

 

For many years Costa Rican Corporations have been known and used in the offshore world as vehicles for online gaming. Hence included in the Articles of Incorporation of such companies appears typically the activity of ”online gaming and entertainment”. Some clients can function just with the CR company, however most clients come to us and request the DPL as Banks, Merchant Account Providers and Ewallet providers require to sight such a licence before they will agree to provide accounts or payment processing or merchant account services for CR Companies.

 

Step 1 Company Formation

 

First step is you will need to Incorporate a Costa Rica (“CR”) Company for Gaming:

 

Type of entity: S.R.L. (Sociedad de Responsabilidad Limitada)

 

Main characteristics: authorized for gaming in its bylaws, limited liability, offshore tax exempt, low maintenance, operated by a single director

 

Includes:

 

ü  Articles of Incorporation

ü  Share Certificates

ü  Legal Books

ü  Corporate Certification

ü  Resident Agent*

ü  Registered Address*

ü  Official Translation to English

ü  Tax Registration

*Included in the first year*

 

Legal Fees: USD 2,300 (includes registry fees, VAT and Yearly Corporations Tax)

 

Estimated Duration: 2-4 days (we offer the fastest incorporation service available compared to the normal 2-4 weeks of other companies) 

 

After one year of operation, you will need to renew it by paying:

 

ü  Legal Fees, Renewal of Resident Agent, Registered Address, Legal Book Custody, Yearly Corporations Tax Payment Diligence and Final Beneficiary Declaration: USD 950.00

ü  Associated Expenses, Yearly Corporations Tax USD 150.00 paid with the incorporation and then every January.

 

Annual Renewal:

 

Re Gaming Businesses as advised there is no online gambling license in Costa Rica and that a company incorporated under the laws of Costa Rica can operate an online gaming business under a “data processing” license. The basic requirements to obtain such a license are:

• Office Lease Contract
• Health permit
• Workers insurance policy

 

A specific gaming license was issued as a tax in 2012, such license starts at US$40K per year and increases to US$60K and US$80K depending on the number of employees, This particular license was created for gaming companies that actually have employees in Costa Rica; thus far nobody has paid for such a license as it doesn’t provide any real benefit. Hence startups keep operating with just the CR Corporations and with the Data Processing License (DPL – see details below) which is especially valuable if you wish to be accepted by ewallet providers such as Skrill etc.

 

The following is the description that we give to our clients on a daily basis:

 

Step 2: Apply for a Data Processing License

 

Type of license: CR Business License

 

Process Includes:

 

ü  Lease of Small Office Space at a selected local government

ü  Zoning Permit at local government

ü  Employer Registration at Social Security Agency

ü  Work Risk Insurance at Insurance Agency

ü  Health Permit at Ministry of Health

ü  Business License at local government

 

Legal Fees: USD 9,750 (50% to begin, 50% with approval)

Estimated Duration: 3 months

 

After one year of operation, you will need to renew it by paying:

 

ü  Yearly Renewal: USD 4,750 (after one year of operation includes one year lease and business license yearly taxes and processing fees)

 

Ancillary Services

 

We can also assist with drafting and/or reviewing the website and service terms and conditions. For these kind of jobs we charge an hourly rate ($US300 per hour). Average cost is usually between $1,500 and $US2,000. And we can advise on what countries residents it would be illegal to market such a business to (again on an hourly rate basis)

 

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

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

 

 

Depending on your requirements, setting up a Mauritius Special Purpose Fund can either be done through an open-ended fund (CIS) or a closed ended fund (CEF), the main difference being the frequency at which the fund plans to redeem the investments.

 

On an indicative basis, we have displayed below OCI’s fee schedule for the setting up of an SPF through a CIS and our fact sheet on CIS and CEF.

 

Services that OCI Can supply or arrange (and costs thereof) in relation to a Special Purpose Fund in Mauritius are detailed below.

 

Services to the Fund	Services to the CIS Manager
KYC Review and Set-up of a GBC structured as a Special Purpose Fund.	Establishment of the CIS Manager
Registered Office Address	Registered Office Address
Company Secretarial Services	Company Secretarial Services
Directorship services	Directorship services
Preparation of Annual Financial Statements	Preparation of Annual Financial Statements
Monthly NAV calculation	Provision of Money Laundering Reporting Officer
Provision of Money Laundering Reporting Officer	Provision of Compliance Officer
Provision of Compliance Officer	Tax and Statutory Filings
Tax and Statutory Filings	FATCA/CRS
FATCA/CRS

 

 

Introduction

This letter specifies the services we are to deliver as your service provider for the subject of this engagement, the team we have assigned to the Engagement, how you will remunerate us and other terms of business governing our relationship.

 

We kindly request you to read this letter carefully and confirm your agreement with its terms by signing and returning to us the enclosed duplicate.

 

1. 1.     Mauritius GBC structured as a Special Purpose Fund

 

1. A.   Set-Up Fee:

Particulars			USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.		15,000
Opening of first bank account in Mauritius		2,700
Government Fees:
ROC Processing Fee		350
Annual Fee payable to FSC- GBC Licence		1,950
Annual Fee payable to FSC – Fund licence		3,000
FSC Processing Fee – GBC Licence		500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)		500
Total :		20,300
Legal Fees
The above excludes Legal Fees if required (in the range USD 10,000-15,000)

 

1. B.    Annual Administration Fees

 

Particulars	USD Annual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	700
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Government Fees
Preparation of Tax Return	1,350
Tax Residence Certificate  payable to MRA	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to the FSC – Fund Licence	3,000
Annual Fee payable to ROC	275
Accounting and Other Fees
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors Calculation and Sign-off of NAV	10,000
Professional fees for due diligence on investors	USD 100 per investor

 

 

 

 

1. 2.     Mauritius GBC – CIS Manager

 

 

1. Incorporation Fee:

Particulars			USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.		4,000
Opening of first bank account		1,350
Government Fees:
ROC Processing Fee		350
Annual Fee payable to FSC- GBC Licence		1,950
Annual Fee payable to FSC – Fund licence		3,000
FSC Processing Fee – GBC Licence		500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)		500
Total :		5,300
Optional
The above excludes Legal Fees if required

 

1. Annual Administration Fees

 

Particulars	USDAnnual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Preparation of Tax Return	1,350
Renewal of Tax Residence Certificate	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to ROC	350
Accounting & Investor Due Diligence Services
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors	USD 7,000

 

 

OTHER SERVICES	USD
Provision of Fully Serviced Office Space	1,200 monthly
Annual Fee : Provision of a nominee shareholder pp	2,000
Annual Fee : Provision of a nominee director pp	2,000
Notarization and Apostilation – Per set of document	330
Certificate of Good Standing	300
Certificate of Incumbency	200
Renewal of TRC	750
Bank Account opening outside of Mauritius	Price on Application
Power of Attorney	200/hr
Change of Director	200/hr

 

3.     Mauritius GBC structured as a Special Purpose Fund Set-Up Fee: Particulars USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.		15,000
Opening of first bank account in Mauritius		3,000
Government Fees:
ROC Processing Fee		350
Annual Fee payable to FSC- GBC Licence		1,950
Annual Fee payable to FSC – Fund licence		3,000
FSC Processing Fee – GBC Licence		500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)		500
Total :		20,300
Legal Fees
The above excludes Legal Fees if required (in the range USD 10,000-15,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Annual Administration Fees

 

Particulars	USD Annual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	,000
Government Fees
Preparation of Tax Return	1,000
Tax Residence Certificate  payable to MRA	500
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to the FSC – Fund Licence	3,000
Annual Fee payable to ROC	275
Accounting and Other Fees
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors Calculation and Sign-off of NAV	10,000
Professional fees for due diligence on investors	USD 135 per investor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. 4.     Mauritius GBC – CIS Manager

 

 

1. G.   Incorporation Fee:

Particulars			USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.		4,000
Opening of first bank account		1,350
Government Fees:
ROC Processing Fee		350
Annual Fee payable to FSC- GBC Licence		1,950
Annual Fee payable to FSC – Fund licence		3,000
FSC Processing Fee – GBC Licence		500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)		500
Total :		5,300
Optional
The above excludes Legal Fees if required

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. H.   Annual Administration Fees

 

Particulars	USDAnnual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Preparation of Tax Return	1,350
Renewal of Tax Residence Certificate	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to ROC	350
Accounting & Investor Due Diligence Services
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors	USD 7,000

 

 

OTHER SERVICES	USD
Provision of Fully Serviced Office Space	1,200 monthly
Annual Fee : Provision of a nominee shareholder pp	2000
Annual Fee : Provision of a nominee director pp	2000
Notarization and Apostilation – Per set of document	330
Certificate of Good Standing	260
Certificate of Incumbency	200
Renewal of TRC	750
Bank Account opening outside of Mauritius	Price on Application
Power of Attorney	200/hr
Change of Director	200/hr
Share Transfer	200/hr
Increase of Share Capital	200/hr
Standard charge in respect of disbursements	130
Amendment of memorandum of association	200/hr
Change of Company Name	400
Miscellaneous non-standard work in relation to company management to be carried out by a qualified member of staff as and when specifically requested by client (perusal, preparation, modification and issue of legal and commercial documents, correspondence, responses to third-party inquiries, and similar)	200/hr

 

   

Notes on our fees:

 

1. All fees will be subject annually to an indexation of 2%
2. All fees and hourly rates are exclusive of VAT and disbursements
3. FSC fee is payable in advance on incorporation on a pro-rata basis up to 30 June; For subsequent years, the annual licence fee is payable annually at latest by 30 June. In the event of late payment, a penalty will be chargeable by the FSC and thereafter the licence shall lapse and no other business can be transacted by the entity.
4. The ROC annual fee is payable by 10 January of each year.
5. The retainer covers the appointment of a Company Secretary; Any other administrative services will be charged on a time-spent basis.
6. Wherever retainer is mentioned in this proposal, it covers the minimum charge for the applicable service. Depending on the complexity and volume of transactions, additional charges may be claimed on an agreed time-spent basis.
7. Any other administrative work or professional services not specified above shall be charged on an agreed time-spent basis.
8. Fee schedules do not include external Auditors fees which vary depending on choice of auditor.
9. Fee schedules do not include legal costs (when required)
10. Local Director Fees should be added to fees should Directors Services be retained.

Customer Due Diligence Checklist

List A – Documents required for an individual

 

1. A certified true copy of the individual’s current valid passport, driving licence or national identity card. The document must be pre-signed and should bear a (clear) photograph of the person.
2. A recent original or certified true copy of the individual’s utility bill (dated not less than three months), bank or credit card statement or an original bank reference confirming his/her current  residential address. Note that “P.O. Box” addresses are not accepted.
3. An original bank reference from a recognised banking institution bank which has known the person for at least the last two years, confirming that the bank account of the individual is currently in good standing.
4. Individual Questionnaire including declaration of source of funds (template to be provided by OCI upon signature of the fee proposal).
5. FSC Personal Questionnaire
6. Evidence of source of funds.
7. Detailed CV.
8. Signed FATCA/CRS Declaration form.

 

Enhanced Due Diligence measures

 

1. Signed declaration of source wealth.

2. Evidence of the source of wealth (i.e.; bank statements for the last 6 months).

 

List B- Documents required for a Company

 

1. Certified true copy of the Certificate Incorporation or Registration and certified true copy of the Company’s licence (where the latter is a regulated entity).
2. Original Certificate of Good Standing.
3. Certified true copy of the constitution or Memorandum and Article of Association of the Company.
4. Details of the registered office and place of business.
5. Copy of latest audited accounts or original signed Corporate Profile (template to be provided by OCI upon signature of the fee proposal).
6. Certified true copy of the register of directors
7. A certified true copy of at least two directors’ current valid passport, driving licence or national identity card. The document must be pre-signed and should bear a (clear) photograph of the person.

A recent original or certified true copy of the two directors’ utility bill (dated not less than three months), bank or credit card statement or original bank reference confirming his/her current residential address. Note that “P.O. Box” addresses are not accepted.

1. Certified true copy of the register of shareholders.
2. Complete set of due diligence documents (as per List A/B/C/D/E/F) on controlling shareholders of the Company.
3. Original or certified true copy of due diligence documents on the senior managing official of the Company.
4. Certified board resolution confirming the person authorized to act on behalf of the Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
5. Signed declaration source of funds (template to be provided by Redbird upon signature of the fee proposal) and evidence of source of funds.
6. Signed FATCA/CRS Declaration form.

Enhanced Due Diligence measures

 

1. Signed declaration of the source of fund and source of wealth of the Ultimate beneficial owner (“UBO”) together with the relevant evidences.
2. Bank Reference Letter of the UBO.

 

* The senior managing official will need to be identified by OCI in the event that the natural person who ultimately has controlling ownership interest in the Company cannot be identified.

 

List C- Documents required for a Trust

 

1. Certified true copy of the extract of the trust deed.
2. Certificate of registration, where applicable.
3. Details of registered office and place of business of the trustee.
4. Complete set of due diligence documents (as per List A/B/C/D/E/F) on principals of the trust (Trustees, Beneficiaries, Settlors, Protectors, Enforcers).
5. Original or certified true copy of due diligence documents on the senior managing official of the Trust.
6. Signed declaration of source of funds for Settlors/Contributor (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
7. Signed FATCA/CRS Declaration form.

 

List D- Documents required for a Partnership

 

1. Certified true copy of the partnership deed and certificate of registration (if registered).
2. Copy of the latest report and accounts.
3. Complete set of due diligence documents (as per List A/B/C/D/E/F) on the General Partners and the Limited Partners.
4. Original Certificate of Authority (signed by the General Partners) confirming the person authorized to act on behalf of the Partnership as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
5. Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
6. Signed FATCA/CRS Declaration form.

 

 

List E- Documents required for a Société

 

1. Certified true copy of acte de société including profile of the Société.
2. Original Certificate of Good Standing.
3. Complete set of due diligence documents (as per List A/B/C/D/E/F) on the Principals, Administrators Gérants f the Société.
4. Original or certified true copy of due diligence documents on the senior managing official of the Société*
5. Original Certificate of Authority (signed by the Administrators or Gérants) confirming the person authorized to act on behalf of the Société as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
6. Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
7. Signed FATCA/CRS Declaration form.

 

Enhanced Due Diligence measures

 

1. Signed declaration of the source of fund and source of wealth of the UBO together with the relevant evidences.
2. Bank Reference Letter of the UBO.

 

List F- Documents required for a Foundation

 

1. Certified true copy of the Foundation Charter and certified true copy of the Certificate of Registration (if registered).
2. Copy of the latest report and accounts of the Foundation.
3. Complete set of due diligence documents (as per List A/B/C/D/E/F) on the Founder, members of the Council and beneficiaries of the Foundation.
4. Original or certified true copy of due diligence documents on the senior managing official of the Foundation
5. Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
6. Signed FATCA/CRS Declaration form.

 

Enhanced Due Diligence measures

 

1. Signed declaration of the source of fund and source of wealth of the UBO together with the relevant evidences.
2. Bank Reference Letter of the UBO.

 

REDUCED OR SIMPLIFIED CDD

 

Regulated financial services business based in Mauritius or in an equivalent jurisdiction (i.e. subject to the supervision of a public authority)

 

1. Proof of existence.

2. Regulated status.

3. Signed FATCA/CRS Declaration form.

 

Public companies listed on Recognised Stock / Investment Exchanges.

 

1. Proof of existence.

2. Proof of listing status.

3. Copy of latest annual report and account.

4. Original Certificate of Authority (signed by the directors) confirming the person authorized to act on behalf of the Public Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.

5. Signed FATCA/CRS Decdaration form.

 

Government administrations or enterprises and statutory body

 

1. Certified copy of the Charter or Constitutive Document or Enactment which established the body.
2. Original Certificate of Authority (signed by the directors) confirming the person authorized to act on behalf of the Public Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.

 

Note: Enhanced due diligence measures may be carried out by OCI on politically exposed persons (PEPS), non-face-to face business relationships, NCCT and non-equivalent jurisdictions, where adverse information is obtained, etc. In these circumstances, OCI reserves the right to request further information and documents, irrespective of percentage shareholding.

Note: Certification can be done either by a lawyer, notary, banker, or an accountant holding a recognised professional qualification; a serving police or customs officer; a member of the judiciary; a senior civil servant; an employee of an embassy or consulate of the country of issue of identity documentation.

 

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

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

 

 

Two weeks ago we looked at the various options for the set-up of Investment Funds in Mauritius. Today we drill down to take a close look at the SPF ie Mauritius’s version of an Incubator Fund (ie a Start Up Fund aimed primarily at first time Fund Promoters and or Successful Traders looking to spread their wings by taking on/trading investor funds for the first time)

 

1. What is a Special Purpose Fund (“SPF”)?

 

New measures announced in the 2019/2020 Mauritius National Budget included the modernising of the existing Special Purpose Fund regime to provide further flexibility and ease access to new markets.

 

In line with this measure and its object to study new avenues for the development of the Financial Services Sector, the Mauritius Financial Services Commission (“FSC”) issued the Financial Services (Special Purpose Fund) Rules 2021 to govern “Special Purpose Funds” (“SPFs”), effective as from 6 March 2021. These new rules have replaced the Financial Services (Special Purpose Fund) Rules 2013.

 

An SPF is a Collective Investment Scheme (“CIS”) or a Closed-End Fund (“CEF”) which is authorised by the FSC as a Special Purpose Fund.

 

 

2. What are the requirements for a CIS/CEF to be authorised as an SPF?

 

The FSC may authorise a CIS or a CEF as an SPF if the fund will:

a. offer its shares, solely by way of private placements, to investors having competency, significant experience and knowledge of fund investment;

 

b. have a maximum of 50 investors and a minimum subscription of USD 100,000 per investor;

 

c. at all times, firstly be managed by a CIS manager; and secondly be administered by a CIS administrator;

 

d. comply with any such other conditions as may be imposed by the Commission.

 

 

3. Can an SPF invest in Mauritius?

 

Yes, investments can be made within as well as outside of Mauritius while benefitting from tax exemption provided in the Income Tax Act.

 

 

4. Can a Global Business Company (“GBC”) be authorised as an SPF?

 

A CIS/CEF holding a Global Business Licence can seek authorisation as an SPF if the Fund/Company is meeting the relevant requirements.

 

 

5. What are the on-going obligations of an SPF?

 

An SPF must comply with the provisions of the Financial Services Act, the Securities Act 2005 and the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 in so far as the provisions relate to a CIS and CEF.

 

In addition, an SPF must ensure that it abides by all provisions of the Financial Services (Special Purpose Funds) Rules 2021.

 

Furthermore, the submission of the Audited Financial Statements of an SPF must be accompanied by certificates from the SPF’s directors and auditors to confirm that the SPF is in compliance with the abovementioned rules and substance requirements referred to in point 8 below.

 

 

6. Can an SPF present its financial statements in a currency other than the Mauritius currency?

 

Yes. This is permissible subject to approval being granted by the Registrar of Companies in accordance with the provisions of the Companies Act 2001.

 

 

7. What happens if the CIS/CEF no longer fulfils the requirements/conditions under which it was authorised as an SPF?

 

Without prejudice to its powers under the relevant Acts, where a CIS/CEF, which was authorised as an SPF no longer, fulfils the requirements/conditions under which it is authorised, the FSC may withdraw its authorisation as an SPF.

 

 

8. What are the substance requirements of an SPF?

 

An SPF, its CIS manager and its CIS administrator shall carry out their relevant core income generating activities in, or from Mauritius, and shall:

a. employ directly or indirectly an adequate number of suitably qualified persons to conduct such core income generating activities; and

 

b. incur a minimum expenditure proportionate to the level of such activities.

 

 

9. Is there any new/additional application form to be filled-in by an SPF?

 

There is no new/additional application form to be filled-in by an SPF. An SPF will have to fill-in only the current application form and pay the applicable processing fee so as to be authorised as a CIS/CEF. Once authorised, an SPF will have to pay the annual fee applicable to the CIS/CEF authorisation and an additional annual fee of MUR 200,000 (USD 5,000 for a holder of a Global Business Licence).

 

 

10. Does an SPF benefit from tax incentives?

 

An SPF, as well as a certain category of investors in the SPF, will benefit from tax exemptions as provided in the Income Tax Act.

 

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

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

Are you a practising GP/Family Doctor?

 

Are you thinking post Covid of ways to move online and or to reduce your overall tax burden?

 

If so, once can easily understand where you are coming from/what you are thinking…. If I can deliver all or most of my services online why live/pay tax in a high tax jurisdiction?

 

There are 2 aspects to this. The first is the issue of physical residence. The second is the issue of tax residence.

 

First you need to identify places where you could reside in that are nil tax or tax friendly. Then you’d need to check out their residency programs and whether you’d qualify for residency rights.

 

There are a number of jurisdictions where one can live exotically and free from tax.  Many of the nil tax havens you’ve probably heard of or read about in novels… You may even have holidayed in some of them! They include:
• The Cayman Islands
• St Kitts and Nevis
• Dubai
• Monaco
• The Bahamas
• Bermuda
• Vanuatu
• The Turks & Caicos Islands
• Anguilla

 

Countries with no Income Tax

 

The below mentioned countries generally speaking do not levy a tax on income regardless of where the income is/was sourced:

• UAE
• Qatar
• Oman
• Kuwait
• Cayman Islands
• Bahrain
• Bermuda
• The Bahamas
• Saudi Arabia
• Brunei Darussalam

 

Countries That Don’t Tax Offshore Income

 

Another option is to live/base yourself in a country which has a territorial tax system (ia country which only taxes you on locally sourced income) and run your business income through a (tax free) Offshore company. Hong Kong is an example of such a place. Singapore is another. Panama would also be in the discussion as would the UAE be. Other examples include:

Costa Rica

Gibraltar

Hong Kong

Malaysia

Nicaragua

Panama

Paraguay

San Marino

Singapore

Seychelles

 

In such a scenario all your business sales in the first instance would run through a tax-free Offshore Company. Thereafter you should only (maybe) have to report/pay tax locally on any salary paid to you by the Offshore Company.

 

To be able to live in such a place you’d need to obtain a residency permit or citizenship. We can assist you to obtain residency rights in Panama and the UAE. We can also assist you to apply for citizenship in Nevis.

 

Second Issue

 

The next thing you need to would be to take steps to ensure that you effectively exit the local tax system. From a taxing rights perspective in terms of which country has the rough to tax you the question isn’t where I am residing (or where do I have a residency permit for) but where am I resident for tax purposes.

 

We are often asked by individuals where (ie in what country/s) am I liable to pay tax?

 

The starting point it this: If you are regarded at law to be tax resident (ie resident for tax purposes) in a particular country you are liable to pay tax there on your (usually, worldwide) income.

 

The concept of tax residency however (ie what it takes to be classified as non-tax resident) varies from country to country. Depending on where you originate from you may pass the non-tax resident test of one country but fail the same test had you originated from the country next door.

 

Let me explain….

 

The most well-known tax residency test is in fact the oldest ie the days spent at home test. Historically, in most countries (USA excepted – see below), you were considered non-tax resident if you spent less than half the year inside your “home” or mother country.

 

Over the years, and particularly with the proliferation of “fly in-fly out” jobs (seen most prevalently in the oil/mining industries) a number of countries (in particular the more developed countries) have brought into play a multifaceted tax residency test. In other words notwithstanding that you might spend less than half the year on the ground in your mother country if you have a “substantial connection” with your mother country you may still be classified as tax resident of/in that country.

 

So what constitutes “substantial connection”?

 

In considering whether you still have a “substantial connection” to your mother country a number of factors are looked at including:

 

• Do you retain a residency/home in your mother country?
• Do you own any personalty in your mother country (eg a car, furniture/home contents/boat/leisure toys etc etc)
• Do you have a bank account in your mother country?
• Do you have investments or business interests in your mother country?
• Do you retain a professional or trade license (eg Lawyer/Plumber/Doctor/Teacher/Nurse/Engineer/Architect/Builder/Dentist etc) license in your mother country?
• Do you keep current a golf/tennis/leisure club membership in your home country?
• Do you regularly renew a driver’s license in your home country?
• Do you have children at school in your home country?
• Do you have a spouse/partner living full time in your home country?
• Etc etc etc

 

Chances are, as a minimum, what you will need to do in order to become non-tax resident in your mother country is:

 

(a)   Sell your home/residence in your mother country (or cancel any lease you might have over residential premises there)

(b)   Sell any business you own on the ground in the mother country

(c)    Sell all personalty owned/held in your mother country

(d)   Hand in (and not renew) any professional/trade license you may have in your mother country

(e)   Close down any bank/investment accounts you might have in your mother country

(f)     Write to your local IRS/Tax Office and advise that you have departed the country permanently and filed your last tax return.

 

For USA citizens however a unique situation applies. Generally speaking, if you are a US citizen you are required to declare worldwide income in and pay tax in America regardless of (a) whether you spend less than half the year there and (b) whether you have no substantial connection with the USA. (For Americans the only way to be classified as “non tax-resident” of the US is to hand in your passport and denounce your citizenship).

 

All that said we are not tax advisers or financial advisers. Before committing to move abroad we’d advise you to seek advice from a local Tax Lawyer and a local tax Accountant (ie both in the country where you are departing from and the country where you are going 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

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

Over the course of the past 20 years+ the reputation of the central Indian Ocean Islands Financial Centre of Mauritius has indeed blossomed.

 

Led by an innovative Financial Services authority and boasting political stability and low taxes – alongside a powerhouse and stable economy – Mauritius has become a popular jurisdiction for fund managers, institutional investors, entrepreneurs and private investors looking to set up Private Funds, Blockchain enterprises or Fiduciary structures. In recent years – thanks to vibrant new laws, quality service providers, value for money pricing and solid banking infrastructure – Mauritius has increasingly become a/the jurisdiction of choice for Fund Managers and Traders looking to set up traditional funds, start-up funds and alternative investment collectives.

 

If you are a Fund Manager or successful Trader looking to kick off a Hedge Fund or Private Fund structure this article will provide you with an overview of the various Fund structures on offer in Mauritius.

 

Key advantages of Mauritius

• Low tax – A Partial Exemption Regime is applicable to domestic and global business companies ie GBCs – 80% of foreign-source income from collective investment schemes (CIS), closed-end funds (CEFs), CIS manager or administrator will be exempted from income tax. And a tax rate of just 3%.
• No capital gains tax and no withholding tax on dividends and interest
• No exchange controls
• Innovative well drafted legislation and a British Legal/Court system
• Advantageous time zone for global markets (GMT +4)
• Low-cost jurisdiction for services
• Minimal red tape/Business friendly set up procedures
• Wide Range of Fund structuring options (Global CIS, Professional CIS, Specialised CIS and Expert Fund)

 

How to set up a Collective Investment scheme in Mauritius

 

An Investment Fund if incorporated/established in Mauritius is regulated as a “Collective Investment Scheme” – CIS.

 

A Collective Investment Scheme’s aim is to pool capital from accredited investors or institutional investors and to infuse such funding in a variety of assets, often with complex portfolio-construction and risk management techniques thus diversifying its investment risk whilst at the same time ensuring an absolute return objective.

 

Essentially, such a CIS is structured with an elastic capital and provides its subscribers the freedom to exit at any time based on the NAV (Net Asset Value).

 

Sub-categories of CIS:

• Professional CIS: A Professional CIS is a CIS which offers it shares solely to sophisticated investors or as private placements
• Specialised CIS: A Specialised CIS is one that invests in real estate, derivatives, commodities or any other product authorized by the Mauritius Financial Services Commission (FSC)
• Expert Fund: An Expert Fund is a Fund which is only available to expert investors. As per the Securities Act 2005 (‘SA 2005’), an expert investor means: a. an investor who makes an initial investment, for his own account, of no less than USD 100,000; or b. a sophisticated investor as defined in the SA 2005 or any similarly defined investor in any other securities legislation
• Public CIS: A CIS other than sub-categories (1), (2), (3) above, and which is fully regulated and meant mainly to be offered to the public (Such a CIS may be referred to as a “Public CIS”).

 

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

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

Are you an Online Trader (eg Trading cryptocurrency or Trading forex or Trading shares or Trading commodities/futures/options or etc)?

 

Have you developed a successful Trading strategy?

 

(Having experienced some success) are you now being asked by family and friends to trade their funds?

 

If the answer to all these questions (in particular, the latter question) is yes then you’re probably considering (or thinking about the possibility of) setting up some kind of Private Investment Fund.

 

Most “Onshore” jurisdictions make it extremely difficult for a career Trader to set up a Hedge Fund. You may be interested to know there are several ways to cost effectively set up a Fund type Company “Offshore” (including options that do not require any form of special license).

 

Here’s how this might be achieved:

 

• If your main aim is to obtain a Special License that will enable you to trade other person’s funds then a Broker’s License or a Securities Dealer’s license might be the way forward. For a summary of what a  Brokerage business might look like check out this file/link FX Brokerage Structures: https://www.dropbox.com/s/hrd783n205pdzwf/FX%20Brokerage%20Structures.pdf?dl=0

Popular Licensing Options here include:

-        A Seychelles Securities Dealers License – Check this file/link for an overview: https://www.dropbox.com/s/6pstxtedigpb0ep/Seychelles%20Securities%20Dealers%20License%20OVERVIEW.docx?dl=0

-        A Belize Broker’s License – Check this file/link for an overview: https://www.dropbox.com/s/vrofr9vhhgcwkd3/Belize%20Broker%27s%20License%20FACT%20SHEET.docx?dl=0

-        A BVI Brokers License – Check this file/link for an overview: https://www.dropbox.com/s/kkapiwyse8wyhwn/BVI%20Brokers%20License%20FACT%20SHEET.docx?dl=0

-        A Vanuatu Financial License – Check this file/link for an overview: https://www.dropbox.com/s/h15jmyga764vo7x/Vanuatu%20-%20Applications%20for%20Financial%20Licenses%20-%20Requirements.pdf?dl=0

 

• Alternatively you could set up a Private (non-licensed) Closed End Fund. Check this link/file for details of how this might be achieved:   https://www.dropbox.com/s/p92e6iveqgql4vf/Structuring%20Options%20for%20a%20Non%20Licensed%20Closed%20End%20Fund.doc?dl=0 ; or

 

• Another possibility would be to apply for a Mutual Fund License for the proposed business. The quickest, easiest and cheapest place to do this would be Seychelles. Check this link/file for details: https://www.dropbox.com/s/e3s6v1tp1sbfr2d/How%20To%20Set%20Up%20a%20Licensed%20Fund%20in%20Seychelles.pdf?dl=0

 

• Another possibility would be to utilise an IBC (International Business Company) which would be contracted to trade an investor’s money in the broker’s account under Power of Attorney. Check this link/file for details on how that can work: https://www.dropbox.com/s/8v0qmsta7f90evk/How%20To%20Trade%203rd%20Party%20Funds%20Using%20a%20PoA.docx?dl=0

 

• Semi licensed/regulated options include the BVI Incubator Fund & Mauritius Special Purpose Fund; Check these files/links for details:

https://www.dropbox.com/s/quu1kjc7emnpbys/How%20To%20set%20up%20a%20BVI%20Incubator%20fund.docx?dl=0

 

https://www.dropbox.com/s/89cm6g0mkje1tyo/Mauritius%20Special%20Purpose%20Fund%20FAQ.pdf?dl=0

 

• The simplest & most cost effective way to kick off a Startup Hedge Fund would be to set up a Panama PF-20 Fund. Check this file/link for details: https://www.dropbox.com/s/ypvfyb7bq1nmm28/Panama%20Private%20Funds.pdf?dl=0

 

Cost to set up a Licensed Entity range from circa $US15,000 (eg a for a Broker’s License) up to north of $25,000 (eg to establish a Licensed Mutual Fund).

 

To set up a non-licensed Closed End Fund can be done for as little as $3-5,000 (+ Bank Account set up). A BVI Incubator fund to set up costs around 15-18k. The most cost-effective Open Ended Fund Option would be a Panama PF 20 Fund which can be set up for a little as $4,000 (+ nominee Directors if required).

 

Non License Jurisdiction Suggestions

 

Given they are low regulation, boast peerless privacy laws and are cost effective places to maintain/setup such a Company (ie assuming you’d prefer to go down the non licensing road) commonly we would suggest Seychelles, Belize or Nevis as potential jurisdictions in/at which to incorporate “Offshore” such an Enterprise.

 

See here for details:

 

• Nevis – For detailed information click on this link: http://offshoreincorporate.com/st-kitts-and-nevis-offshore-companies/
• Belize – For detailed information click on this link: http://offshoreincorporate.com/belize-offshore-companies/
• Seychelles – For detailed information click on this link: http://offshoreincorporate.com/seychelles-offshore-companies/

 

Cost there to incorporate a Company would be:

 

• For a Nevis Company, including incorporation, registered/agent office service and one year’s basic admin: $1,475 . 2^nd and subsequent years $1,165
• For a Belize Company, including incorporation, registered/agent office service and one year’s basic admin: $1,000. 2^nd and subsequent years $690 (or $1,090 if nominees are required)
• For a Seychelles Company, including incorporation, registered/agent office service and one year’s basic admin: $1,075  2^nd and subsequent years $765

 

Another popular place to incorporate such a business is Hong Kong. Check this link which explains why it’s so popular:  https://www.dropbox.com/s/hfzo6gdlk5v0xci/Why%20Incorporate%20in%20Hong%20Kong.docx?dl=0

 

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

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

 

 

 

 

If you want to or need to add a new shareholder to your Offshore Company the process is simple and streamlined.

 

To add an additional shareholder/s for/to an IBC/Offshore Company:

 

(a)   You will need to tell us the name and address of the new shareholder and how many shares, and of what value and what kind of shares are to be issued to that person/entity (eg please issue 1,000 ordinary shares of one USD each to Mr John Smith of 1 Jones Street Jonesville, NY, USA)

 

(b)   You will need to provide us with KYC (ie Certified Proof of ID and residential address) per the requirements for/as regards the proposed new shareholder

 

(c)   We would need the Director/Chairman of the Company to sign s a Change of Shareholder minute/resolution.

 

(d)   A new share certificate will need to be issued

 

(e)    The share register will need to be amended

 

(f)    A share subscription form will need to be drafted and signed by the new shareholder.

 

(g)   We will also need the requisite fee settled in advance. See details below.

 

Procedures Once Documents Have Been Received

 

Once OCI’s fees have been settled and we have received the original (or certified copy) of the signed resolution and the original share subscription form duly signed, within 72 hours we will:

(i) email you (and prepare for couriering to you) the new share certificate/s; and

(ii) upgrade the Company’s Share register to note the new shareholder’s name; and

(iii) email you a Lawyer certified true copy of the upgraded Share register plus a new Certificate of Incumbency (if required); &

(iv) (the same day) package and take the above docs to DHL (or to the post office for airmailing as you may prefer) for dispatch by courier to you with the next available flight to your region.

 

Cost of attending to Change of Shareholder inclusive of the above is from $375 per shareholder inclusive of provision of Certificate of Incumbency if required (cost of courier if required is extra).

 

NOTE: If the new shareholder is a Company we’ll also need proof of the Company’s Incorporation + confirmation that the Company is in Good standing (eg a Certificate of Good standing issued by the Company Registry in the country wherein the Company is incorporated) + KYC per the requirements for the shareholders & directors (& beneficial owners) of the new shareholder Company.

 

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

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

 

 

In many jurisdictions if you no longer require a Company all you need to do in order to kill it off is stop paying the annual renewal fees and eventually it will be struck off the Register.

 

Closing down a company in Hong Kong however involves a certain number of formal steps and the overall process can take some months to complete. Depending on how the company is being closed, this process can also be expensive; hence the decision whether to cosle down and how to close down should be made after careful thought and consideration.

 

This article serves as a guide on the options available to close down a company in Hong Kong.

 

The most common reasons for closing a company are:

• Failure of the company to carry on business
• Company is no longer profitable
• Inability to pay its debts
• Falling out between shareholders
• Non-compliance with statutory requirements, including mis-management of company affairs
• Corporate restructuring of the group to which the company belongs

 

The process of closing down a company is referred to as “liquidation” in common terms. Companies can be liquidated either by “De-registration” or “Winding Up“. Although both the procedures will result in the dissolution of a company, the processes they entail are significantly different.

 

Deregistration is a relatively simple, inexpensive and quick procedure for dissolving defunct private companies who meet certain specific requirements. Winding up is the process of appointing a liquidator who will settle the accounts, pay off the company’s debts (if any), liquidate the assets of a company and distribute the surplus assets (if any) to members, ensuring that the company is completely dissolved.

 

Detailed below are the procedures involved in deregistration and winding up of a Hong Kong company.

 

De-registration of a HK Company

 

Requirements

The company must be a solvent private company incorporated under the Hong Kong Companies Ordinance, other than those companies specified in section 291AA(16) or registered under Part XI of the Companies Ordinance, and must meet the following requirements:

• All the members of the company agree to the deregistration
• The company has never commenced business or operation, or has ceased to carry on business or ceased operation for more than 3 months immediately before the application
• The company has no outstanding liabilities
• It has obtained a written notice of no objection from the Commissioner of Inland Revenue

 

Procedure

An applicant must submit to the Companies Registry:

• A duly completed form NDR1
• A Notice of No Objection from the Commissioner of Inland Revenue (original copy)
• Any further information/documents that the Companies Registry may request in connection with the application
• If the Companies Registry finds all documentation to be in order it will proceed to issue a Letter of Approval for the deregistration application within five working days.
• The Registrar will then publish a notice of the proposed deregistration in the Gazette. If the Registrar receives no objection, within 3 months of publishing the notice, it will proceed with the deregistration process by publishing a final notice in the Gazette declaring the company to be deregistered and the applicant or nominated person will be duly notified of the same.
• Upon the publication of the final notice the company will be dissolved.
• The whole process will be completed within 5 months.
• Upon dissolution of the company, all the company s property (including credit balances in the company s bank account) shall be deemed to be bona vacantia and shall vest in the Government of the Hong Kong Special Administrative Region. You are strongly advised to seek legal or professional advice to ensure the proper disposal of the company s property before making an application for deregistration of the company.
• You must notify the Business Registration Office of the Inland Revenue Department, in writing within 1 month of the date of cessation of business, to apply for a cancellation of Business Registration.
• Until the company is deregistered, the company is still required to adhere to compliances, including the filing of annual returns and notification of situation of registered office.

 

Winding up a HK Company

 

There are two paths to winding up a company in Hong Kong – voluntary winding up or compulsory winding up.

 

Voluntary winding up

 

Voluntary winding up of a Hong Kong company can be initiated either by members (shareholders) or creditors.

 

The voluntary winding up of a company begins by a special resolution being passed for the company to be voluntarily wound up and publishing this information in the Gazette within 14 days. The winding up is said to begin on the date on which the resolution is passed.

 

Members’ Voluntary Winding Up

 

A members’ voluntary winding up of a company can be carried out if the directors believe that the company will be able to pay its debts, in full, within 12 months after the commencement of the winding up.

 

To initiate such a winding up, a directors’ meeting must first be convened where a majority of the directors must make a statutory Declaration of Solvency. The Declaration of Solvency must also contain the statement of assets and liabilities, based on the most recent financial statements of the company. The Declaration must be delivered to the Companies Registry within seven days after the date on which it was made.

 

The directors should proceed to appoint a provisional liquidator, who is generally a solicitor or professional accountant and must give his consent to act as the provisional liquidator in writing. The notice of the appointment of the provisional liquidator and notice of the commencement of the winding up by virtue of delivery of the Declaration to the Companies Registry must be published in the Gazette within 14 days of the appointment of the provisional liquidator. The provisional liquidator must also notify the Companies Registry of his appointment within 14 days after the date of his appointment.

 

Within 28 days of delivering the Declaration of Solvency to the Companies Registry, the directors must convene an Extraordinary General Meeting (EGM). The purpose of the EGM is for passing a Special Resolution to wind up the company, and an Ordinary Resolution appointing the liquidators (and approving their remuneration). The company should, within 14 days of passing the special resolution for voluntary winding up, give notice of the resolution by advertising in the Gazette. The voluntary winding up is deemed to have commenced with the passing of the special resolution at the EGM. The liquidator, or provisional liquidator will proceed to wind up the affairs of the company and file the necessary notifications required under the Companies Ordinance.

 

When the liquidation process takes more than a year, the liquidator must hold a general meeting every year to keep the members informed of the winding up process. Once the company’s affairs are fully wound up, the liquidator must prepare a final account of the winding up, showing how the property of the company has been disposed of and how the winding up has been conducted. The account must be presented at a final general meeting. The meeting has to be called by advertising in the Gazette, one month prior to the scheduled date. A copy of the account, along with a return stating that the meeting was held, must be sent to the Companies Registry within one week after the meeting. The company will be dissolved three months after the Registry receives the documents or at a later date as set by a court order in Hong Kong.

 

Creditors’ Voluntary Winding Up

 

If the company cannot make a Declaration of Solvency, a creditors’ voluntary winding up will have to be executed. Soon after the meeting at which the resolution for a voluntary winding up is made, a creditors’ meeting should be convened. The company must advertise notice of this meeting in the Gazette and two Hong Kong newspapers (one English language paper and one Chinese). The directors must present a complete picture of the company’s affairs, along with a list of creditors of the company and the estimated amount of their claims. The creditors will then proceed to appoint a liquidator and may also appoint a committee of inspection whose role is to act in concert with the liquidator. The liquidation process is similar to that of a members’ voluntary winding up, as mentioned above.

 

Effects of Voluntary Winding Up

 

• With effect from the commencement of the winding up, the company must cease to carry on its business except insofar as it is required for the beneficial winding up.
• The directors’ powers will cease, except under circumstances where the liquidator has resolved that the directors should continue to have such powers.
• Any transfer of shares is void unless made to, or sanctioned by the liquidator, and the status of the members cannot be altered.

 

Compulsory Winding Up

 

The most common circumstances under which a Hong Kong Court can order a compulsory winding up of a company in Hong Kong are:

 

• The company is unable to pay a debt of HKD 10,000 or above
• The court is of the opinion that it is just and equitable that the company should be wound up
• The company has by special resolution resolved that the company be wound up by the court

 

A creditor, a shareholder or the company itself can file a winding-up petition against the company, by appointing a solicitor. The petition must be prepared in accordance with the Companies Winding Up Rules. The petition must be advertised in the Gazette at least seven clear days before the hearing date and once at least in two Hong Kong daily newspapers (one Chinese and one English). A sealed copy of the petition must be delivered to the registered office or principal place of business of the company and an affidavit verifying the petition must be filed.

 

Once a winding-up petition is filed in the court, the winding-up of the company shall be deemed to commence and a court hearing will take place. At the hearing, the court will make a winding up order (if it deems fit) and the Official Receiver becomes the provisional liquidator (unless a provisional liquidator has already been appointed prior to the making of the winding-up order), until a liquidator is appointed. The provisional liquidator will take over control of the company including its assets and accounting records and will proceed to investigate the company’s affairs.

 

If the property of the company is not likely to exceed in value HKD 200,000, the provisional liquidator is appointed as the liquidator. If the property of the company is likely to exceed in value HKD 200,000, the provisional liquidator will hold meetings of creditors and contributories for the purpose of appointing a liquidator and a committee of inspection. The liquidator continues to investigate the company’s affairs, realises and disposes off the company’s assets and pays dividend to the creditors (if possible). Once the company’s affairs are completely wound up, it will be dissolved.

 

Effects of Compulsory Winding Up

 

• Once a winding-up petition is filed in the court, the winding-up of the company shall be deemed to commence.
• Once the winding up commences any disposition of the property of the company, including any transfer of shares or alteration in the status of the shareholders of the company, unless the court orders otherwise, is void.
• The company or any creditor or shareholder may apply to the court to stay or restrain any pending action or proceeding against the company.
• If the petitioner believes that the assets of the company are in jeopardy, he may apply to the court, after the filing of the winding-up petition, for the appointment of a provisional liquidator to safeguard the assets of the company prior to the hearing of the petition.

 

Notification Requirements

 

A company must notify the following bodies as part of closing down its business:

• Companies Registry
• Inland Revenue Department
• Relevant Licensing Authorities

 

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info@offshorecompaniesinternational.com

 

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ociceo@hushmail.com

 

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.