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US Residents – How To Open an Offshore Cryptocurrency Exchange Account

Are you a Cryptocurrency Trader or Cryptocurrency Investor based in America?

If so, you’d be aware that your residential situation limits your access to Cryptocurrency Exchanges.

No doubt you’d like to be able to open a Cryptocurrency Exchange Account with your preferred supplier. The dilemma there is that many (if not most) of the most sought after Cryptocurrency Exchanges won’t accept Americans as clients.

If you want access to the widest range of Cryptocurrency Exchanges what you will need to do is set up an Offshore Company.

Even if you were to do that, some Exchanges won’t accept a (non American)n Offshore Company as a client if the Director or Shareholder of the Company is an American. So for those Exchanges you’d need to include a Nominee Shareholder and a Nominee Director as part of your Company/legal structure. (Obviously these Nominees would be based outside of the US and ideally in a zero tax locale – most Offshore Service Providers can provide such a service).

In the above scenario however (ie an Offshore Company with a Nominee Director/Nominee Shareholder) you would still be classified as the “beneficial owner” of the Company.

Some Exchanges won’t accept a (non American)n Offshore Company as a client if the Director or Shareholder or beneficial owner of the Company is an American. To get access to those Exchanges (ie to get access to the widest range of Exchanges) what you would need to do is set up a Private Foundation to act as shareholder of the Company…. Because a Foundation is considered at law to be both the legal owner and the beneficial owner of any asset it holds.

A Foundation is a legal entity very similar to a Trust in that it’s set up by a Founder (like a Settlor in the case of a Trust) and managed day to day by a Councillor (like a Trustee in the case of a Trust) who manages the Foundation property for the benefit of the beneficiaries of the Foundation (ie persons who are designed ultimately to benefit financially from the set up of the Foundation). A key advantage of a Foundation is that it’s a separate legal entity in its own right (ie the Foundation is presumed at law to be the legal AND beneficial owner of any asset it holds – unlike a Trustee who holds property for someone else ie the beneficiaries) and generally speaking the beneficiaries of the Trust are considered at law to have a beneficial interest in Trust property/income streams).

It’s not hard to set up an Private Foundation and or an Offshore Company; You just need to complete a basic order form + provide proof of your ID and residential address. The process can take as little as 48 hours and can cost as little as $US1,000!

OCI can also provide guidance in terms of where to domicile (& how to structure) your Offshore Company as/if needed.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.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.

Where To Incorporate a Cryptocurrency Focussed Enterprise

Are you looking to launch a business that will offer/sell Crypto Tokens to the General public? Or are you looking to launch an ICO? Or are you looking to launch a Cryptocurrency Exchange?

Are you wanting to avoid to the hassle of, and the expense involved in, having to apply for some form of Special License?

If ease of set up, and/or tax minimisation and/or ownership privacy is important to you, you might want to incorporate your Company in a Low Regulation nil tax Privacy Haven (ie somewhere which typically does NOT have a public register of directors, shareholders or owners). Most people in that position choose to incorporate in one of these jurisdictions:

Belize – For detailed information click on this link: http://offshoreincorporate.com/belize-offshore-companies/
Nevis – For detailed information click on this link: http://offshoreincorporate.com/st-kitts-and-nevis-offshore-companies/
Panama – For detailed information click on this link: http://offshoreincorporate.com/seychelles-offshore-companies/
Dominica – For detailed information click on this link: https://offshoreincorporate.com/dominica-offshore-companies/
Seychelles – For detailed information click on this link: https://offshoreincorporate.com/seychelles-offshore-companies/
St Vincent– For detailed information, check this link: https://www.dropbox.com/s/66hidfkfz3abj8g/Saint%20Vincent%20IBCs%20Page.doc?dl=0

These jurisdictions are very popular with ICO, Blockchain focussed and Cryptocurrency Exchange startup enterprises as currently in these jurisdictions such activities are neither licenseable nor prohibited activities.

Cost there would be:

For a Belize Company, including incorporation, registered/agent office service and one year’s basic admin: $1,000 (0r $1,400 if a Nominee Director is required – which would be advisable for tax purposes). 2^nd and subsequent years $690 (or $1,090 if nominees are required)
For a Nevis Company, including incorporation, registered/agent office service and one year’s basic admin: $1,200 (0r $1,700 if Nominee Directors are required – which would be advisable for tax purposes). 2^nd and subsequent years $890 (or $1,390 if nominees are required)
For a Panama Company, including incorporation, registered/agent office service and one year’s basic admin: $1,000 (+ $900 if Nominee Directors are required – which would be advisable for tax purposes – note Panama requires 3 Directors minimum). 2^nd and subsequent years $690 (+ nominees if required)
For a Seychelles Company, including incorporation, registered/agent office service and one year’s basic admin: $1,075 (0r $1,475 if a Nominee Director is required – which would be advisable for tax purposes). 2^nd and subsequent years $765 (+ $400 if nominees are required)
For a St Vincent Company – see attached

If you’re just looking to invest in Cryptocurrency/s or to Trade Cryptocurrencies do let us know because if that is all you intend to do then you would have a much wider choice of nil Company tax jurisdictions/entities (including Seychelles, HK, Samoa, Dominica, Gibraltar, Anguilla, Marshall Islands, American LLC States, Singapore Estonia, Scottish LPs and more). .

Once we know/can read some details re what kind of Crypto/Fintech business you intend to startup OCI can/will provide more definitive advice on where we think you could/should incorporate. If you’d like some free guidance/suggestions in regards to where to incorporate please email us a copy of, or a detailed summary of, your business plan (we’d be happy to sign a NDA to help facilitate that). We specialize in incorporating Crypto startups – every week we help to launch at least one new ICO or at least one new Exchange and hence are uniquely placed to help you.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Set up Token Launch Company in Mauritius

Mauritius has a regime known as the Regulatory Sandbox License (RSL) which may potentially be accessed by Token Launch and/or ICO Entrepreneurs.

The RSL is issued by the Economic Development Board (EDB) to eligible companies willing to invest in innovative projects according to an agreed set of terms and conditions for a defined period. To be eligible, these firms need to demonstrate the innovative nature of their project, whether at the local, regional or international level.

Objectives of the regulatory sandbox

To supply FinTech companies with a structure, where they have to meet the relevant regulations in the fast-moving world of FinTech
To provide companies with better access to finance
To create the opportunity for start-up companies to demonstrate their innovation
To encourage investment (Potential Lenders are more likely to invest in a company if they are sure that it operates in a regulated environment)
To create awareness and to improve both individuals’ and organisations’ knowledge of FinTech products and services
To protect the rights of consumers

In a nutshell, the Regulatory Sandbox licence (RSL) plays an essential role in the growth, adoption and investment of FinTech innovation, at the same time providing suitable protection for consumers and investors’ interests. The Regulatory Sandbox License has been a real game changer for many entrepreneurs. Activities already approved under RSL include Crowdfunding, Peer-to-Peer lending, etc.

Eligibility

In order to be eligible, applicants should meet the following criteria:

Investment in an innovative project;
Promotion of a project in respect of which there is either no legal framework or a lack of adequate legislative framework
Establish the innovative nature of the proposed activity at the local, regional and international levels.

Documents to be submitted:

Duly completed application form;
Business Plan or feasibility study outlining proposed business activity;
Particulars of promoters, beneficial owners and directors;
Certificate of character of beneficial owners and directors;
Financial forecast and financial capacities of applicant;
Details regarding the lack of regulatory framework in the country in relation to the conduct of the proposed activity;
Details regarding the known risks associated with the proposed activity;
Information on whether the applicant is licensed in any other jurisdiction for the proposed activity; and
An exit strategy to be implemented by the applicant in the event that the proposed activity is not implemented.

Successful Applications

An applicant is entitled to commence his/her RSL activity and to develop the project within a controlled environment as soon as it is notified of the EDB’s acceptance of the application. The development of the RSL activity remains of course subject to licensing conditions that may be imposed. Furthermore, a licensee will be requested to submit what are known as interim and final reports.

How to proceed

Set-up a Mauritius Domestic Company
The company will then submit an application to the EDB with the required documents.
The processing will take up to 3 months inclusive of the EDB assessment and online interview with promoters.

Costs

Set-up costs will be USD 13,000 inclusive of domestic company incorporation, preparation of documents, submission of application to EDB and liaison.

Other costs will depend on requirements of the project (compliance, office rental, etc). this will be provided after we have examined details of the project.

The set-up costs exclude opening of bank account.

It should be noted that in the event that EDB approval for the project is granted, there may be a transition process once the activity becomes formally regulated by the FSC and rules are published; This does not mean that the RSL licence will be revoked, only that there will be a need to submit an application to the regulator so that they can issue a new licence.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

NOTE: This information is current as at 2 July 2021

The Panama PIF20 Private Investment Fund: FAQs – Answered

An increasingly popular type of Private Investment Fund recognized by Panama law is the PIF-20.

The Panama PIF-20 is a Private Investment Company which can be incorporated in Panama with a specially tailored constitutional document providing:

(a) that there will be no more than twenty (20) investors due to their membership to an enterprise or an association; &

(b) that shares or units in the Company will be offered on a private basis and not by public means of communication.

This type of Fund is not required by law to appoint an investment manager or a custodian. Moreover, the Panama PIF-20 Fund does not have to be registered with (nor its existence even notified to) the SMV (ie the Superintendency of the Securities Market of Panama) and is not required to comply with the provisions of Regulation No. 5 of 23 of July of 2004 (ie a PIF-20 Fund is not subject to the normal post regulation Regulatory Supervision/Reporting requirements that normally apply to Licensed Mutual Funds in Panama).

The PIF20 is ideal for deployment as a Start Up (or First Time) Fund and is significantly cheaper and (much) easier to set up compared with its direct competitor ie the BVI Incubator Fund. Most significantly, unlike most (it not all) comparable jurisdictions you don’t need to include a Licensed/Experienced Financial Professional on/in the proposed Board of Directors/Management Team/Ownership Team.

OCI can provide you (and/or your client/s) with the required legal/practical/etc assistance to establish such an Investment Fund in Panama.

Here are some of the frequent questions we receive and their answers:

1. How long will it take to establish a PIF20?

Once we have obtained the due diligence information/documentation, we will be able to register your PIF20 in 1-2 weeks.

2. What really makes a difference between a PIF20 and an ordinary Panama company? Meaning what makes it to become / to carry the name of “fund”?

A PIF20 is subject to the Panama Corporations Law and the Panama Securities Law (and its regulations). A PIF20 Fund may carry the name “FUND”.

3. Do I understand correctly that PIF20 is tax neutral and also no withholding applies for distributions to investors?

A PIF20 will be considered as an ordinary Panama offshore company for taxation purposes. Consequently, a PIF20 will not be subject to any withholding tax in Panama and will not be subject to Corporate Tax in Panama ie assuming (i) the PIF20 is managed/controlled from outside of Panama and (ii) that all its income is sourced from outside of Panama

4. Is there any accounting / reporting required?

A PIF20 must maintain accounting records but there are no reporting requirements. Our firm as Registered Agent will need to have access to the accounting records for compliance purposes, upon requirement. All you need to do is provide an address and the name of contact person being the individual who will keep custody of the accounting records. A PIF20 is not a regulated entity, but the Company’s Panama registered agent may be subject to inspections from the SMV in order to validate that the company is in full compliance with PIF20 regulations.

5. What does OCI’s fee cover / what documents will be produced? What is required to carry PIF20 in general and annually, like address, local contact person? What about a bank account? Is it realistic to open it in Panama if non-resident beneficiaries are involved?

The set up fee of $US2,000 includes the total legal fees and expenses for registering your PIF20 company with a specially drafted provision in the Articles of Incorporation, to comply with the Panama Securities Law. There is no need to appoint a local director or representative. Opening a bank account for a PIF20 in Panama is not unrealistic but it can certainly be very bureaucratic. Kindly note that the PIF20 is generally incorporated with two classes of shares, Investor Shares (ie Class B shares which have dividend rights but no voting rights) and Management Shares (ie Class A shares which come with both voting rights and dividend entitlements).

It also should be noted that the Fund Manager of a PIF20 must be a separate legal entity that can be established as an ordinary Panama company or of any other jurisdiction that is not managed in or from Panama.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Panama Private Funds

Are you a Successful Trader?

Are friends and family and or friends of friends approaching you asking you to trade their funds?

Are you thinking about kicking off a fledgling Investment Fund? Not sure how or where to get started? And/or are you concerned about the set up/admin cost of setting up an Incubator Fund?

Well you might want to take a look at Panama’s Private Fund Set up Options.

Introduction to Panama Private Funds

There are two types of private fund (fondo privado) in Panama, namely, a private investment fund with up to 50 qualified investors or a private investment fund with up to 20 investors (an “FP”).

The operation of FPs is governed by Decree-Law No.1 of 8 July of 1999 (the “Securities Act”) together with Regulation No.5 of 23 of July of 2004 (the “Regulations”) issued by the Superintendency of the Securities Market (the “SSM”), which is the governmental body responsible for regulating funds in Panama.

There is no restriction on the type of assets the FP can invest in. However, should the FP hold local assets then it may require additional regulation in Panama.

Types of PFs

There are two types of private fund (fondo privado) in Panama, namely, a private investment fund with up to 50 qualified investors or a private investment fund with up to 20 investors (an “FP”).

A. Up to 20 investors (“20-FP”) – most popular

A 20-FP is generally a Panamanian company.

The shares of a 20-FP must only be offered on a private basis rather than to the public.

It is imperative that the constitutional documents of the 20-FP state that there will be no more than 20 shareholders/investors.

Upon establishment of the 20-FP, there is no requirement to register with, or notify the SSM. Additionally, a 20-FP is not required to comply with the provisions of the Regulations, which are set out in more detail below in relation to establishment of a 50-PF. In summary, this means a 20-FP does not need an auditor, a custodian or investment manager.

A 20-FP therefore has a very light regulatory touch in Panama and can be established relatively quickly and cost effectively.

B. Up to fifty investors (“50-FP”)

As with 20-FP’s, a 50-FP does not need to be registered with the SSM. However, unlike a 20-FP, the SSM must be notified of the establishment of a 50-FP. This notification does not, however, mean that the 50-FP is classified as a registered person by the SSM.

The documents establishing a 50-FP must contain any one of the following provisions:

a provision limiting the number of investors to 50;
a provision requiring that all offers will be made privately and not publicly;
a provision stating that its participation shares will only be offered to qualified investors; and
a provision confirming that an investor’s minimum initial investment must be not less than USD $100,000.

Qualified Investors

In order to invest in a 50-FP, the investor must be a qualified investor. A qualified investor is a person who has signed a statement confirming that his assets, individually or together with his/her spouse, are worth no less than US$1,000,000 and providing his express consent to be treated by the 50-FP as a qualified investor.

Registered Agent and Legal Representative

A Panamanian company requires a registered agent in Panama, which is generally a Panamanian law firm (which OCI is in partnership with).

In addition, pursuant to the Regulations a 50-FP must have a legal representative in Panama. The same Panamanian law firm providing the registered agent services can act as legal representative.

The legal representative will represent the 50-FP before the SSM. It will be the point of contact between the SSM and the 50-FP and will, therefore, receive all communications from the SSM in relation to the 50-FP.

Requirements to set up a 50-FP

(a) The legal representative of the 50-FP must notify the SSM in writing that the 50-FP has fulfilled the requirements of the Regulations.

(b) The following documents must be provided to the legal representative who will ensure they are available for inspection by the SSM:

a copy of the constitutional documents, such as the articles of incorporation or trust instrument;
a copy of the prospectus, offering memorandum or such document used by the 50-FP to offer its shares to investors;
audited financial statements for the latest financial year;
certificate of good standing confirming the existence of the 50-FP;
documentary evidence of the appointment of the legal representative;
a certificate of the directors confirming that the 50-FP has complied with the requirements of the Securities Act and the Regulations;
name and address of the fund, its investment manager, offeror, custodian, directors and key executives.

(d) The latest audited financial statements must be provided to the legal representative within 120 days of the financial year end.

(e) International – Panama is internationally focused and the Company is popularly used for international business and transactional purposes.

Advantages of an FP?

Panama is an attractive jurisdiction for the establishment of a private fund. There are numerous advantages to establishing a FP, including but not limited to:

Panama is one of the world’s fastest growing economies.
Panama is an excellent banking and international financial services centre.
FP’s, particularly the 20-FP, are lightly regulated. Neither a 50-FP or 20-FP has to be registered with the SSM.
There is no restriction on the type of investment the FP can make.
The directors of the FP do not need to be based in Panama.
FPs are exempt from tax on income received overseas and so can be structured so as to have a zero rate of tax in Panama.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

PANAMA TRUSTS FEATURES & BENEFITS

With a suite of attractive Company, Foundation & Trust products, over the course of the past fifty years or so, Panama has built a name for itself as the Premier International Offshore Financial Centre of the Americas/Caribbean region.

Whilst the Panama Foundation garners a lot of attention internationally, an often overlooked gem of the Panama Financial Services Product Suite is the Panama Trust.

A Panama Trust allows foreigners with assets located outside of Panama to form tax free trusts.

Panama’s first law governing trusts was enacted in the 1940’s. A new law was passed in 1984 called the Trust Law No. 1 of 1984 allowing trusts to be more flexible. Law 1 of 1984 (hereinafter “Law 1”) specifically stated that non-Panama assets and properties and all income generated by trusts from assets located outside of Panama are exempt from all taxes.

Benefits

A Panama Trust provides the following benefits:

• Totally Foreign: Foreigners can set up trusts with foreign beneficiaries and assets in other countries.

• Confidential: The law penalizes anyone associated with a trust who discloses confidential information without a court order or authority punished by 6 months imprisonment.

• Privacy: Since Panama trusts are not registered with the government, the identity of the settlor, beneficiaries, and assets are never included in the public records.

• No Taxation: Income produced from Assets owned by a Panama Trust outside of Panama is not taxed in Panama.

• Estate Planning: Panama Trusts can have perpetual life for generations of heirs to enjoy.

• Asset Protection: All assets owned by a Panama Trust are protected from the settlor’s and beneficiaries’ creditors.

• Fast Formation: A Panama Trust can be formed in 1 – 2 weeks.

• English Docs: While Panama is a Spanish speaking country, all trust documents can be prepared in English.

Panama Trust Name

Every Panama Trust must include the word “Trust” at the end of its name so everyone knows what type of legal entity that are dealing with.

Trust documents and names can all be written in English.

Registration & Establishment
Panama Trusts do not have to register with the Panamanian government. The only exception is when a Panama Trust acquires Panama Real Estate.

As soon as the Trust deed is written and signed by the Settlor, the Trust becomes valid.

The Trust Deed
The Settlor of a Panama Trust can have great discretion in terms of how the Trust is created, its purposes, the types of assets it holds, the powers of the Trustee, rights and limits of the Beneficiaries, the appointment of a Protector (and what powers he or she is to have), and the life span of the Trust.

According to Law 1, Panama Trusts can be created to fulfill any lawful purpose. This means that besides a typical trust established for specific beneficiaries, a purpose trust can be created with no beneficiaries and a specific event or purpose which must occur.

The basic Panama Trust Deed provisions include:

• Appointment of the Settlor, Trustee, and Beneficiaries (unless its a Purpose Trust) and appointing deputy trustees and beneficiaries as an option;

• Description of the assets to be held by the Trust;

• Declaration by the Settlor creating the Trust and if it will be irrevocable or revocable;

• The duration of the Trust as either perpetual or specific years which may be revoked or terminated earlier than the stated expiration date if so stated;

• The powers, duties, and rights of the Trustee with any restrictions or limitations;

• How the Trustee manages, administers, and distributes the Trust’s assets and its income;

• Appointment of the Registered Agent (who must be a Panama Attorney at Law or law firm);

• The registered address for the Trust; and

• A Declaration that the Trust meets Panama laws.

The Trust deed is tantamount to a legal contract between the Settlor and the Trustee signed by both of them in front of a notary public.

Settlors
Settlors can be citizens of any country and reside anywhere. The Settlor may be a natural person or a legal entity. (The person who authorizes the set-up of a Trust is known as the “Settlor”).

Beneficiaries
Beneficiaries are persons who are designed to benefit financially from the set up of a Trust. Like the Settlor, Beneficiaries do not have to reside in, or be citizens of, Panama. They can reside anywhere. Beneficiaries may be natural persons or legal entities. (“Beneficiaries” are persons who are designed ultimately to benefit from the set up of a trust).

Trustees
Even though the Trustees of a Panama trust do not have to be citizens of, or reside in, Panama, their actions come under government scrutiny. (A Trustee is a Person or Company to whom management of a Trust and its assets are delegated)

In Panama Trustees are regulated by Panama’s National Banking Commission which includes Companies/Firms providing Trustee services. While the Banking Commission does not have the authority to investigate the terms and conditions of a trust, they are empowered to investigate all complaints made by Beneficiaries.

Trustees can be individuals or legal entities.

Protectors
A Protector is a person (or Company) whose consent may be required before a Trustee can do certain things (eg change Beneficiaries, buy assets, sell assets, incur debts, make payments etc). Whilst not compulsorily required in Panama, the appointment of a Protector in the Trust Deed is an option.

Perpetuity
The Rule against Perpetuity which prevents perpetual trust lifespans was not adopted in Panama. Trusts can last forever in Panama.

Confidentiality
Confidentiality is guaranteed by Article 37 of Law 1 for the protection of Trust information. Violation of this confidentiality by the Trustee or anyone involved with the execution of the Trust entails a crime punishable with six months’ imprisonment and a fine up to $50,000 USD.

Asset Protection
Law 1 provides that the Trust’s assets constitute a separate estate from the Trustee’s assets. Therefore, the assets held by a Panama trust cannot be seized, attached, or subject to any liens resulting from the debts or obligations of the Trustee. Only the Trust’s liabilities could affect the assets.

There are no restrictions of the types of properties or their locations around the world from becoming assets of a Panama Trust.

A Panama Trust will not become void or voidable if the Settlor becomes bankrupt or insolvent. The only exception occurs when a creditor proves to a Panama court that the Settlor intended to defraud his or her creditors when the trust was created.

Taxes
Law 1 provides that Panama Trusts are exempt from all Panama taxes as long as these conditions are met:

• Assets and properties must be located outside of Panama;

• Trust funds are not derived from Panama sources or subject to Panama taxes;

• Corporate shares and all securities issued by corporations are not located in Panama. (Foreign corporation shares or securities deposited in Panama are, however, exempt);

• Panama bank savings accounts and time deposits are exempt.

Distributions of trust income and assets to foreign beneficiaries by a Panama Trust are not taxed in Panama.

Law 1 states that upon termination of a Panama Trust all distributions will be tax free.

If a Panama Trust earns taxable income in Panama, the tax is imposed on the Trust and not the Trustee.

Money Laundering
As a result of international regulatory agencies and watchdog organizations, Panama enacted two laws regarding money laundering in 2000. Every financial institution in Panama comes under the supervision of the Banking Superintendency government agency which includes Trusts.

Public Records
Since Panama Trusts do not have to be registered with the government, no public records exist regarding a Panama Trust.

OCI Panama Trust Packages

At OCI we believe in giving you more for your money than would the average Trust formation service. Hence included in the registration package for your Panama Trust is the following…

Services:

• Unlimited name availability inquiries

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

• Preparation (overseen by a lawyer) of application to register the Trust

• Preparation (overseen by a lawyer) of the Trust Deed

• Attending to filing the Trust registration request with the registry

• Attending to payment of government filing fees

• One year’s Registered Trustee’s service in the country of registration

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

• Mailing address in the country of registration

• Delivery of registration pack by international courier (ie DHL/Fedex/TNT etc) • Unlimited free legal consultations for 12 months

Documents included in your Incorp pack:

• Certificate of Registration

• A sealed/stamped copy of the filed registration application

• Resolution by Trustee accepting appointment

• Resolution to open a bank account

• Resolution to appoint a lawyer for the Trust

• Resolution to appoint an accountant for the Trust

• Sample/template letter of wishes

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

• Resolution appointing you as Investment adviser to the Trustee

• Agreement authorising you to represent the company in commercial negotiations

• Agreement appointing you as Investment adviser to the Trustee

Price (all inclusive): $US3,500

From 2nd year $US2,500

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

BVI Investment Funds

The British Virgin Islands (“BVI”) is one of the most popular and established jurisdictions for the formation and operation of offshore investment funds and managers. BVI investment fund structures are globally known for their flexibility allowing investment managers and investment fund sponsors to tailor their offering to the needs of their investors. Some of the key advantages of BVI investment funds include the following: A modern, recognized and robust legal system derived from English common law, including a very flexible corporate statute (the BVI Business Companies Act 2004). Key features include:

A dedicated and experienced commercial court
Competitive professional and government fees
Fast turn-around times
No regulatory restrictions on investment policies, strategies or objectives, and
No requirement to appoint local directors, local functionaries, or local auditors.

Regulatory Background

By way of background, only open-ended investment funds are regulated in the BVI, closed-ended funds are not. Open-ended funds are investment funds which provide their investors with the option to redeem their shares or interests in the investment fund, at their request. In contrast, the redemption of interests in a closed-ended fund requires the approval by the closed-ended fund. There are no specific regulations for closed-ended investment funds under BVI law. Due to the illiquid nature of its investments, most private equity funds are structured as unregulated closed-ended funds.

In the BVI there are five types of regulated open-ended investment funds:

The Incubator Fund
The Approved Fund
The Private Fund
The Professional Fund; &
The Public Fund

BVI Private Funds

The Private Fund (the “Private Fund”) is geared towards start-up managers and family and friends’ funds. It has no minimum investment threshold. However, the Private Fund must be limited to either having no more than 50 investors or to inviting potential investors to subscribe for, or purchase, Interests on a private basis only. The Private Fund is an attractive alternative to the Approved Fund.

A Private Fund must:

Have two directors, one of which must be an individual,
Have an investment manager, funds administrator, custodian (or prime broker) and an auditor appointed (subject to certain exemptions),
Have an authorised representative

The Incubator Fund

The incubator fund (the “Incubator Fund”) is geared towards start up investment managers who wish to offer investments into a regulated investment fund at reasonable costs to build up their track record. The key characteristics of an Incubator Fund are:

The total number of investors is restricted to 20,
An investor must initially invest at least USD20,000,
The net assets of the Incubator Fund must not exceed USD20,000,000 (or its equivalent in any other currency),
No requirement to have an offering document in place,
No requirement to have third party service providers appointed,
No requirement to file audited financial statements, and
The life span is limited to 2 years (or 3 if an extension is granted) after which an Incubator Fund may be converted into a Professional Fund, a Private Fund or an Approved Fund. Alternatively, an Incubator Fund can also be converted into an unregulated closed-ended fund.

An Incubator Fund must:

Have two directors, one of which must be an individual
Have an authorised representative. The authorised representative will serve as a conduit between the fund and the BVI Financial Services Commission (the “FSC”),
Submit financial statements annually (which need not be audited),
Submit returns to the FSC regarding its status, i.e. the number of investors, total investments, aggregate subscriptions and redemptions, net asset value of the fund and details of any significant investor complaints; and
Notify the FSC within 14 days of any changes to the information provided in the application or in relation to any matter which is likely to have a material impact on the fund.

The Approved Fund

The approved fund (the “Approved Fund”) is geared towards ‘family and friends’ funds managers. Its key characteristics are:

The total number of investors is restricted to 20
Net assets of the Approved Fund must not exceed USD100,000,000 (or its equivalent in any other currency)
No minimum investment
No requirement to have an offering document in place
No requirement to have third party service providers appointed, except for appointment of a fund administrator which will, in short, provide the Approved Fund with registrar and transfer agent and net asset value calculation services, and
No requirement to file audited financial statements

Although not required by law, in practice the Approved Fund will often have a third-party investment manager appointed.

An Approved Fund must:

Have two directors, one of which must be an individual
Have an authorised representative
Submit financial statements annually (which need not be audited),
Submit returns to the FSC regarding its status, i.e. the number of investors, total investments, aggregate subscriptions and redemptions, net asset value of the fund and details of any significant investor complaints; and
Notify the FSC within 14 days of any changes to the information provided in the application or in relation to any matter which is likely to have a material impact on the fund.

The Professional Fund

The professional Fund (the “Professional Fund”) is geared towards sophisticated investors. It is the most popular type of regulated investment fund in the BVI, with a market share of around 70% of all regulated BVI funds.

An investor in a Professional Fund must be either a professional investor or an exempted investor:

A professional investor is a person whose ordinary business involves the acquisition or disposal of property of the same kind as the property held by the fund or who, whether individually or jointly with a spouse, has a net worth in excess of USD1,000,000. A professional investor must make an initial investment of at least USD100,000
An exempted investor is not subject to minimum investment requirements. An exempted investor includes the fund manager, administrator, promoter or underwriter of the fund or any employee of the manager of the fund.

A Professional Fund must:

Have two directors, one of which must be an individual
Have an investment manager, funds administrator, custodian (or prime broker) and an auditor appointed (subject to certain exemptions)
Have an authorised representative
Submit audited financial statements annually; &
Notify the FSC of certain changes as specified in the relevant legislation.

The Private Fund

A Private Fund must:

Have two directors, one of which must be an individual,
Have an investment manager, funds administrator, custodian (or prime broker) and an auditor appointed (subject to certain exemptions)
Have an authorised representative
Submit audited financial statements annually, and
Notify the FSC of certain changes as specified in the relevant legislation.

The Public Fund

The Public Fund (the “Public Fund”) is geared towards investment managers seeking to offer a retail investment fund. The regulatory regime applicable to a Public Fund is considerably more complex than for any other regulated BVI fund. However, there are no restrictions on the type of investors, number of investors, marketing to investors or the maximum value of assets held by the Public Fund.

Fund Vehicles

BVI investments funds can be formed as companies, segregated portfolio companies (for a private, professional or public fund only), limited partnerships or unit trusts. Most of the BVI investment funds are established as companies limited by shares. Limited Partnerships are more often used in the context of unregulated closed-ended funds

BVI Incubator Funds – Overview

Are you looking to set up a Fund? Is this your first time setting up a Fund???

If so, you may be interested to know that the most popular model of “Start Up” Fund in the BVI is the Incubator Fund.

In 2015 the progressive jurisdiction that is the BVI (British Virgin Islands) recognized there was a gap in the Fund Setup Market for a lightly regulated model of Fund.

Hence regulations were passed allowing for the set-up in the BVI of 2 new models of Mutual Fund ie Incubator Funds and Approved Funds.

Prior to 2015 the only option for a successful trader/prospective fund manager wanting to dip his or her toe into the Fund Management Market was to set up a (non- licensed) Closed End Fund ie a Fund wherein the Investor was/is required to lock in his funds for a fixed investment period.

This limitation often caused a promoter difficulty in fund raising as most investors would prefer a mechanism that would entitle them to withdraw their funds on demand if desired or needed.

The (relatively) new BVI Regulations enable Incubator and Approved Funds to be set up and launched on a fast track, low cost basis with limited regulatory oversight by the BVI Financial Services Commission (“the Commission”).

Fund Requirements

An Incubator Fund has a minimum investment requirement of US$20,000, a cap on net assets of US$20M and can take in no more than of 20 investors. An Incubator Fund does not need to appoint an Administrator or a Custodian or an Investment Manager or an Auditor.

An Approved Fund has a net asset cap of US$100 Million and no minimum investment requirement but is limited to no more than 20 investors. An approved fund is required to appoint an Administrator but does not need to appoint a Custodian or an Investment Manager or an Auditor.

Application Process

An applications for approval as an Incubator Fund or an Approved Fund must be lodged with the Commission and be accompanied by:

The constitutional documents;
Details of the investment strategy;
A prescribed form of investor warning; and
An application fee (US$1,500).

An Incubator Fund or Approved Fund can commence business 2 days from the date of receipt of a completed application by the Commission.

Duration & Conversion of Incubator Fund

An Incubator Fund has a limited life span of two years which can be extended for up to 12 months. An Approved Fund has no such limits. An Incubator Fund can convert to an Approved Fund, a Private Fund or a Professional fund, or may be wound up at the end of its term. An Incubator Fund can convert to a Private Fund or a Professional Fund or to an Approved Fund by lodging the required/prescribed application with the Commission.

Ongoing Obligations

Part of what keeps the set up and admin costs low is that service provider requirements are minimal:- Each fund is only required to appoint an Authorized Representative in the BVI and an Approved Fund is required to have an Administrator at all times. Pleasingly, there are no mandatory custody requirements and there is no requirement for the issuance of an Offering Document. If/where the fund decides to not issue an Offering Document, the required investor warnings can be set forth in a separate term sheet.

The key regulatory requirements for an Incubator Fund and Approved Fund are:

An annual fee of US$1,000 is payable to the Commission on or before 31 March of each year
Must have a minimum of two directors at all times, one of whom must be an individual
The Fund Entity must notify the Commission of any change to any of the information submitted to the Commission in the set-up application; (eg you’d need to advise of any conduct which has, or is likely to have, a material impact or significant regulatory impact, changes to directors, etc changes to ownership/promoter structure etc).
Prepare and file annual financial statements with the Commission (note there is no requirement for an independent audit)
Twice a year you must file a return with the Commission

OCI Service etc Fees

We confirm assist you to register an Incubator Fund in the BVI. Our fees would be as follows:

Incorporation of the fund will be $2,150 Annual renewal will be $1,750
Professional fee for application with FSC for Fund licence $1500 (note if the application becomes complicated additional charges will apply)
FSC application fee $1500 or $750 after June, (annual renewal will be $1,500)
Authorized Representative fee effective from application $1,600 per annum
For Administration we can certainly do this at competitive rates. The specific fees will depend upon various factors such as frequency of NAV, investment strategy, number of investors etc… By way of example, if the Fund only requires an annual NAV and holds a single or minimal number of easy to value positions and has only a handful of investors, we could do the Admin for as little as US$12k-$14k per annum/NAV. However if the Fund wants monthly NAVs and has multiple, frequently traded positions the fees would start in the region of US$29,000.

(The above assumes that the authorized share capital figure, as stated in the Company’s articles of Association will be no greater than $50,000. If you require a higher amount of authorized share capital additional fees are payable to the BVI registry both at incorporation and yearly thereafter, on a sliding scale).

Documents etc Required

The following documents are required for the application:

Instruction Sheet
FSC application form
Notarized passport and proof of address for each director, shareholder and beneficial owner
Bank Reference for each director, shareholder and beneficial owner,
Professional reference for each director, shareholder and beneficial owner
Police Certificate for each director, shareholder and beneficial owner
Resume for each director
Form A application for the Directors (2 minimum)
Offer document ie if you have prepared your own, (We can also assist with drafting of same. We can draft a standard offering document for $US1,500).

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Belize LLC Versus Belize IBC

We are regularly asked by clients looking to incorporate in Belize should I set up a Belize LLC or a Belize IBC?

So let’s look at the features of each beginning with the Belize LLC…

An LLC (Limited Liability Corporation) is, effectively, a hybrid of a Limited Company and a Partnership.

It’s 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 it’s 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 an LLC is superior from a liability perspective 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 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 (in Belize) 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:

A Belize LLC can be structured according to its own rules rather than being dictated to by statute
A Belize LLC is a legal entity with separate rights and liabilities distinct from its members & managers. (This means nobody other than the LLC itself can be made liable for the debts of the LLC)
Somebody suing a Belize LLC member at best can only have the members rights assigned to him; he can’t participate in the management of the LLC
Belize doesn’t recognize foreign judgments. Only a judgment made by a Belize Court can be given against a Belize LLC
LLCs from other jurisdictions can migrate to Belize and vice versa (ie a Belize LLC can redomicile and become eg a Nevis LLC)
Civil legal proceedings against a Belize LLC must be held in private (and there are penalties for unauthorised disclosure).

Set Up cost: $UD1,200 From 2^nd year $890

Belize Companies & Compliance

Belize LLCs are not subject to any reporting requirements, have no Belize tax obligations and ownership/management information is not publicly accessible.

However, it must comply with the usual KYC/DD requirements (same as IBCs).

Also, there is no limitation on LLCs owning IP Assets.

The setup requirement for an LLC is similar to that of an IBC (similar information required on application form). There is an important distinction, however, in that, because of economic substance, the activity of the IBC needs to be specific so as to determine if it is carrying on a relevant activity or not.

All IBCs need to obtain a TIN (Tax Identity Number) from the Belize Registry. Having a TIN does not mean that the IBC is liable for tax in Belize. The purpose for this initiative is strictly for regulatory and tax authorities to efficiently monitor the status of the IBC.

Regarding the current tax position of the Belize IBC, there is a presumption of residency for all entities registered in Belize. This means that moving forward Belize IBCs will be required to file a tax return by the first tax filing date unless the company claims to be tax resident in an outside jurisdiction. For non-grandfathered Companies, the first tax filing date is 31st March 2021, and for grandfathered Companies, this is 31st March, 2022.

The foregoing requirement will not apply to an IBC that:

Is tax resident in another country (other than a country on the European Union list of non-cooperative jurisdictions for tax purposes);
Has no permanent establishment in Belize
Files an information return at the same filing dates mentioned above, wherein said form will include the jurisdiction of which the company is a tax resident, the beneficial owners of the company owning or controlling 5% or more, as well as all direct and indirect legal owners, including information on the tax residency of such legal or beneficial owners.

Tax resident IBCs are subject to Business Tax, which is a tax on gross revenue and ranges from 1.75% (for trade) to 6% (on professional services).

Set Up cost: $UD1,000 From 2^nd year $690

Local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up a Company such as that described above.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Issue More Shares for an Existing Company

Typically, when a Company Limited by Shares is incorporated, in the Company’s set up docs (eg in the Memorandum/Articles of Association or Constitution) it will say the authorized Share Capital of this Company is X$.

(For those of you who don’t know authorized share capital is) Authorised Share Capital is the amount of capital/money a company can raise by issuing shares. If the maximum authorized share capital of a company is $100,000 then the company can only issue or allocate (eg by private sale) $100,000 worth of shares (eg 100,000 shares of one US Dollar each or 10,000 shares of Ten US dollars each or say 1,000,000 shares of 10 cents each, etc).

If the maximum authorized share capital is $US1,000,000 (1 Mill USD) then a company can issue and sell $1,000,000 worth of shares (eg 1,000,000 shares of one US Dollar each or 100,000 shares of ten US Dollars each etc or ten million shares of 10 cents each).

In theory any shares issued should be fully paid for by the shareholder; Which is why typically when we form a Company, where the client (or a Nominee) is to be the initial shareholder, we only issue one hundred shares to the initial shareholder (ie so as to limit the amount of money you have to commit to, or the amount of money that you will end up owing to, the Company).

If you want to issue more shares you would firstly need to:

Tell us how many shares and the kind of shares you want issued (and the value of each share) eg Dear OCI Please issue one hundred thousand ordinary shares of $US1 each
Tell us who these shares are to be issued to

You will also need to provide us with:

A. (if the new shareholder is to be a person) certified copies of the said person’s passport, drivers license, and proof of address document; or

B. if the shareholder is to be a company (all the above info as regards the underlying company owners and natural person shareholders plus) proof of incorporation, registered office address and good standing of the company (and you’d need to tell us, if these shares are to be sold to an outside party, what the agreed sale price is of/for these shares).

Here is what the legal process will look like:

(a) We would need to create and arrange for the Company Director/Chairman to sign a Change of Shareholdings minute/resolution – (we will forward you the draft when you confirm that you wish to proceed).

(b) An application for shares (also known as a Share subscription application) will need to be created by us for signing by the incoming shareholder – (we will forward you the draft share transfer when you confirm that you wish to proceed).

(c) We will also need fees settled in advance. See details below.

Procedures Once Documents Have Been Received

Once our fees have been settled and we have received (a) the original application for shares and (b) an original (or certified copy) of the signed resolution within 3-5 working days we will:

(i) scan and email to you the new share certificate/s; and

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

(iii) scan and email to you a Lawyer certified true copy of the upgraded Share register; &

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

Cost of attending to all the above would be circa $300 per shareholder (depending on the jurisdiction) and payment is required in advance. (Payment can be made by bank transfer or credit card or via Paypal or in Bitcoin).

Please confirm that you wish to proceed (advising of the shareholder details as per paragraphs 1 and 2 above) + advise how you wish to pay and we will send you an invoice for payment.

NOTE: if the amount of shares you propose to issue means that the total amount/value of shares issued will be then greater than the Company’s “Authorised” Share Capital ie as stated in the Company’s Articles of Association (or Constitution as the case may be) then, before attending to any of the above, we will also need to amend the Articles of Association (or Constitution as the case may be). To amend a Company’s Articles of Association we would need to call a board meeting, create a whole new draft of the Articles of Association then arrange for that draft to be signed and filed with the registry. Cost to attend to all of this would be circa $350 + registry fees.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To Set up a Video Game Business Offshore

Are you an Online Game Developer? Are you planning to design and or launch a new game?

If so, you’ll be pleased to know that such an enterprise lends itself well to an “Offshore” Corporate structuring Plan.

Howso???

A video game is a Digital Asset.

Whenever there is economic disruption on a major scale (such as we are experiencing presently thanks to the Corona pandemic), opportunity comes knocking.

People working from home and or with more time on their hands are starting to realize that valuable digital assets can be sold online and there is more demand for such products than ever before.

Examples of digital assets include:

EBooks
Original music (including beats, jingles, film music , ringtones etc)
Videos (eg original films, tutorials etc)
Photos (eg for website use, Look up tables, mock up images etc)
Icon designs/artwork (eg business logos, business cards, website home pages etc)
Video/Online games
Software (eg add ons/plugins for video games, website templates etc)
Knowledge (eg Coaching, teaching, financial, legal etc)
Marketing services (eg Email campaign templates, add flyers etc)

What do all these products/services have in common?

They can be marketed and delivered online.

Online and Offshore

A business where goods or services are advertised for sale, and delivered, online lends itself (extremely) well to an “Offshore” Corporate Structuring Plan. Here’s how it usually works:

A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated to own/operate the business
You design/launch a website or Online Product/Sale portal which is owned by the Offshore Company
The IBC owns all proprietary items (including also the/any Trademarks, Operating software/systems, soft products to be delivered to customers etc)
Your website/landing page should ideally should be hosted in a nil tax/private Jurisdiction (Iceland is currently the most popular destination for such web hosting, Singapore is also often favoured)
The clients find you and/or contact you via the web
The IBC is seen to be managed and controlled from (and ideally beneficially owned from, see below) Offshore. This is achieved via the appointment of a (nil tax jurisdiction based) “Nominee” director.
Your standard sale agreement/website terms and conditions should provide (a) that a contract is not formed until the customer’s offer is accepted by you (ie the Offshore Company) and (b) that the source of the income is the contract. Before the client clicks buy he/she clicks on a button acknowledging that he/she has read and agrees to be bound by your terms & conditions
Acceptance of the buyer’s offer would be provided by the Company (which is seen to be managed from “Offshore” via a nil-tax-jurisdiction resident Nominee Director) sending an email or text to the buyer, after he/she has paid online; In simple terms what that means is that the situs of the Contract ie the place where the contract of sale (ie the agreement between you and the buyer for you to supply goods in consideration of the buyer paying), at law, is formed is the director’s location ie a nil tax environment…
Hence the income – from which the contract of sale is the source – has been/is derived, prima facie, in a zero tax jurisdiction (every time a client buys and you send an email thanking him for payment that concludes as contract of sale at law)
An Offshore account (which can/will also be set up to receive card payments via a merchant account) is opened in a nil tax banking centre
Customers/clients contract with and pay the IBC; All such monies are banked free of tax in the first instance
You or your local company would/could be contracted by the IBC to manage sales/delivery of product/website maintenance/whatever
(If you need a regular income) You would invoice the IBC periodically (eg monthly) for this service which income would be assessable income in your home state – though a smart Tax Accountant should be able to assist you to claim a series of expenses against this income (eg home office, equipment, travel, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income
Ideally once you start to grow you and to add substance you would be wise to set up your MD/Board and or a sales team to take orders and receive income in a low tax onshore environment (eg Hong Kong, Ireland, Singapore, Cyprus etc).

If you plan to raise sales revenue by charging a recurring subscription fees that business model can also work using an Offshore Company – Check our Blog article logged 28.6.20 “How to set up a subscription based startup business tax free offshore” which explains how.

If you plan to also manufacture the game you might be wise to set up an IP Holding Company PLUS a Trading Company. In this scenario the IP Company (which would be based in a nil tax jurisdiction) would hold/own the IP (“Intellectual Property”) behind the game (including source code, character designs, logos etc) and would issue a License to the Trading Company (which could be incorporated onshore or in a low tax, or potentially, in a nil tax) jurisdiction, to commercialize the IP/turn it into a product and sell it in the market place. (ie the Trading Company would pay royalties ort license fees as agreed to the IP Company).

Such a structure can potentially deliver tax optimization, asset protection and more flexible business sale options (eg you could sell the Trading Company but retain the IP Company and draw passive income, potentially indefinitely, even after you’ve exited the business!)

For details check our Blog article filed 7.7.2019 “How and why to set up an Offshore IP Company“ + check out our most recent Blog article (ie set out below) which sets out some useful ideas in terms of where you might want to set up an IP Holding Company.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

DISCLAIMER: OCI Ltd are not Tax advisers or Legal Advisers. You should seek local tax, legal and financial advice before committing to set up an Offshore Corporate or Fiduciary Entity.

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