Category Archives: Company- Management

During the course of the past 20 to 30 years the Cayman Islands, an independent former British Protectorate in the norther Caribbean Sea, has risen to become one of the World’s Premier Fund set up destinations.

 

Whether you’re looking to set up a Hedge Fund, a non-regulated Closed End Fund or a High End Mutual Fund Caymans provides options.

 

Fund setups are governed in the Caymans Islands by the Caymans Mutual Funds Law

 

The said legislation defines a mutual fund as being any company, trust or partnership either incorporated or established in the Cayman Islands, or if outside the Cayman Islands, managed from inside the Cayman Islands, which issues equity interest redeemable or re-purchaseable at the option of the investor, the purpose of which is the pooling of investors’ funds with the aim of spreading investment risk and enabling investors to receive profits or gains from investments.

 

Regulation of Funds & Fund Administrators

 

The Caymans Mutual Funds law makes the Cayman Islands Monetary Authority (“CIMA”) responsibility for regulating certain categories of funds operating in and from the Cayman Islands (see Categories of Regulated Mutual Funds below) as well as Fund administrators.

 

Interestingly not all mutual funds fall within the Regulatory ambit. Certain categories of mutual fund ie Funds that meet the criteria set out in section 4(4) of the MFL are exempt from Licensing/Regulation. All other mutual funds are regulated and must be licensed.

 

The licensing requirement is coved in section 4 of the act which states as follows:

 

“4. (1) Unless a mutual fund is complying with subsection (3) or is exempted under subsection (4), it shall not carry on or attempt to carry on business in or from the Islands unless —

(a) it is the holder of a Mutual Fund Licence, and it has —

     (i) a registered office in the Islands; or

     (ii) if a unit trust, a trust company licensed under the Banks and Trust Companies Law          as its trustee; or

 

(b) a licensed mutual fund administrator is providing its principal office in the Islands, and, unless an exemption from this requirement has been granted by the Authority, there is filed with the Authority, in respect of the mutual fund, a current offering document that complies with subsection (6).”

 

Categories of Regulated Mutual Funds

 

The following categories of funds must apply for a License in the Cayman Islands:

 

A Licensed Mutual Fund 

The MFL (Section 4(1)) specifies that a mutual fund operating in and from the Cayman Islands must have a licence unless: a licensed mutual fund administrator is providing its principal office; it meets the criteria set out in Section 4(3), which allows for funds to be registered, or it is exempt from regulation under Section 4(4).

The provisions relating to licensed mutual funds benefit large, well known and reputable institutions, which do not propose to appoint Cayman Islands service providers.

 

Administered Mutual Fund 

To be approved as an administered mutual fund, the fund must have a CIMA-licensed mutual fund administrator providing its principal office. The regulatory responsibility for the administered fund, which has more than 15 investors and which is not a licensed or registered mutual fund, is placed largely in the hands of a licensed Mutual Fund Administrator.

 

Registered Mutual Fund 

A Registered Fund must have either a minimum aggregate equity interest of CI$80,000 (US$100,000) purchasable by a prospective investor or the equity interests must be listed on a stock exchange approved by CIMA.

 

A Master Fund must have either a minimum aggregate equity interest of CI$80,000 (US$100,000) purchasable by a prospective investor in the master fund or the equity interests of the master fund must be listed on a stock exchange approved by CIMA.

 

Common Fund Vehicles

 

The Cayman Islands has company, trust, partnership and related laws that allow a high degree of flexibility for establishing mutual funds. The four vehicles commonly used for operating mutual funds are the exempted company, the segregated portfolio company, the unit trust and the exempted limited partnership.

 

Exempted Company - The exempted company may redeem or purchase its own shares and may therefore operate as an open-ended corporate fund. Closed-ended corporate funds can also be established using the exempted company and it is a relatively straightforward procedure to convert from one to the other.

 

Segregated Portfolio Company - An exempted company can also be established as a “Segregated Portfolio Company” (“SPC”) with protected cells or portfolios. The SPC makes it possible to provide a means for different groups to protect their assets when carrying on business through a single legal entity.

 

Unit Trust - The unit trust is usually established under a trust deed with the investors’ interest held as trust units.

 

Exempted Limited Partnership - The exempted and limited partnership provides a second unincorporated vehicle and it can be formed as easily as the exempted company or the unit trust.

 

Closed End Fund Exemption

 

Section 4(4) of the Caymans Mutual Funds Law specifically provides that:

“A mutual fund may carry on or attempt to carry on business in or from the Islands without complying with subsection (1) if —

• (a) the equity interests are held by not more than fifteen investors, a majority of whom are capable of appointing or removing the operator of the fund; or
• (b) it is a fund, not incorporated or established in the Islands, which makes an invitation to the public in the Islands to subscribe for its equity interests by or through a person who is the holder of a licence under the Securities Investment Business Law (2019 Revision), for a regulated activity specified by the Authority for the purposes of this subsection and —
•    (i) those interests are listed on a stock exchange (including an over the-counter-market) specified by the Authority by notice in the Gazette; or
•   (ii) the fund is regulated in a category, and by an overseas regulatory authority, approved by the Authority for the purposes of this subsection.
• The ongoing supervision of funds and fund administrators falls under the remit of CIMA’s Investments and Securities Division.

 

Closed-End/Exempted Funds

 

A Closed End Fund is an investment fund wherein the investor commits to invest his or her money for a set period of time; The investor cannot redeem his /her shares (ie the investor can’t cash out) until the minimum/fixed investment period has expired.

 

In the case of a Closed End Fund typically a Limited Company is set up (ie a Company Limited by shares); the investor receives shares entitling him/her to take home a percentage of the profits (ie in proportion to the percentage of the company that the investor owns) based on net asset value at the conclusion of the fixed investment period.

 

A closed-ended fund is most appropriate for investments which typically require a longer period to mature, eg private equity, venture capital, real estate or infrastructure investments.

 

Exempted funds are mutual funds that are not required to be regulated by CIMA ie where there are no more than 15 investors, the majority of whom are capable of appointing and removing the directors of the fund. (Provided the fund meets the criteria) Closed-ended funds incorporated in the Cayman Islands are not regulated and are not required to obtain a Fund License in the Cayman Islands.

 

Closed End Fund Companies are often established via a tailored Articles of Association/Constitution which allows the Company to issue 2 different classes of shares ie Class A shares and Class B shares. Class A shares (often called Management Shares) come with both voting rights and the rights to share in profits. Class B shares (often called Equity

Shares or Investor Shares) ony entitle the shareholder to a share in the profits ie they do NOT come with voting rights.

 

This model of Closed End Fund is most commonly Incorporated in Seychelles or Belize or Nevis because such funds, if incorporated in these jurisdictions, do not fall within the regulatory ambit of the local Mutual Funds Law.

 

Why Set Up Your Fund In The Cayman Islands?

 

The Cayman Islands is presently the dominant “Offshore” Fund Jurisdiction. It, reportedly, is home to 75%+ of all new offshore fund formations including nearly half of the World Mutual Funds Industry’s estimated US$1.1 trillion of assets under management.

 

Why do so many funds choose to call Cayman Islands home? Because the Caymans offers:

 

• Political and economic stability
• No exchange control restrictions
• Reputable quality professional service providers
• A huge amount of expertise in the investment fund space
• World class banks
• Flexible, modern, quality legislation
• Commerciality – Cayman regulators are very approachable, flexible, innovative and efficient
• Affordability – Cayman’s investment fund fee structure is globally competitive, which benefits the manager and the investor with respect to the launch and ongoing operation/ maintenance of the fund.
• Reputability – The Caymans is on the OECD “White List” and has signed tax information exchange agreements (TIEA) with 19 countries
• Tax effective outcomes for both Funds and Fund Managers

 

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

 

Investing in a Forex Trading JV is an activity that lends itself well to an “Offshore” Corporate Structuring Plan.

 

Usually the deal provides that the investor contributes capital and the Forex Trader provides the knowhow, (ie does all the Trading) and profits are split between the Trader and the Investor (ie you) eg 50/50 or 60/40 or 70/30 ie whatever you manage to negotiate.

 

How it works is:

 

(a)  You incorporate a tax free Offshore Company (“OC”)

 

(b)  You structure the Company in such a way as to ensure that the Company is seen to be managed and controlled from Offshore; This can/will be achieved by via deployment of a tax haven based Nominee Director (which is a service that OCI can provide)

 

(c)   Your OC signs a general investment agreement/contract with the Forex Trading Company. This agreement sets out what each party will do and how profits will be shared (and when)

 

(d)  You advance funds to your OC

 

(e)  The OC then advances funds to the Forex Trading Company

 

(f)    The Forex Trading Company invests/trades your money

 

(g)  The Forex Trading Company pays a return periodically to your OC (eg monthly or quarterly or 6 monthly or yearly).

 

(h)  Returns paid to your OC will be banked and or reinvested Offshore potentially free from tax

 

(i)   To minimize the chances of local Controlled Foreign Company laws being applied to your Offshore Company (and or if your local tax man has the power/wherewithall to tax an Offshore Company if you are the “beneficial owner” thereof), ideally, you would not want to be seen to be the beneficial owner of the Company. This can be achieved by deploying a Private Foundation to act as the shareholder of your nil tax Offshore Company.

 

Note if you need to draw on or utilize these returns at home there are several ways to discreetly go about this (including options potentially with zero tax implications).

 

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

 

With the rise of the digital/global economy – and the greater job choices now on offer as a result of that rise – many businesses are finding it increasingly difficult to find and retain good staff, particularly in specialist or highly skilled fields. Consequently, more and more savvy business owners (in particular internationally focused enterprises) are turning to Specialist Staff Recruitment Agents to help locate & hire key staff.

 

Such a business model, particularly in the International field, lends itself well to an Offshore Corporate Structuring Plan. Often you’ll see a specialist Staff Recruitment Agency engaged where you have a business located in Company A which needs high skill, or unusual, work done in Country B by a person whose skills transcend and are recognized in (or transferable across) multiple jurisdictions (eg Engineers, CFOs, Lawyers, Geologists, etc) ie the target staff member could potentially come from any country.

 

Typically, such businesses operate Online. That is The Staff Recruitment Agent has a website, prospective clients and suppliers find the Agent online and contact/communicate with the Agent via email or via the website.

 

Usually, the Agent is paid a sign on fee once the employee is hired + a percentage of the employee’s earnings during the lifetime of the contract.

 

To summarize how such a business usually works from “Offshore” is:

 

• You (ie The Recruitment Agent) set up a zero tax Offshore Company eg an International Business Company (“IBC”) with a nil tax jurisdiction based “Nominee” Director
• Ideally your website will be hosted in a nil tax jurisdiction
• You are appointed as the IBC’s Authorised Representative/CEO/GM (ie as a senior staff member)
• On behalf of the IBC you negotiate terms with each client to pay your IBC a lump sum fee and or a Commission or Commissions if/when the Client/Employer and Employee sign a contract
• The Agency agreement/contract is signed Offshore by the Nominee Director (ie the “situs” of the contract is a nil tax jurisdiction)
• The source of the income is the contract
• Because the contract was signed offshore, ie in a nil tax environment, there should be no tax payable on income generated by the contract (a) where the Company is incorporated and (b) where you live (assuming you structure and administer the Company in a certain way).
• When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of sales made)
• That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are tax resident though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home). More sizeable amounts could be accessed by way of loan (or a 2nd Offshore Company could be formed to buy your onshore investments)
• If you don’t want the authorities to know how much money you are earning eg by way of wages you could convert your hard currency into Bitcoin and/or you could potentially use an anonymous ATM or Debit/VISA card to withdraw $ from an Auto Tele Machine (though technically that receipt would be assessable income for local tax purposes)
• The majority of trading profits would be banked and or reinvested Offshore potentially tax free
• To minimize the chances of local Controlled Foreign Company laws being applied to your Offshore Company, ideally, you would not want to be seen to be the beneficial owner of the Company. This can be achieved by deploying a Private Foundation to act as the shareholder of your nil tax Offshore 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

 

A Shareholders Agreement is a contract between some or all of the shareholders of a Company in which they agree to regulate the exercise of some of their rights as shareholders.

 

A Shareholders’ Agreement is a supplement to a/the Company’s Constitution/Articles of Association and will generally regulate shareholders’ rights and regulate the management/operations policy of the Company.

 

Potential Problems In The Absence Of A Shareholders Agreement:

 

1) The rights of minority shareholders are typically limited under a/the Company’s Constitution/Articles of Association. Minority shareholders must rely on the Courts for assistance if they have a complaint about the way in which a company is conducted. The Courts only provide help in limited circumstances (and usually at a sizeable cost).

 

2) What happens if a shareholder wishes to sell his or her shares upon -

•          Retirement?

•          Disability?

•          Death?

•         Or for any other reason?

Company Constitutions/Articles of Association are usually silent on detail with respect to these issues.

 

Unless these events are adequately covered in a Shareholders’ Agreement, the only potential purchasers are the other shareholders; If they don’t want the shares, (or aren’t prepared to pay full value for them) then the shares remain unsold or are sold at far less than their true value.

 

Death of a shareholder can result in the shares being worthless to the deceased’s estate because there is no purchaser. On the other hand, the beneficiaries who inherit the shares (eg the deceased’s spouse) may wish to become actively involved in the company against the wishes of the other shareholders.

 

Benefits of a Shareholders Agreement

 

Shareholders agreements can bind the shareholders to protect share value and control who becomes a future shareholder, for example:

 

•          Buy sell agreements: An agreement can provide that upon a shareholder wishing to sell out, existing shareholders have an option or first right to buy shares at a re-determined price or formula. If the existing shareholders don’t wish to purchase the shares, the agreement can set minimum requirements for an incoming buyer, for example that the party is acceptable to the remaining shareholders.

•          Compulsory buy agreements: An agreement can provide that upon a shareholder retiring, being disabled and/or dying the remaining shareholders must compulsorily buy the shares. Funding such buy outs can be planned and a savings plan or borrowings put into place, whilst in the event of death and disability, the buy outs can usually be funded through the provision of appropriate insurances.

•          Compulsory sell agreements: An agreement can provide that upon a shareholder breaching the shareholders agreement, becoming insolvent or on the happening of other specified events, the non-defaulting shareholder/s can elect to compulsorily acquire shares from the defaulting shareholder and eject that shareholder. The agreement can predetermine the price or formula for determination of the sale price. The price payable in the event of breach of the agreement may be less than that payable in other circumstances and generally discounted from the market value.

 

Matters Not Regulated By The Company Constitution/Articles of Association

 

A Shareholder’s Agreement can include provisions regulating -

•          Shareholder exit strategies

•          Shareholder warranties

•          Confidentiality agreements

•          Restraint of trade for directors and/or shareholders

•          Agreement specifying or limiting business activities of the company

•          A shareholder’s right to appoint directors and the number of directors

•          Director’s meeting procedures

•          Minimum budgeting, business plan, accounting and management reporting requirements of directors and management

•          Agreement concerning financing policy

•          Dividend distribution policy

•          Personal rights/obligations of shareholders

•          Documentation of shareholders’/directors’ loans and the right to payment of interest

•          Policies, management and procedures

•          Protection of minority shareholder interests.

 

A Shareholders Areement should cover all aspects of the relationship and the mechanics by which the company is to be operated. The agreement should also protect the respective interests of the parties to the agreement and outline dispute resolution.

 

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

With the rise in the volume of day traders entering the Forex market over the course of the past 10-20 years, it comes as no surprise to see a recent spike in the volume of Entrepreneurial Traders realizing that there is money to be made by allowing others to copy their trades and charging for the provision of such information.

 

Such an arrangement enables an experienced Forex Trader to allow novice traders/investors to “piggy” back on the frame of the experienced Trader (ie copy the trades of the experienced Trader) without the Trader having to endure the red tape, hassle, cost or legal risk that would likely otherwise come into play were the Trader to trade the Novice’s money directly.

 

If you are an experienced/successful Forex Trader, chances are you will have had (or will soon have!) friends or family or acquaintances come at you asking you to invest (ie Trade) their money.

 

Generally speaking, if you take people’s money and invest it (or if you offer financial/investment advice) such endeavours would require one to apply either for a Mutual Fund License or a Broker’s License or a Financial Adviser’s License.

 

If, however, all you are offering is a Copy Trade Facility/Service it may be possible to incorporate such a business in a low regulation/low tax jurisdiction without needing to apply for any form of Special License. This could potentially be achieved by characterizing your business/offering in a certain way eg:

 

1. You could take in investors via the set-up of a Private (non-licensed) Closed End Fund. Click on the following link to read details of how this might be achieved: https://www.dropbox.com/s/vy9xgzj3gtu9dq1/Structuring%20Options%20for%20a%20Non%20Licensed%20Closed%20End%20Fund.doc?dl=0 ;or
2. You could utilise a tax-free International Business Company (“IBC”) eg a Seychelles or Belize or Nevis or Samoa IBC – which could be contracted to trade an investor’s money in a/the broker’s account under Power of Attorney. Click on the following link to read details of how that can work: https://www.dropbox.com/s/h74029saaaa3mmm/How%20To%20Trade%203rd%20Party%20Funds%20Using%20a%20PoA.docx?dl=0 ;or
3. Your IBC could enter into a service contract or consultancy contract or an information supply agreement with the “investor” whereby, in consideration of you supplying details of your trades or some other person’s trades as/when placed (or if you supply an introduction to some other service provider who provides the trade data), the investor agrees to pay you a fee (which could potentially be a percentage of the investor’s profits made from such trades). Such an agreement, if drafted very carefully by an appropriately experienced/knowledgeable Lawyer, could get you around the need to apply for a Special License.

 

Moreover, provided the Company is seen to be managed and controlled from Offshore and, (eg if you live a country that has CFC laws), is seen to be beneficially owned from Offshore, the profits from such a venture could be banked Offshore potentially tax free.

 

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

 

 

 

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 to corporate or business 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 a deposit being an amount equal to the greater of (i) one half of the amount claimed or $US50,000 whichever is the greater

 

Other features of the Belize LLC Law include:

1. A Belize LLC:

(a)  can be structured according to its own rules rather than being dictated to by statute

(b)  is a legal entity with separate rights and liabilities distinct from its members & managers. (This means nobody other than the LLC itself can be made liable for the debts of the LLC)

(c)   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

1. Belize doesn’t recognize foreign judgments. Only a judgment made by a Belize Court can be given against a Belize LLC
2. LLCs from other jurisdictions can migrate to Belize and vice versa (ie a Belize LLC can redomicile and become eg a Nevis LLC)
3. 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 our 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:

1. Is tax resident in another country (other than a country on the European Union list of non-cooperative jurisdictions for tax purposes);
2. Has no permanent establishment in Belize
3. 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).

 

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

 

ocil@protonmail.com

 

oci@tutanota.com

 

oci@safe-mail.net

 

ociceo@hushmail.com

 

Investing in Stocks/Shares is an activity that lends itself well to an “Offshore” Corporate Structuring Plan.

 

How it usually works is:

 

(a)  You incorporate a tax-free Offshore Company (“OC”)

 

(b)  You structure the Company in such a way as to ensure that the Company is  seen to be managed and controlled from Offshore – This can/will typically be achieved by via deployment of a nil tax jurisdiction based “Nominee” Director – which is a service that OCI can provide (ideally, especially if you live in a country which has CFC laws, you’d be wise to also set up a Private Foundation to hold the shares of/own your Offshore Company ie so that you aren’t classified at law as/seen at law to be the “beneficial owner” of the Company)

 

(c)   Your OC engages a Broker/opens a Brokerage Account

 

(d)  You advance funds to your OC

 

(e)  The OC then advances funds to the Broker’s Account

 

(f)    The Broker acquires the shares for you and registers your Company as the owner of those shares

 

(g)  The Company you hold shares in pays a return/dividend periodically to your OC (eg yearly). This return is banked into a tax-free Offshore Bank Account in the name of your OC

 

(h)  Returns paid to your OC can/will be held in an interest bearing bank/deposit account and or reinvested Offshore, potentially free from tax… AND if you incorporate Offshore ie in the right tax free Offshore jurisdiction you should also be able to avoid having to pay CGT ie Capital Gains Tax when you sell your shares (most “Offshore” company jurisdictions do not have CGT laws)

 

Note if you need to draw on these returns at home there are a number of discreet (& potentially tax-free) ways to go about this. But that’s a discussion for another day….

 

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

 

 

A Travel Agent Business lends itself well to an “Offshore” Corporate Structuring plan.

 

Most Travel Agents work on the Commission Agent model, ie you act as a middleman between the Travel Service Provider (ag an Airline or Hotel) and the end user customer.

 

Typically in this model of a Travel Agency you in effect act as a sales agent of the Travel Service Provider, ie you are authorized to market/sell the Travel Service Provider’s products/services and you get paid a commission (ie typically a percentage of the sale/deal proceeds) when the consumer orders/pays for the service.

 

To summarise how it would work is:

 

• You set up a zero tax Offshore Company eg an International Business Company (“IBC”) with a nil tax jurisdiction based “Nominee” Director
• You are appointed as the IBC’s Authorised Representative
• On behalf of the IBC you negotiate terms with the Travel Service Provider to pay your IBC a Commission if/when the Buyer and Seller do business
• The Commission Agent/Broker agreement/contract is signed Offshore by the Nominee Director
• The source of the income is the contract
• Because the contract was signed offshore in a nil tax environment there should be no tax payable on income generated by the contract (a) where the Company is incorporated and (b) where you live (assuming you structure and administer the Company in the right way).
• When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated)
• That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are tax resident though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home). More sizeable amounts could be accessed by way of loan or a 2nd Offshore Company could be formed to buy your onshore investments
• If you don’t want the authorities to know how much money you are earning eg by way of wages you could convert your hard currency into Bitcoin and/ or you could use an anonymous ATM or Debit/VISA card to withdraw $ from an Auto Tele Machine (though technically that receipt would be assessable income for local tax purposes)

 

The majority of trading profits would be banked and or reinvested Offshore potentially tax free.

 

Online Based Travel Agency

 

The other model of Travel Agency Business that lends itself well to an “Offshore” Corporate Structuring Plan, is where your business operates 100% online (ie products are advertised online and orders are placed for and paid for online).

 

Here’s how such a business can work from an “Offshore” Perspective:

 

1. A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated
2. The IBC owns/operates a/the web based business (eg ownership of the web-domain and the website/artworks or trademark/s or any sole distributor rights are held by or transferred to the IBC)
3. An Offshore account (which received payments via a merchant account) is set up in a nil tax banking centre
4. Ideally the server is located in a country which does not tax business on the basis of server location (eg Singapore or Iceland)
5. Customers contract with and pay the IBC. All such monies are banked free of tax in the first instance
6. You pay the actual Service Provider – the difference between what the customer pays you and what you pay the service provider is your profit (banked/held Offshore in a tax free bank account)
7. You or your local company would be contracted by the IBC to manage sales/delivery of product/website maintenance/whatever
8. 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 expense against this income (eg home office, equipment, travel, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income.
9. Often there is some kind of intellectual property (“IP”) created or behind the website based business (even if it’s just the website/design). It may be advantageous to you down the track if ownership of the business and the IP were held by 2 different entities. What you can do there is set up a 2^nd IBC to own the IP. The first IBC (ie the Trading Company) pays license fees periodically to the 2^nd IBC which fees would be receipted tax free. This could be advantageous if you wanted to bring ownership of the web-business onshore or if you wanted to sell the business but keep a passive (potentially tax free) income stream
10. 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 onshore to take orders and receive income in a low tax onshore environment (eh Hong Kong, Ireland, Singapore, Cyprus etc as per the Amazon/Google model)

 

To minimise the chances of the IBC being taxed onshore ideally the IBC should be (and be seen to be) managed and controlled from offshore. How this can be achieved is including a Nominee Director etc as part of the Corporate structure. See this page for details of how that can work:

http://offshoreincorporate.com/faq/should-i-engage-nominees-or-should-i-direct-and-hold-the-shares-in-my-offshore-company/

http://offshoreincorporate.com/faq/how-can-i-protect-my-underlying-ownership-of-my-offshore-company-where-a-nominee-is-engaged-to-act-as-director-or-shareholder/

 

In either model of business, in most cases, it’s likely – notwithstanding that you may have an “Offshore” Management system in place (ie a nil tax jurisdiction based Nominee Director) – that, if you’re seen to be a/the beneficial owner of the Company, your IBC would be liable at law to declare income and pay tax where you live.

 

If you want to mitigate (to the greatest extent possible) against this risk you’d be wise to also set up a Private Foundation to be/act as the shareholder of your Company (in short because a Private Foundation is presumed at law to be both the legal AND beneficial owner of any asset it holds/owns). For more information check this link: https://offshoreincorporate.com/private-interest-foundations/

 

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

 

 

 

Forex Trading is an activity which lends itself well to Offshore Corporate Structuring. For details on how you can minimize tax on trading profits using an Offshore Company as your trading vehicle please take a look at this page from our website: http://offshoreincorporate.com/trading-forex-using-an-offshore-company/

 

To summarize how it would work is:

• You set up a zero tax International Business Company
• The IBC opens an account with the Broker
• You are appointed as the IBC’s authorised trader (ie you place the buy and sell orders on behalf of the company)
• For all intents and purposes the IBCs trading profits are generated in a nil tax environment tax free/offshore (ie provided the IBC Is structured properly)
• When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated)
• That living/spending money can be paid to your local bank account (which means it would be assessable income at home though, if you know a smart Tax Accountant you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home)
• The majority of trading profits could be reinvested Offshore potentially tax free.

 

AND because a high percentage of our client base are professional forex traders we know and can introduce you to a wide range of quality Brokers (including Brokers who will accept as customers Offshore Companies set up by US persons.

 

AND as I myself trade forex via an Offshore Company I can explain to you how it works, from a practical perspective, on a day to day basis.

 

How To Get Around The American Problem

 

If you’re a US based forex trader you’ll know that the trading terms on offer from US brokers are NOT trader friendly. The only way to get better trading terms is to shop for a Broker outside of the US. BUT the quandary there is most (certainly all quality) non US Forex Brokers will not accept Americans (or American Companies) as customers.

 

The solution is to:

 

(a)  set up an Offshore Company with a(n ideally nil tax jurisdiction resident) Nominee Director (which is a service that OCI can provide); &

(b)  set up a Private Foundation to own (ie hold all the issue shares in) the Offshore Company

 

The Private Foundations is basically Europe’s version of a Trust save for one big difference ie a Foundation (unlike a Trust) is a separate legal entity ie it can sue and be sued. Moreover a Foundation is presumed under European Common law to be both the legal AND beneficial owner of whatever asset it holds/buys. (One jurisdiction ie the Seychelles has taken this a step further ie they specially codified this aspect of the law by inserting into their Foundations Act, see below).

 

Whenever you apply to open a Corporate Brokerage Account one of the first questions the Broker asks is “Who is the beneficial owner of this Company??”

 

If the Company applying for the Brokerage account is owned by a Seychelles Private Foundation we can say to the Broker. “This Company is owned by a Seychelles Foundation. By operation of law – that is section 71 of the Seychelles Foundations Act – the Foundation is deemed to be both the legal AND beneficial owner of the Company“.

 

Globally speaking having a Foundation as part of your Corporate structure can also deliver potential tax planning opportunities. In short the beneficiaries of a Foundation are not entitled to receive a distribution from a Foundation unless or until such time as the Foundation Council actually resolves to pay a distribution. This means (provided the Company/Foundation is seen to be managed and controlled from Offshore) that you can potentially retain profits inside your Company and only be liable to pay tax on income paid to you by the Company or Foundation.

 

Local laws can have an impact. Hence you should seek local legal/financial/tax advice before committing to set up an Offshore Company or Private Foundation.

 

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

 

In addition to the standard IBC the forward-thinking Caribbean state of Nevis offers one the opportunity to incorporate an LLC (Limited Liability Corporation) within its confines.

 

For tax purposes an LLC is regarded as a Partnership ie as a flow through entity. Like a Partnership an LLC doesn’t file a tax return or pay tax provided it passes through to its partners/members the net profit made each year.

 

As LLCs do not have shares (they have membership units, which in effect carry the same rights as shares) they also have the potential to steer one around the potential application of CFC laws.

 

The Nevis LLC however has made its name as the asset-protection-focused incorporator’s jurisdiction/corporation of choice; In short anyone wanting to file suit to attack the interest of a member of a Nevis LLC must first pay a bond to the Court/s in Nevis of not less than $US100,000.

 

1. What is the annual registration charge for a Nevis Limited Liability Company and are there any  sliding scales relating to members’ capital contributions?

 

The annual registration charge for a Nevis Limited Liability Company is US$220.00. There are no sliding scales relating to members’ capital contributions.

 

Annual registration charges are paid for each year following the year of incorporation of the company using the following payment schedule:

$220 Due Date	$100 Penalty TOTAL $320	$220 Penalty TOTAL $440	Strike Off Date
Due on the anniversary of the incorporation date and must be paid within one month of that date.	When payment of the annual renewal is made more than one month but less than six months from the anniversary.	When payment of the annual renewal is made more than six months but less than 12 months from the anniversary.	When payment of the annual renewal is not made within one year of the anniversary of incorporation.

In addition to the annual registration charge the Nevis Registrar of Companies will, at the request of the company, issue a Certificate of Renewal at a cost of US$5 at the time that the registration charge is paid.

 

2. What is the government charge to register the organization of a Nevis Limited Liability Company and are there any sliding scales relating to members’ capital contributions?

 

The government charge to register the organization of a Nevis Limited Liability Company is US$ 235.00. This charge is unaffected by the amount of the company members’ capital contributions.

 

In addition to the registration charge each Nevis Business Corporation must pay US$10 for Certificate of Incorporation of the company and US$5 for the Certificate of Endorsement of the company. These additional charges are compulsory.

 

3. Are there any requirements to disclose the beneficial owners (members) of a Nevis Limited Liability Company to the general public and are there any requirements to file details of the managers with the public or any other Registry in Nevis?

 

There are no requirements to disclose beneficial owners of a Nevis Limited Liability Company to the general public or to file copies of any details of managers with the public or any other Registry in Nevis. However, the government encourages the “Local Agents” to keep registers of such information at their offices in Nevis.

 

4. Are there any requirements to hold:

 

a. An annual meeting of the members of a Nevis Limited Liability Company?
b. Meetings of the managers of a Nevis Limited Liability Company?

 

Except as provided in the company’s Operating Agreement there are no requirements for a Nevis Limited Liability Company to hold any annual meeting of the members or meetings of the managers.

 

5. Are there any requirements for a Nevis Limited Liability Company to prepare annual financial  statements ?

 

No, there are no specific requirements to prepare annual financial statements although Section 10(1) of the Nevis Limited Liability Company Ordinance states in part:

 

10(1) Each member of a limited liability company has the right, at his own expense and subject to such reasonable standards (including standards governing what information and documents are to be furnished) as may be set forth in the operating agreement or otherwise established by the managers, to obtain from the limited liability company from time to time upon reasonable demand for any purpose reasonably related to the member’s interest as a member of the limited liability company such information and records as the limited liability company may maintain.

 

The section further states:

 

10(6) Failure of the limited liability company to keep or maintain records shall not be grounds for imposing liability on any manager, officer, member or agent of the limited liability company for debts, obligations and liabilities of the limited liability company.

 

Section 48 of the Nevis Limited Liability Company states:

 

48 Managers shall discharge the duties of their respective positions in good faith and with that degree of diligence, care and skill which ordinarily prudent men would exercise under similar circumstances in like positions. In discharging their duties, duly authorized members or managers, as the case may be and officers, when acting in good faith, may rely upon financial statements of the limited liability company represented to them to be correct by the manager of the limited liability company having charge of its books or accounts, or stated in a written report by an independent public or certified public accountant or firm of such accountants fairly to reflect the financial condition of such limited liability company.

 

6. Are there any requirements for a Nevis Limited Liability Company to file any form of annual return or tax return in Nevis?

 

No, there are no requirements for a Nevis Limited Liability Company to file any form of annual return or tax return in Nevis.

 

7. What does the annual registration charge filing form for a Nevis Limited Liability Company disclose?

 

There is no annual registration charge filing form for a Nevis Limited Liability Company. However, after payment a certificate of renewal is issued by the Registrar of Companies which contains:

 

- The name of the company;
- The company number; and
- A short statement that the company has paid the annual registration charge for relevant period.

 

8. How do members of a Nevis Limited Liability Company prove ownership of their memberships?

 

A person may become a member of a Nevis Limited Liability Company upon compliance with the Operating Agreement of the company or, if the Operating Agreement does not so provide, upon the written consent of all the members. Evidence of ownership can be provided in the form of a Certificate of Incumbency issued by the company’s Registered Agent.

 

9. Are there any restrictions relating to the issuance of evidence of membership by a Nevis Limited Liability Company?

 

There are no restrictions relating to the issuance of evidence of membership by a Nevis Limited Liability Company.

 

10. Must all capital contributions attributed to members of a Nevis Limited Liability Company be fully paid up?

 

It is not necessary for all capital contributions attributed to members of a Nevis Limited Liability Company to be fully paid up.

 

Section 37(3) of the Nevis Limited Liability Company Ordinance states:

 

37(3) A person may be admitted to a Nevis Limited Liability Company as a member and may receive an interest in the Nevis Limited Liability Company without making a contribution or being obligated to make a contribution to the company.

 

However, the members’ liability for capital contributions must be set forth in the Operating Agreement.

 

11. Can OCI open bank accounts in Nevis on behalf of it’s clients and, if so, what are the requirements?

 

OCI can arrange for the opening of bank accounts in Nevis on behalf of its clients. However, it is to be noted that no international banks on the islands of Nevis offer banking services to Nevis Business Corporations.

 

The requirements for bank account establishment of a Nevis Limited Liability Company are as follows:

 

a. Notarised copies of valid passports and S.S. card of all signatories to the account and principal owner if not a signatory.
b. Certified Copy of Certificate of Incorporation or Good Standing Certificate.
c. Certified copy of Articles of Organization and current Operating Agreement.
d. Contact details of Company’s present bankers (if applicable).
e. Proof of physical address of company. f. Proof of physical addresses of the signatories to the account.
g. A professional and bank reference for each company beneficial owner and account signatory

 

12. What is the minimum number of managers that a Nevis Limited Liability Company must have?

 

Section 44(2) of the Nevis Limited Liability Company Ordinance states:

 

42(2) The operating agreement may fully or partially vest management duties in one or more managers, who may, but need not be, members.

 

13. Are Nevis Limited Liability Companies required to have a President, Secretary and Treasurer or is the appointment of officers optional?

 

The appointment of officers of a Nevis Limited Liability Company is optional but at least a company secretary is recommended.

 

14. What is the standard members’ capital contribution of a Nevis Limited Liability Corporation  incorporated by OCI?

 

There is no standard members’ capital contribution for a Nevis Limited Liability Company. There is no requirement for a statement of members’ capital contributions when incorporating.

 

15. Can a members’ capital contribution to a Nevis Limited Liability Company be denominated in any   recognised currency?

 

Members’ capital contributions to a Nevis Limited Liability Company may be denominated in any recognised currency.

 

Section 32 of the Nevis Limited Liability Company Ordinance states:

 

32 The capital contribution of a member to a limited liability company may be in cash, property, services rendered, or a promissory note or other binding obligation to contribute cash or property or to perform services.

 

16. How many members must a Nevis Limited Liability Company have?

 

There are no restrictions on the number of members a Nevis Limited Liability Company may have.

 

17. What restrictions on the use of names a Nevis Limited Liability Company have and what words  must be included to indicate limited liability?

 

Part V of the Nevis Limited Liability Company Ordinance Section 23(1) states:

 

23(1) Except as otherwise provided in subsection (2) of this section, the name of a limited liability company:

 

(a) Shall contain the word “limited liability company” or the abbreviation “LLC”, “L.L.C.”, “LC” or “L.C.”, and

 

(b) Shall not be the same as the name of a limited liability company or of any other company of any type or kind, as such name appears on the index of names of existing limited liability companies or companies or on the reserved name list maintained by the Registrar of Companies or a name so similar to any such name as to tend to confuse or deceive.

 

Also, a Nevis Limited Liability Company name including the following words may involve the need for government approval or licensing prior to incorporation:

 

Assurance, Bank, Building Society, Chamber of Commerce, Chartered, Co-operative, Imperial, Insurance, Fund Management, Investment Fund, Loans, Municipal, Royal, University.

 

18. Can meetings of members and managers of a Nevis Limited Liability Company be held anywhere in  the world?

 

Subject to the terms and conditions of the Operating Agreement meetings of members and managers of a Nevis Limited Liability Company can be held anywhere in the world.

 

19. Can meetings of members and managers of a Nevis Limited Liability Company be handled by written resolution?

 

Subject to the terms and conditions of the Operating Agreement meetings of members and managers of a Nevis Limited Liability Company can be handled by written resolution.

 

20. How long does it take to obtain:

 

a. A Nevis Limited Liability Company name check?

 

b. Incorporation of a Nevis Limited Liability Company completed?

 

c. Dispatch of a Nevis Limited Liability Company completed?

 

Under normal conditions:

 

a. Names of a Nevis Limited Liability Company can be checked within one day.

 

b. Organization of a Nevis Limited Liability Company can be completed within 2 working days.

 

c. Dispatch of a Nevis Limited Liability Company corporate pack can be completed within three working days of organization.

 

In relation to Nevis LLC’s we can expand upon the FAQ’s as follows:

The Nevis LLC provides more confidentiality, more flexibility and more advantages for the corporate and individual user. It is a business entity that provides an alternative to those who might consider using corporations or partnerships.

 

With the enactment of the Nevis Limited Liability Company Ordinance, the island of Nevis boasts state-of-the-art LLC legislation aimed at solving many of the problems that face planners and business persons using or hoping to use LLCs. It is analogous to the limited liability company in the USA, to limited life companies elsewhere in the Caribbean, to the GmbH in Germany, to the SARL in France and to Limitadas in Latin America.

 

The United States Internal Revenue Service has indicated that limited liability companies generally may be taxed either as corporations, or as partnerships, with income and losses flowing through to the members without any incidence of tax effect at the entity level.

 

The Nevis LLC Ordinance permits planners to structure their Nevis LLC in any manner that suits their particular needs. It may be used for any legitimate business venture or professional practice anywhere in the world outside Nevis, including international financing arrangements, real estate holdings, manufacturing concerns and as an operational or investment vehicle for offshore trusts.

 

Most international LLC statutes protect the company’s assets from the creditors of its members through the limitation of creditors to a charging order. The Nevis LLC Ordinance further specifies that this is the exclusive remedy available to the creditor and also gives the company the power to redeem creditor’s interests.

 

One or more persons can form a Nevis LLC, such person or persons do not have to be a member or members of the LLC. The company is managed by a manager or managers exclusive of the members or by all of the members. Managers may be corporations or individuals. The Nevis LLC should have at least one member and such member can be the Manager or any other person or business entity.

 

Upon the formation of a Nevis LLC the members can enter into an Operating Agreement that may contain details of matters relating to the affairs of the business. Such agreement need not be in writing. Note:

 

- A manager of a Nevis LLC is entitled to keep confidential from the members any information in the nature of trade secrets;

- No initial capital is required at formation;

- The company is not required to issue any share or shares to commence operations;

- No shareholders are required at or after formation;

- Nevis LLC’s do not require the appointment of directors or officers;

- Corporations are permitted to act as Managers and/or members.

 

With regard to their purposes and powers, an LLC formed in Nevis shall be used for “ANY LAWFUL BUSINESS” purpose or purposes.

 

In their relationships with third parties, any LLC formed under the Nevis Limited Liability Company Ordinance 1995 shall be a legal entity with separate rights and liabilities, distinct from its managers or members. Note:

 

- A limited liability company shall be liable for its own debts, obligations and liabilities; and

- The failure of a Nevis LLC to keep or maintain records shall not be grounds for imposing liability on any manager, member or agent.

 

For operational purposes the members of a Nevis LLC may enter into an “Operating Agreement”. All members must agree to such agreement before it becomes effective. Unless the articles of organisation state otherwise, such agreement does not have to be in writing. Note:

- Entering into an operating agreement is not mandatory; and

- An operating agreement need not be in writing.

 

The basic information needed for our office in Nevis to form a Nevis LLC is minimal although AML/CFT requirements necessitate certain additional risk analysis information regarding geographical areas of operation etc., found on our standard order form. We need:

 

- The desired name of the LLC;

- The name and address of a person or a corporation that will act as the “Manager” of the LLC;

- At least one name and address of a proposed member of the LLC; and

- A brief description of the purpose for which the LLC is to be formed.

 

The Nevis Limited Liability Company Ordinance features:

- Exemption from taxes and exchange controls in Nevis.

- Right to third party anonymity of ownership, management and assets.

- Flexible management structure.

- No requirements for financial or annual reports to be filed.

- Designation of manager is optional.

- Strict confidentiality.

- No residency requirements for managers, members or any other officers of the LLC.

- Any one person or persons forming an LLC need not be a member or members of the LLC.

 

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