Category Archives: Company- Management

The State of Saint Vincent and the Grenadines (“SVG”) is as an idyllic Island Archipelago in The Eastern Caribbean Sea made up some 18 islands known historically as The Windward Islands.

 

A former British colony, SVG gained independence from the British in 1979 but retains all the key signature traits common to most ex British colonies ie English is the first language, it boasts an English system of Law/Justice and it has retained the Westminster system of government (Britain’s monarch Queen Elisabeth is the head of state, represented locally by a Governor General).

 

Whilst the key pillar of the Economy remains tourism (SVG is a popular stop-off point for cruise ships) Financial Services is a key contributor along with agriculture (primarily banana farming). SVG is also a popular and growing International banking centre with a historical commitment to preserving privacy.

 

The following is a summary and brief overview of the statutory, legal and commercial environment in St. Vincent & the Grenadines (SVG) in relation to International Business Companies (IBC’s).

 

 

1              LAW

 

SVG is a common law jurisdiction.  The legal system of St. Vincent & the Grenadines is similar in most respects to that of the United Kingdom.  SVG’s court of final appeal is Her Majesty’s Judicial Committee of the Privy Council in London, England.

 

 

2              FORMS OF BUSINESS ENTITY

 

IBC – International Business Company

 

There are five variants of the IBC as follows:

 

1.            Companies limited by shares

2.            Companies limited by guarantee

3.            Companies limited by guarantee and authorized to issue shares (ie a hybrid company)

4.            Companies limited by shares and duration (“LDC” or limited duration company).

5.            Unlimited companies

 

 

3              LEGISLATION

 

•             The key piece of Legislation giving rise to the IBC Regime in SVG is The International Business Companies (Amendment and Consolidation) Act 2007 and its regulations (A copy of the Act can be accessed via the website of the SVG Financial Services Authority, www.svgfsa.com in the section entitled “Law and Regulations”.

 

 

4              FORMATION

 

The following information is required to form a SVG Company:

 

1.            Company Name

2.            Amount of Authorised Share Capital required (ie for Companies Limited by Shares or Hybrid Companies)

3.            Type of shares required (both bearer shares and registered shares are permitted, thought bearer share certificates must be held in SVG by a licensed Custodian)

4.            Class of shares (eg ordinary shares, shares of no par value, preference shares, redeemable shares, shares with or without voting rights etc.)

5.            Due diligence information on ultimate beneficial owners

6.            Consent of Directors to serve on Board of Directors

 

 

5              CAPITAL REQUIREMENTS

 

A company can have any authorized share capital if/as desired and formation fees are not affected by the level of authorized capital.  Typically clients choose an authorized share capital of US$50,000-$100,000 but any number can be chosen. (For an explanation of what Authorised Share Capital is Click on this link: https://offshoreincorporate.com/faq/whats-the-difference-between-authorized-and-paid-up-share-capital/).

 

 

6              DIRECTORS AND OFFICERS

 

•             A SVG company must have at least one director.

•             Directors may be individuals or corporate entities.

•             Directors are not required to be resident in SVG.

•             Officers are optional.

 

 

7              CORPORATE DIRECTORS

 

•             Corporate Directors are permitted

 

 

8              ACCOUNTS

 

•             No requirements to file annual accounts with any authority

•             A SVG Company shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the company.

•             Accounts do not have to be audited

 

 

9              SHAREHOLDERS / MEMBERS

 

•             A company shall have at least one shareholder / member.

•             Shareholders do not have to be SVG resident

•             Shares may be held by nominees/trustees

 

 

10           CLASSES OF SHARES

 

•             Ordinary

•             Preferred

•             Multi-class

 

 

11           ANNUAL GENERAL MEETINGS

 

•             No requirement for annual general meetings of shareholders unless written into a company’s by-laws.

 

•             Subject to the Articles or By-Laws of the IBC, the Directors may convene a meeting of the shareholders at such times and at such places as the directors consider necessary or desirable.

 

 

12           CORPORATE ACTIVITIES

 

Registered Agent & Office

 

•             A SVG Company must have a SVG registered agent.

•             A SVG Company must have a registered office which can (and usually is)  the office of the Registered Agent.

 

Books and Records

 

•             A SVG Company must have a share register which shall be kept at such place as the directors may determine

 

•             A SVG Company shall keep:

 

(a)          minutes of all meetings of

 

(i) directors,

(ii) shareholders,

(iii) committees of directors,

(iv) committees of officers, and

(v) committees of shareholders; and

 

(b)          copies of all resolutions consented to by:

 

(i) directors,

(ii) shareholders,

(iii) committees of directors,

(iv) committees of officers, and

(v) committees of shareholders.

 

•             The books, records and minutes referred to above shall be kept at the registered office of the company or at such other places the directors may direct in writing

 

Taxes

 

•             SVG Companies can elect to be tax exempt (no taxes) or to be taxed at 1% on its annual profits

 

Board Meetings

 

•             No rules in relation to location of board meetings.  Board meetings can be held anywhere.

•             No rules in relation to nationality of directors.  Directors can be of any nationality.

•             Company may convene meetings of the Board of Directors at such times and in such manner as deemed necessary or desirable by the Directors.

 

 

13           REDOMICILIATION

 

SVG recognizes transfer of domicile.  Companies can be transferred into and out of the jurisdiction.

 

 

14           PUBLIC DISCLOSURE

 

•             No requirement to file names of shareholders or directors with the Registrar when incorporating companies.

 

 

15           CORPORATE CAPACITY

 

A SVG Company can engage in all types of business except:

 

1.            Banking Business (Acting as a Bank)

2.            Mutual Funds Business (Acting as a Fund)

3.            Insurance Business (Acting as an Insurance Company)

4.            Trust Business (i.e. “Offshore Representation”–Acting as a Registered Agent, Trustee or Financial Fiduciary)

 

Special licenses are required if the company wishes to engage in any of the above activities (banking, insurance, etc.).

 

Other limitations:

 

1.            A SVG Company cannot offer its goods and services to persons resident in St. Vincent & the Grenadines.

 

 

16           CERTIFICATION

 

•             Commons Seals are optional

 

•             Contracts may be entered into on behalf of an international business company as follows:

 

(a)          a contract that, if entered into between individuals, is required by law to be in writing and under seal, may be entered into by or on behalf of the company in writing under the common seal of the company, and may, in the same manner, be varied or discharged;

 

(b)          a contract that, if entered into between individuals, is required by law to be in writing and signed by the parties, may be entered into by or on behalf of the company in writing and signed by a person acting under the express or implied authority of the company, and may, in the same manner, be varied or discharged; and

 

(c)           a contract that, if entered into between individuals, is valid although entered into orally, and not reduced to writing, may be entered into orally by or on behalf of the company by a person acting under the express or implied authority of the company, and may, in the same manner, be varied or discharged. 

 

•             Without affecting paragraph (a) above, a contract, agreement or other instrument executed by or on behalf of a company by a director or an authorised officer or agent of the company is not invalid by reason only of the fact that the common seal of the company is not affixed to the contract, agreement or instrument. 

 

•             A document requiring authentication or attestation by an international business company may be signed by a director, a secretary or by an authorized officer or agent of the company, and need not be under its common seal.

 

 

 

17           REGISTRATION OF CHARGES

 

•             Charges on a company’s assets may be registered / filed with the Registrar.  Filing of charges is optional.

 

 

OCI SVG COMPANY FORMATION SERVICES

 

At OCI we believe in giving you more for your money than would the average IBC formation service. Hence included in the incorporation package for your SVG Company is the following-

 

Services:

 

•             Unlimited name availability inquiries

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

•             Preparation (overseen by a lawyer) of application to incorporate the company

•             Preparation (overseen by a lawyer) of the company’s memorandum of association

•             Preparation (overseen by a lawyer) of the company’s articles of association

•             Attending to filing incorporation request with the company registry

•             Attending to payment of government filing fees

•             One year’s Registered Agent service in the country of incorporation

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

•             Mailing address in the country of incorporation

•             Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)

•             Unlimited free legal consultations for 12 months

 

Documents included in your Incorp pack:

 

•             Certificate of incorporation

•             2 sealed/stamped copies of the company’s Memorandum of Association

•             2 sealed/stamped copies of the company’s Articles of Association

•             Resolution appointing first director/s

•             Resolution appointing first shareholder/s

•             Up to 5 share certificates

•             Resolution to open a bank account

•             Resolution to rent an office

•             Resolution/s to engage a Phone, Internet & Website service provider

•             Resolution to hire a staff member/s

•             Resolution to appoint a company lawyer

•             Resolution to appoint a company accountant

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

•             Resolution issuing a Power of Attorney in your favour

•             Agreement authorising you to represent the company in commercial negotiations

•             Power of attorney authorising you to sign documents on behalf of the company

•             Register of directors

•             Register of shareholders

•             Expression of wishes (ie an “Offshore” Will)

•             Lawyer authored User Guide (“How to Use Your Offshore Company”)

 

Price (all inclusive): $US 1,500

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): + $800

 

Every effort has been made to ensure that the details contained herein are correct and up-to-date, but this does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.

 

 

 

This week’s article continues the examination of venues where one could consider establishing a Brokerage Business Offshore.

 

Anyone looking to set up a Forex Brokerage Business should consider establishing a Panama Financial Services Company and then apply for a Financial Services License.

 

Such a license empowers a Panama Company to carry out any of these activities:

 

•             Asset Management

•             Account Management

•             Currency Trading/FX

•             Payment processing

•             Factoring

•             Leasing

•             Forex Brokerage

•             Precious metals trading

•             Other associated activities

 

The benefits of a Panama Financial Services License are:

 

•             Low cost to setup and fast, 15 days for the corporation, 30 days for the license and bank account setup in 15 business days

•             No requirement to maintain an office or staff in Panama

 

Fine Print

 

Applicants must have a paid-in capital of US$150,000, as well as:

1. Be exclusively dedicated to activities related to the broker-dealer house business.

 

2. Articles of Incorporation which have a corporate purpose adequate to the activities related to the broker-dealer house business and social capital of at least US$150,000 in registered shares.

 

3. A Board of Directors or its equivalent composed by at least three individuals (no corporate directors), all of them individuals of “proven business and professional integrity. At least one third of the members of the Board of Directors shall also possess knowledge and experience in subjects related to the stock markets or the financial sector in general. It shall be understood that individuals with a record of respect for the commercial laws and other laws regulating the economic and business activities, as well as good business and financial practices, possess commercial and professional honorability. In any case, it shall be understood that individuals lack such honorability, when the individual is under one of the causes of incompetence to hold offices, pursuant this Agreement. Only individuals who have performed duties as principal executives or other similar responsibilities in other public and private entities for a period of at least 2 years, are deemed to have appropriate knowledge and experience.

 

4. Have the number of principal executives that the broker-dealer house business volume requires, who must have the corresponding licenses issued by the Commission. Every broker-dealer house must at least appoint one person as Principal executive.

 

Our fees for assisting to apply this type of license application would be in the vicinity of US$7,500 to $US10,000. Registration fees for a brokerage house are US$5,000. On a yearly basis a supervision fee must be paid to the Superintendent equivalent to 0.0025% of yearly trades (min $5,000.00 max. $100,000.00).

 

If you’ve any questions about the Panama Financial Services Company please contact us.

 

A relative newcomer to the LLC market the New Mexico LLC is attracting a lot of interest on account of its unparalleled privacy features. (Principally, ownership information does not have to be revealed at registration and there is no requirement to file an annual return).

 

And as typical with an LLC a New Mexico LLC is treated by the American Tax authorities as a partnership for tax purposes ie provided all income is distributed to members by years end the LLC is not liable for tax either in New Mexico (“NM”) nor to the US Federal tax authorities.

 

Prime features of the New Mexico LLC Include:

 

1.         Low Cost: New Mexico has the lowest government filing fees in the US for an LLC

2.         Low Maintenance: There is no requirement to file an annual report.

3.         Easy of set up: The Company can be incorporated simply by filing Articles of Organization.

4.         Privacy: A nominee can be listed in the Articles as Organiser

 

NEW MEXICO LLCs BENEFITS

 

New Mexico LLCs offer distinct benefits:

 

•          One-time filings

•          You only need to form the LLC in New Mexico. There is no other government maintenance or licenses to file after you complete the Articles of Organization.

•          There is no disclosure to the authorities of owners or managers details

•          The address at which company records are to be kept (“ie the “Principal Business Address”) can be anywhere in the world

•          New Mexico LLCs do not have annual reports.

•          Low government fees

•          A NM LLC may be managed (ie Directed) by either a member or non-member manager.

•          A NM LLC may be managed/directed by another LLC/Company.

•          Simplicity – No annual reports needed and simple Articles of Organization requirements.

•          Asset Protection – New Mexico has some of the best limited liability coverage for an LLC (explained in depth below), especially when it comes to protecting LLCs from other members.

 

THE UNIQUE ADVANTAGES OF A NEW MEXICO LLC

 

Forming a limited liability company (LLC) in the state of New Mexico has unique advantages: simplicity of operations, federal and state tax exemption, protection of your assets from personal liability, and ease of raising capital with no investor ceiling. A New Mexico LLC combines the taxation benefits of a sole proprietorship or partnership, and the limited liability of a corporation, for the best of both worlds. New Mexico LLC formation is regarded as a separate legal entity, with the advantage of protecting the owners from business liability.

 

Simplicity 

 

A New Mexico LLC is uniquely flexible and simple to form. The cost is low, and maintenance is minimal. The LLC has the advantage of setting its own policies on corporate governance such as: capital or asset contributions by the members; taxation planning; accounting model; recordkeeping and minutes-keeping; frequency of member meetings; management structure; officer appointments; buy-out provisions; management rights, duties and obligations; date of LLC dissolution; and resolutions, voting rights or operational duties and requirements.

 

Tax Exemption

 

A Mexico LLC is tax-exempt under state and federal law. It has the advantage of taking the limited liability features of a corporation and combining them with “flow-through” tax benefits of a sole proprietorship or partnership. Your business losses, profits and expenses flow through the company to the individual members to avoid being taxed on both a corporate and individual level. Your LLC corporation has the flexibility of setting its own dividend policy, rather than having to follow mandatory distribution of earnings on a dollar-per-share basis.

 

Asset Protection

 

A New Mexico LLC offers the unique advantage of the same benefits of asset protection as Nevada corporations and offshore entities, without the premium prices and high maintenance fees. Under the LLC, your personal assets are separated from corporate liability and any potential future creditor action. To protect your privacy, only the following are required for the Articles of Organization: the name of the company and the address of the principal office; the name and address of the registered agent; and the duration of the LLC. Membership interests may not be seized to satisfy a creditor’s claim against the member. This is due to a statutory provision known as “charging order protection”. The creditor can only receive the right to allocations of profit and loss that the member would otherwise receive. However, a properly worded LLC Operating Agreement will allow for profits to be retained within the company and “expensed out” or funneled to the member via alternative means (such as LLC management fees.)

 

Unlimited Investors

 

The advantage of raising capital for a New Mexico LLC is that any number of investors can contribute, including individuals, trusts, pensions or even other LLC corporation entities, unlike a sub-chapter S corporation, which is limited to 75 shareholders. By building your capital base and with an operating history, you have an advantage in securing various credit facilities.

 

OCI New Mexico Incorporation Packages

 

At OCI we believe in giving you more for your money than would the average IBC formation service. Hence included in the incorporation package for your New Mexico LLC is/are the following-

 

Services:

 

          Unlimited name availability inquiries

          Advice from an experienced International Corporate Lawyer on how to structure your company

          Preparation (overseen by a lawyer) of application to incorporate the company

          Preparation (overseen by a lawyer) of the company’s Operating Agreement

          Preparation (overseen by a lawyer) of the company’s Articles of Organisation

          Attending to filing incorporation request with the company registry

          Attending to payment of government filing fees

          One year’s Registered Agent service in the country of incorporation

          One year’s Registered Office service in the country of incorporation

          Mailing address in the country of incorporation

          Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)

          Unlimited free legal consultations for 12 months with our In House Lawyer ( call us anytime at no cost for advice on how to structure/document transactions, how to administer your Company, how to move money, compliance requirements etc)

 

Documents included in your Incorp pack:

 

          Certificate of incorporation

          2 sealed/stamped copies of the company’s Operating Agreement

          2 sealed/stamped copies of the company’s Articles of Organisation

          Resolution appointing first Manager

          Resolution appointing first Members

          Up to 5 Membership Unit Certificates

          Resolution to open a bank account

          Resolution to rent an office

          Resolution/s to engage a Phone, Internet & Website service provider

          Resolution to hire a staff member/s

          Resolution to appoint a company lawyer

          Resolution to appoint a company accountant

          Resolution appointing you as the company’s authorised representative in commercial negotiations

          Resolution issuing a Power of Attorney in your favour

          Agreement authorising you to represent the company in commercial negotiations

          Power of attorney authorising you to sign documents on behalf of the company

          Register of Managers

          Register of Members

          Expression of wishes (ie an “Offshore” Will)

          Lawyer authored User Guide (“How to Use Your Offshore Company”)

 

Price (all inclusive): $US $650

 

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): $ 1,050

 

From 2nd year costs $450 (+ $400 if Nominees are required). Included in the annual fee from 2nd year are the following services:

          Attending to payment of government filing fees

          One year’s Registered Agent service in the country of incorporation

          One year’s Registered Office service in the country of incorporation

          Mailing address in the country of incorporation

          Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)

          Provisions of New Mexico  business address

          Attending to and updating the Directors register

          Attending to and updating the Share register

          Attending to and updating the Asset register

          Recording details of any changes to Directors or Shareholders

          Unlimited free legal consultations for 12 months with our In House Lawyer ( call us anytime at no cost for advice on how to structure/document transactions, how to administer your Company, how to move money, compliance requirements etc)

 

If you’d like to know more about New Mexico LLCs Please Contact Us

 

Every effort has been made to ensure that the details contained herein are correct and up-to-date, but this does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.

 

This week’s article continues the examination of “Offshore” Jurisdictions offering Broker’s License Products.

 

This time around we will be looking at the option of applying for a Forex Broker’s License in the BVI (British Virgin Islands).  

 

The issuing of Forex Broker’s License in the BVI is governed by the provisions of the BVI Securities and Investment Business Act (“SIBA”).

 

To date, only a handful of these licence applications have been granted by the BVI Financial Services Commission (“FSC”). From past experience, the FSC will heavily scrutinize all aspects of Forex business. In particular, they will look at the risk levels of the potential licensee and will strongly focus on the degree of leverage offered to retail investors. The FSC will also need the exact details of how the Forex provider operates with regards to margin calls and the closing out of trades. Each potential licensee will also have to review their levels of capital maintenance to ensure that this is sufficient to cover the potential risk and exposure of its investors. 

 

All applicants should be advised from the start that the process will involve a significant amount of correspondence with the FSC and that obtaining an investment business licence under SIBA is not a mere rubber stamping process.

 

Corporate Governance

 

The license should be applied for by a BVI Company which should have (i) no corporate directors and (ii) at least two directors that are individuals;

 

It should be noted that, in addition to having two directors, the Company will need to appoint external auditors, a money laundering officer and a compliance officer (unless the BVI company can avail itself from an exemption which is discussed in more detail below).  Section 75 of SIBA requires a licensee to have an auditor for the purposes of auditing its financial statements.

 

Provided the Company’s business is small and non-complex, the BVI authorities will probably allow for the compliance officer and the money laundering officer to be the same person.  To the extent the Company has employees dealing with its internal auditing, we advise that this be flagged to the FSC as it will be evidence that the Company has good corporate governance procedures in place; furthermore it is likely that the Financial Services Commission will make this a legal requirement in the future.

 

Compliance Officer Exemption

 

The general rule is that a licensee must appoint a compliance officer.   However, The Financial Services (Exemption) Regulations, 2010 exempt certain licensees from the obligation to appoint a compliance officer provided (a) the licensee does not have a physical presence in the Virgin Islands and (b) that it is either regulated in the jurisdiction where its business is conducted or is part of a group of companies that is subject to regulatory supervision.

 

Licence Application Forms

 

For your information, I will describe the relevant forms you need to file as part of the Application:

 

1.            General Part – This is a tick the box style form wherein you indicate the type of license required. We can complete this on your behalf once you confirm what licensable activities you will be undertaking.

 

2.            Part 1 – Application for a Licence or Certificate as a Financial Services Business Provider; In this form you need to outline details of the applicant applying for the license and the key parties, your experience in the relevant business , Compliance procedures, Financial Resources, Business plan, Fitness and Propriety etc

 

3.            Part 4 – Additional information required for Application for an Investment Business Licence ie Address of the applicant’s place(s) of business + Authorised representative’s details ;

 

4.            Part 5 – Additional Information.  This form is not compulsory, but can be used to provide any additional information that you wish to be submitted with the Company’s license application.  It is advisable to submit some additional information which goes to the competence, experience, expertise and the ‘fit and proper’ nature of the managers of the business;

 

5.            Part 6 – Declaration that, to applicant’s knowledge, all facts are true and accurate;

 

6.            Form B1- Application Form for approval of external auditor.  (The external auditor will need to submit other documents with this application form); and

 

7.            Form A -  “Application for approval of Directors, Compliance Officers and Senior Officers”. This form will need to be completed by each director of the company, the compliance officer, each beneficial owner/controller of the Company and any other person having a senior managerial role (if any) such as a money laundering officer or internal auditor employed by the Company. Each of these individuals will need to provide, amongst other things:

 

                a.            Certified copy of passport;

                b.            Professional, Financial and personal references;

                c.             Personal Statement as to suitability for role; and

                d.            CV and certified copies of qualifications.

 

In addition to the above we advise each individual completing Form A to provide a certified copy of a recent utility bill showing their current address.

 

Documentation to be provided by the Company

 

Here is a summary of the documents that will need to be provided by the Company as part of the application:

 

1.            Certificate of Incorporation/Articles of Association and Memorandum/Certificate of Good Standing (Paragraph 5, Part 1);

 

2.            Letter explaining the experience, competence and expertise that the Company has to run its business (Paragraph 6, Part 1); as much evidence should be included as possible;

 

3.            Form A needs to be completed by each shareholder/controller and director as well as the compliance officer and each senior officer (Paragraph 8.1/9.1, Part 1);

 

4.            Letter from Company’s auditor confirming its willingness to act for the Company (Paragraph 10.2, Part 1);

 

5.            Letter from our BVI Lawyers confirming their willingness to act for the Company (Paragraph 11, Part 1);

 

6.            Copy of the Company’s compliance manual, including client acceptance procedures and know-your-customer policies (Paragraph 12, Part 1);

 

7.            Capital requirements (Paragraph 13.1, Part 1) – although there are currently no minimum capital requirements the licensee is required to maintain capital resources that are adequate (and reasonably determined by the directors) to support its investment business.  Please note that the FSC has power to impose minimum capital resources as part of the licensing process. The FSC will usually look at the company having minimum capital resources of US$250,000;

 

8.            A statement of capital of any other company held, directly or through a subsidiary, as an asset of the Company (Paragraph 13.2, Part 1);

 

9.            Statement of assets and liabilities of the company certified by a director (Paragraph 13.3, Part 1);

 

10.          If the Company has historical audited accounts for the past three years, copies to be provided (Paragraph 13.4, Part 1);

 

11.          Summary of insurance policy and copy of the policy schedule.  All licensees are required to obtain professional indemnity insurance (Paragraph 13.5, Part 1);

 

12.          Business Plan (Paragraph 14 of Part 1);

 

13.          Two references (if applicable) in respect of Company, one of these references to be from a regulated entity (Paragraph 18, Part 1); and

 

14.          Applicable licence fee for each category of licence to be applied for.

 

Type of Licence

 

The annual licensing fee due to the BVI Financial Services Commission will depend on what investment business you wish to undertake.  Hence you will need to specify exactly what services you be will providing. In particular, it would be helpful if you could expand on the scope of the Forex trading services that will be provided. Usually it is helpful to know whether the client will be:

 

•             effecting trades in the capacity as agent or is it acting as a market maker;

 

•             providing customers with investment advice; and

 

•             exercising their own discretion and managing customer portfolios.

 

Licence Fees

 

Generally speaking, there is an application fee of US$1,000 per category and an ongoing annual fee of $1,500 per category/sub category.

 

Professional Fees 

 

Based on our previous experience with SIBA licensing applications I would estimate that our professional fees would be as follows, exclusive of disbursements (which include the licence fees and any incorporation fees should we also be instructed to incorporate the company):

 

1.            Our legal fees will be approximately US$39,000 to US$42,000 to prepare, review and file the application for the forex license including reviewing and commenting on the business plan and compliance manual which are documents which the FSC will heavily scrutinize. Following submission of the license application, and subject to any fixed fee arrangement agreed with the client, any additional work would be charged on a time spent basis in respect of dealing with any additional requests for information received from the FSC as it is difficult to quantify how long this process will take and how much extra information/correspondence would be required.

 

2.            US$2,000 per annum for provision of an Authorised Representative which is required by the BVI Financial Services Commission (FSC).   This is only applicable once the application is granted.

Continuing on our series of Articles about where to set up a Broker Business Offshore this week’s article explores the pros and cons of setting up a licensed Brokerage Business in Seychelles.

 

A Seychelles Securities Dealer’s License is a license which allows a Business (ie a Seychelles Company) to trade in securities, either as a principal (ie on its own account) or as an agent (on behalf of the Company’s clients). In comparable jurisdictions such a license is often referred to as a Broker’s License.

 

Whilst there are ways to trade in securities without a license (Contact Us for details) such a License:

(a)         Is useful to traders looking to attract more clients (the existence of a license invariably makes the client feel a whole lot more comfortable);

(b)         Can gift you access to a much wider range of banking partners and brokerage platforms

 

What Does a Seychelles Dealer’s License Entitle You To Do?

 

A Seychelles Securities Dealer License is a license which allows a company to trade in securities either as a Principal (on its own account) or as an agent (on behalf of its clients) and specifically can empower your business/company to:

 

(a) make or offer to make an agreement with another person to enter into or offer to enter into an agreement, for or with a view to acquiring, disposing of, subscribing for or underwriting securities or in any way to effect or cause to effect a securities transaction;

(b) cause any sale or disposition of or other dealing or any solicitation in respect of securities for valuable consideration, whether the terms of payment be on margin, instalment or otherwise or attempt to do any of the foregoing;

(c) participate as a securities dealer in any transaction in a security occurring upon a securities exchange;

(d) receive as a securities dealer under an order to buy or sell a security which is executed; or

(e) manage a portfolio of securities for another person on terms under which the first mentioned person may hold property of the other person.

(f) deal in shares, warrants, debentures, loan stock, bonds, certificate of deposits, futures, contract for difference and options.

 

In summary a Seychelles Dealer’s License can empower your Business/Company to:

 

(a)         Advise other persons concerning investment in securities

(b)         Issue, analyse or prepare reports concerning specific securities; &

(c)          Manage a portfolio of securities for another person

 

Why Seychelles?

 

Brokers and Traders in growing numbers are choosing Seychelles as the place to incorporate a Licensed Brokerage or Dealing Company. Here are some of the reasons why:

 

· A modern, extensively researched and flexible Securities law (drafted by a hugely experienced UK/Australian/Seychelles qualified Corporate Lawyer)

· Proven track record with a steady growth (10% per annum average)

· Outstanding political and social stability

· Is an enabling law (ie it’s a new law designed to tract business not an amendment of an old law designed to increase regulation)

· Regulator flexibility

· Convenient time zone at GMT+4

· Enhanced privacy (Seychelles has no public register of Directors, Shareholders or Owners)

· Excellent facilities in terms of service providers, communications, service businesses etc

· Favorable corporate tax rate (1.5% p.a)

· Attractive corporate and personal tax environment

· Access to a growing range of Double Taxation Avoidance Treaties

 · Is a/the gateway for investment into (and attractive to investors from) Africa 

· Allows the foreign Securities Dealers from recognized jurisdictions

· Free remittance of profits and capital

· Low minimum capital requirements (USD 50,000)

 

Licensing Conditions for Seychelles Securities Dealers

 

The applicant company must:

 

· Be a company incorporated under the Companies Ordinance, 1972 or under the laws of a recognized jurisdiction. Please refer to Schedule 2 of the Act (which can be accessed if you Click Here) for the list of recognized jurisdictions

· Employ at least 2 (two) natural person directors

· Employ at least one individual who is licensed as a Securities Dealer Representative

· Comply with the prescribed minimum issued and paid up capital requirement of US$ 50,000

· Comply with the insurance requirement – the licensee must have a professional indemnity cover appropriate for the nature and size of the business

· Satisfy the Authority that a fit and proper person will be licensed as a Securities Dealer Representative

· Have specified premises that are suitable for keeping registers, records and other

 

OCI’s Seychelles Dealer’s License Services

 

If you are interested in applying for a Seychelles Securities Dealers License OCI can assist you with any or all of the following:

 

 · Drafting and or Vetting of the Licence Application;

 · Incorporation and Structuring of the licensee entity;

 · Assistance with the preparation and review of application pack;

 · Liaison with service providers and regulatory authorities regarding licensing;

 · Filing the application pack at Seychelles Financial Services Authority (“FSA”), liaison and follow ups.

 · Administration

 · Middle and back office operations;

 · Advice on corporate governance;

 · Coordination of KYC and AML processes

 · Maintenance of registers and other statutory records of the company;

 · Coordination of response to client requests;

 · Corporate secretarial work;

 · Assistance with opening a bank account.

 · Accounts and Reporting

 · Preparation and maintenance of financial statements

 · Liaising with the company’s auditors during audits of the company’s financial records

 · Preparing periodic management accounts and budgets for management purposes

 · Virtual office

 · Business address including correspondence mailing address, mail handling and forwarding;

 · Registered office service including provision and maintenance of company name plate;

 · Telephone Services including telephone answering services and call forwarding services.

 

For detailed information on pricing and what information/documentation has to be supplied as part of the Application Process please Contact Us

 

 

With the increased regulation of Brokerage businesses onshore smart Brokers the world over (including Forex Brokers, Stockbrokers, Options Brokers and more) are looking to (or should be looking to) reincorporated Offshore ie in a much less regulated environment.

 

Why?

 

1.           Fewer rules: Means less time/money lost on admin and reporting

2.           Greater trading freedom: Means you can offer better margin terms to your clients

3.           Ease of Set up: It’s a lot easier to obtain a broker’s license “Offshore” than it is Offshore

4.           Less Set up cost: Means more money available to develop your business

5.           Tax Benefits: Most Offshore Financial Centres offer nil or very low tax operating environments for Brokerage Businesses

 

Generally speaking if you intend to invest or trade other people’s money that is a licenseable activity.

 

But it is possible to perform such activities without a license in some of the jurisdictions we’re working with (See below for details).

 

That being said if you are prepared to consider going down the licensing road that would be most wise as it will deliver you a much wider range of banks (and brokers/fund managers) to choose from.

 

NON-LICENSED OPTIONS

 

In terms of the non-licensing road there are 3 specific options worthy of consideration:

 

1.           If your main aim is to be a middle man between the Investor and the actual Trader you could set up a “White Label Brokerage”. This could be done via incorporating a basic International Business Company (eg a Belize or Seychelles or Nevis or Dominica IBC); or

 

2.           Alternatively you could set up a Private (non-licensed) Closed End Fund.  A Private Closed End Fund is a Limited Company that offers shares to a set number of investors who committ to invest for a minimum investment period. At the end of the agreed investment period the investor can either withdraw his capital or reinvest for a further period; or

 

3.           Another possibility is to utilise an IBC which could be contracted to trade an investor’s money in the broker’s account under Power of Attorney (this is sometimes known as a PAM Account). In this scenario the Trader is given a Power of Attorney which enables him or her to trade (but not withdraw) the investor’s money. The Trader and the Investor also enter in an agreement whereby the Trader agrees ti trade the investors funds and in return is permitted to charge the investor an agreed percentage of profits payable periodically;

 

Re the above options cost will be anywhere from $900 to $8,000 depending on what kind of structure you require.

 

Note if you/your client are just going to be an Introducing Broker (ie where you refer clients to a broker and the broker pays you some kind of introductory commission) you should not need any kind of special license.

 

LICENSED OPTIONS

 

If you wants the widest choice of banks, broker and fund managers you could/should also consider setting up/obtaining:

1.           An IBC + Broker’s License in Belize; or

2.           An IBC + Broker’s License in Seychelles (known in Seychelles as a “Dealer’s License); or

3.           An IBC + Broker’s License in BVI; or

4.           A Panama Financial Services Company; or

5.           A Licensed Private Fund in Seychelles

 

Prices for the above range from $US7,500 to $25,000.

 

See below info re Option 1 ie Belize Broker’s Licenses Over the next few weeks we will provide info re options 2,3,4 and 5 inclusive.

 

BELIZE BROKERAGE LICENSES

 

With this license, the company will be able to accept funds from the client to trade.

 

Here’s what you need to know:

 

1.            Company Details – IBC:

 

•             Share Capital must be at least $100,000

•             Bearer shares are strictly prohibited. Registered shares only.

•             No nominees permitted

 

2.            Application Procedure:

 

1.            The applicant must open an account at a bank in Belize.

2.            The applicant must deposit $100,000 in a bank in Belize, and leave it unencumbered for the duration of the license.

3.            The applicant must complete IFSC application form.

4.            The applicant must complete the biographical affidavit

5.            Applicant submits biographical affidavit, company documents, proof of deposit, and application fee of $500 to IFSC through our handling.

 

3.            Requirements:

 

a.            Business Plan

i.              Financial projections  for the next 5  years

ii.             Complete description of activities, including markets

iii.            Description of organizational structures, and details on executive team

b.            Bank account in Belize (ii – v required of each shareholder, director, beneficial owner, signatory)

i.              Completed bank application form

ii.             Notarized copy of passport

iii.            Bank reference

iv.           Professional reference

v.            Utility bill

c.             Additional info on principals:

i.              A curriculum vitae or a brief summary of applicants experience in forex

 

4.            Payments to IFSC:

 

a.            Application fee of $500 (as mentioned above)

b.            Annual license fees:

i.              $5,000 

ii.             Annual fees are due and must be paid by Jan 1 each year.

 

5.            Timeframe:

               

                1. Company formation – 1 day

                2. Bank account approval: Upon receipt of approved application forms and KYC documents (scans ok to initiate) – 3-4 weeks

                3.  Bank account funding: From approval, we wait for the bank account to be funded. Then the bank will confirm the deposit. This time varies depending on how quickly the client sends the funds.

                4. When the funds are received and confirmed, the IFSC may take up to 4 weeks to grant the license.

 

6.                 Fees:

 

The cost of obtaining a Broker’s license in Belize would be as follows:

•            Incorporation of IBC (with capital of $100,000)  : $ 1,500

•            Our fee for handling the application:                      $ 3,500

•            Bank account in Belize:                                              $    500

•            Yearly local representative fee:                                $ 4,000

•            Government application fee :                                    $    500

•            Government license fee, yearly:                               $ 5,000

 

HOW TO USE AN OFFSHORE COMPANY FOR ONLINE TRADING

 

Online Trading is an activity which lends itself well to Offshore Corporate Structuring.

 

No matter whether you trade forex or metals or commodities or oil/petroleum or futures or options an Offshore Corporate Structure can assist you to mimimize the amount of tax you would otherwise have to pay at home.

 

To summarise how it would work is:

•            You set up a zero tax International Business Company (“IBC”)

•            The IBC opens an account with a 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 wherever you are ordinarily resident for tax purposes 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)

•            If you don’t want the authorities to know how much money you are earning by way of wages you could use an anonymous ATM or Debit/VISA card to withdraw your wages from an Auto Tele Machine

•            The majority of trading profits could be reinvested Offshore potentially tax free.

 

A lot of people these days offer products for sale on Amazon.

 

Such a business lends itself well to an “Offshore” Corporate Structuring Plan.

 

Let’s look at atypical example…

 

In this example the client sells Jewelry online via Amazon.

 

How it works is:

•          Any jewelry you want to manufacture/sell should be manufactured by/purchased by the Tax Free Offshore Company (“IBC”)

•          The company would be incorporated in a nil tax jurisdiction and would be managed/controlled from an Offshore (ie nil tax) jurisdiction (which would entail the appointment of an Offshore/Tax Haven based Nominee Director – which is a service OCI would provide)

•          The agreement with Amazon would be signed Offshore, by the Nominee Director, in the nil tax environment

•          Any individual contracts to buy or sell or market the jewelry directly would be signed/concluded offshore (eg signed or ratified by the Nominee Director in a nil tax environment)

•          In effect any/all profits generated have been generated online

•          In the case of an online business typically tax liability lies only in the country from which the Company is managed and controlled

•          As the Company has been structured with a (tax haven based) Nominee Director/Shareholder (ie management and control would be “Offshore” ie in a nil tax environment) any profits generated have been earned (and ideally banked) Offshore ie in a nil tax environment

 

Note Amazon only accepts sellers from certain jurisdictions. The full list can be viewed here: https://www.amazon.com/gp/help/customer/display.html?nodeId=200417280

Nil or low tax jurisdictions acceptable to Amazon include:

•          Costa Rica

•          Cyprus

•          Hong Kong

•          Ireland

•          Mauritius

•          Panama

•          Singapore

•          USA (eg Delaware, Wyoming, Nevada, Colorado, Arkansas, Oregon etc LLCs which when used with an IBC can produce a nil tax result)

 

 HOW TO UTILIZE MONEYS BANKED BY YOUR IBC   

 

There are 6 ways to bring home money from an IBC:

 

1.         Set yourself up as an arms’ length consultant and have the IBC pay you consulting fees periodically. This means you would only have to pay tax on what you bring into your home country (and even that tax you should be able to minimise as a lot of what otherwise-might-be personal expenses could be written off as business costs, eg home office, utilities, car, phone, electrical/office equipment, stationery, computers travel etc etc etc). The rest of the IBC’s income can remain offshore and be (re)invested offshore potentially tax free. Say your target capital base is 3 million Euro and every year you leave at least half the IBC’s income offshore. Because you’re not paying tax yearly on all the IBCs income instead of taking 20 years to accumulate 3 million Euro, with the power of compounding, you could accumulate 3 million within 5 to 7 years. This is what my/our smarter clients do ie they pay a little bit of tax at home each year on their overseas earnings but most of their income is kept offshore and reinvested offshore.

 

2.         Bring back the money as a loan. Yes this can be done but great attention to detail will be required particularly with respect to lending parties, loan terms and documentation.

 

3.         Use an anonymous debit card and withdraw cash from automated teller machines. This can still work in some places though it should be noted that some of the bigger countries now have the ability to trace and connect one to such withdrawals.

 

4.         Have your IBC buy Bitcoins and then make a transfer of bitcoins to you (you would need to firstly set up a bitcoin account). You can then buy valuable goods and services using bitcoin and none of these purchases would be seen by your local authorities.

 

5.         Have your IBC form and fund a subsidiary ie 2nd tax free Offshore Company and then have that 2nd Offshore Company buy any substantial assets you’d like to have onshore (eg cars, real estate, shares, general investments etc). Yes in theory you could have your IBC buy these things but, given most likely there will be a Consultancy Agreement in place between you and the IBC (and payments going from the IBC to you which will be visible to your local tax authorities) the smarter thing to do would be to have a 2nd (seemingly unrelated) IBC buy these items for you.

 

6.         Another option is to take the long hold view. What this entails is letting your capital base build over a period of years; Then, when you get to the stage where you are ready to close down your Offshore business, (or you are ready to retire) you can do one of two things: Either

 

(a)       Expatriate your home country and become “non-resident for tax purposes”, shift to a country which has no income tax and/or CGT (eg Panama, Seychelles, Monaco, etc etc etc) and draw down the capital from your offshore entity (and bank the money tax free); or

(b)       Expatriate your home country, become “non-resident for tax purposes”, and become a PT ie a Perpetual Traveller. How this can work is you spend say 4-5 months a years in one country, 4-5 months a year in another country and the rest of your time travelling. This way, assuming you are not seen to have substantial ties with any one country, you should not be considered as tax resident in any one country. Then you simply draw down the capital from your offshore entity (and bank the money tax free).

 

Note, provided you have successfully become a non-resident for tax purposes of your home country, there’s nothing stopping you from changing your mind a year or 2 later about the expat life and returning to your home country with a bunch of tax free dollars in your back pocket.

 

Note unless you (have expatriated or) live in a country that does not have CFC laws (and/or unless or are structured in a tax effective/compliant manner) you may still be required to declare and pay tax at home on your IBC’s earnings.

 

 

 

 

 

Background

The Federal Territory of Labuan is an island group, 92 sq km in size, with a population of 78,000 situated off the north-west coast of the former British Borneo and Brunei Darussalam. Labuan is part of Malaysia and comprises seven small islands of which Pulau Labuan is the largest. Labuan lies off the north-west coast of Borneo, 8 kms from the Malaysia state of Sabah and is strategically located roughly equidistant from Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Manila and Singapore. It is mostly flat with a good harbour and is accessible by air, with daily services from Kuala Lumpur and from most Asian capitals.

 

Labuan is located on the major shipping and air routes of the Asian Region and is Malaysia’s only deepwater harbour. It has a warm humid tropical climate, with daily temperatures averaging 30°C with two monsoon seasons ie from April to June and from September to December. The main language is Bahasam Melayu but English, Tamil and various Chinese dialects are widely spoken. Many documents and publications are available in English (including the Labuan offshore Legislation).

 

Political & Economic History

 

In 1984 the administration of Labuan was taken over by the Federal Government of Malaysia which consists of thirteen states and two federal territories (ie Kuala Lumpur and Labuan). Malaysia has an unusual political system with power held in the hands of nine hereditary sultans, who elect a head of state every five years from among their number. Legislative power is exercised by a bicameral parliament comprising of a House of Representatives (Dewan Rakyat) and a Senate (Dewan Negara), Executive power is held by the Prime Minister who governs with the assistance of a ministerial cabinet. Appointments are for a five year term.

 

Malaysia is economically strong and considered politically stable. Under the auspice of LOFSA (the Labuan Offshore Financial Services Authority) the Malaysian government has invested heavily in improving the physical infrastructure of Labuan which is now completely modernised and boasts a state of the art telecommunications system including an Internet Gateway which provides an e-commerce platform. More than 50 of the world’s top banks have branches in Labuan.

 

Advantages of Labuan Companies:

o   All offshore business transactions attract no stamp duty and capital gains are not subject to any form of tax

o   Not subject to Malaysian exchange controls

o   Malaysia enjoys tariff reductions in the ASEAN Free Trade Area (AFTA), and has signed more than 60 Double Taxation Avoidance Treaties (“DTAs”)

o   Malaysia boats an English style legal system

o   Labuan IBFC offers a wide range of financial products and services (including both conventional and Islamic)

o   Corporate documents are written in English

o   There is no requirement to disclose to the authority the names of the beneficial owners of the Company

o   Company names can be in a foreign language

 

Features of Labuan Companies:

o   Speedy setup: A Labuan Company can be incorporated in as little as 3 days.

o   It may use “(L)” as part of its name. An offshore company may also have as part of its name the word “Berhad” or “Bhd” but must then add the word “(L)”.

o   There are no minimum share capital requirements. The share capital may be denominated in any currency except Malaysian Ringgit. Separate classes of shares may be created with differing rights to dividends or otherwise. A minimum of one shareholder is required to establish a company. Shareholder can be individuals or corporations. Shareholders need not be resident.

o   Companies require a minimum of one director.

o   Corporate Directors are permitted

o   Directors may be resident in any country

o   Only one shareholder minimum is required

o   A Local secretary is required (which OCI Provides)

o   Directors meetings can be held anywhere

o   The standard authorised capital is US$ 10,000; divided in to 10,000 shares of US$ 1. The minimum issued capital is one share, which may be fully or partly paid.

o   An annual return in the prescribed form made up to a date not earlier than 14 days before the date of lodgment is required to be lodged each year and not later than 30 days prior to the anniversary of the date of incorporation of the company.

o   Classes of Shares Permitted: Registered shares of par value, preference shares, redeemable shares and shares with no voting rights.

o   There is no exchange control in Malaysia. The Malaysian currency is the Ringgit (RM). Save for certain exceptions, offshore companies in Labuan are required to carry on business in a foreign currency.

 

Procedure to Incorporate

 

To incorporate an Offshore Company in Labuan you must submit to the Registry:

• ·       Memorandum and Articles of Association,
• ·       Consent form to act as a director,
• ·       Statutory Declaration of Compliance with the Companies Act
• ·       Certificate of Identity
• ·       Statutory declaration by persons before appointments as directors
• ·       The incorporation fee.

 

Company Name Options & Restrictions

 

Labuan Company names must include one of the following words, or an abbreviation thereof:
Corporation
Incorporated
Limited
Public Limited Company
Societe Anonyme
Sociedad Anonima
Aktiengesellschaft
Naamloze Vennootschap
Perseroan Terbat

 

Names resembling the name of an existing company or names that in the opinion of the Registrar suggest Royal or government patronage are not permitted. Names, which the Registrar considers undesirable, will be rejected. Certain names/words require consent or a license ie Bank, building society, insurance, assurance, reinsurance, fund management, investment fund, trust, trustees, Chamber of Commerce, university, municipal or their foreign language equivalents. Re Suffixes to Denote Limited Liability any of the following may be used:Limited, Incorporated, Corporation, Sociètè Anonyme, Sociedad Anonima or their relevant abbreviation. If the Malaysian word Berhad is used then it must be preceded by “(L)” to denote that the company is incorporated in Labuan.

 

Business Restrictions

 

A Labuan Offshore Company should only carry on business in, from or through Labuan. A Labuan Offshore Company may not:

 

(a)  Do business with a resident of Malaysia (except as permitted by the Offshore Banking Act 1990);

(b) Carry on the business of Banking or Insurance or such similar business unless it is licensed so to do under the Offshore Banking Act 1990 or the Offshore Insurance Act 1990;

(c)  Do business in the Malaysian currency save for defraying its administrative and statutory costs;

(d) Carry on the business of shipping or petroleum operations in Malaysia

(e)  Operate as a trust company.

 

Exceptions to carrying on business with residents of Malaysia:

 

A Labuan Offshore Company is not treated as carrying on business with residents of Malaysia if:

(i)                it makes or maintains deposits with a person carrying on business in Malaysia;

(ii)               it makes contact with professional advisers carrying on business in Malaysia;

(iii)            it prepares and maintains books and records in Malaysia;

(iv)            it acquires or holds any lease or property for operational purposes or accommodation of its employees;

(v)              it holds directors’ or members’ meetings within Malaysia;

(vi)            it holds shares, debt obligations, or other securities in a company incorporated under the Offshore Companies Act 1990 or in a domestic company, or holds shares, debts obligations or other securities for the purposes of a transaction entered in to in the ordinary course of a money-lending business.

 

Taxation

 

Labuan Offshore Trading Companies pay 3% tax on net audited profits or the sum of RM 20,000 (where no audit is required). Non-Trading companies are tax exempt.

 

The locality of profits from trading in goods and commodities is generally determined by the place where the contracts for purchase and sale is effected. “Effected” means more than where the contract is signed and includes the location of negotiation, conclusion and execution of the terms of the contracts.

 

If a Labuan Company earns commission by securing buyers for products or by securing suppliers of products required by customers, the activity which gives rise to the commission is the arrangement of the business to be transacted between the principals. The source of the income is the place where the activities of the commission agent are performed.

 

Double Taxation Agreements

 

To date Malaysia has signed 74 double taxation treaty agreements (DTAs), making its DTA network the most extensive in the region. Labuan companies can now make an irrevocable election to be taxed under the Malaysian Income Tax Act 1967 (ITA), thereby affording the Company access to all of Malaysia’s DTAs. A Labuan holding company which has a co-located office in Kuala Lumpur must make the election to be taxed under the ITA.

 

Malaysia’s DTA partners include: Albania, Argentina, Australia, Austria, Bahrain, Bangladesh, Belgium, Brunei, Canada, Chile, China, Croatia, Czech Republic, Denmark, Egypt, Fiji, Finland, France, Germany, Hungary, India, Indonesia, Iran, Ireland, Italy, Japan, Jordan, Kyrgyzstan, Kuwait, Kyrgyz, Laos, Lebanon, Luxembourg, Malta, Mauritius, Mongolia, Morocco, Myanmar, Namibia, Netherlands, New Zealand, Norway, Pakistan, Papua New Guinea, Philippines, Poland, Romania, Russia, San Marino, Saudi Arabia, Seychelles, Singapore, South Africa, South Korea, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Taiwan (Income Tax Exemption Order), Thailand, Turkey, UAE, UK, USA, Uzbekistan, Venezuela and Vietnam.

 

Financial Records

 

A set of accounting records must be kept in Labuan.

 

A trading company, which pays 3% of audited net profits, is required to appoint an auditor and file audited financial statements. However trading companies which elect to pay tax of RM 20,000 p.a. are not required to file financial statements. Such companies are exempt from appointing an auditor if they have not carried out licensed activities and the members of the company have resolved that no auditor be appointed.

 

There is a filing fee for “adoption of accounts” and if the accounts of the Labuan Company have been audited, and for the “lodgement of the said audited accounts”.

 

A non-trading Labuan Company is not required to appoint an auditor nor file audited financial statements.

 

OCI Labuan Company Formation Services

 

At OCI we believe in giving you more for your money than would the average IBC formation service. Hence included in the incorporation package for your Labuan Offshore Company is the following:

 

Services:

 

• ·       Unlimited name availability inquiries
• ·       Advice from an experienced International Corporate Lawyer on how to structure your company
• ·       Preparation (overseen by a lawyer) of application to incorporate the company
• ·       Preparation (overseen by a lawyer) of the company’s memorandum of association
• ·       Preparation (overseen by a lawyer) of the company’s articles of association
• ·       Attending to filing incorporation request with the company registry  
• ·       Attending to payment of government filing fees
• ·       One year’s Registered Agent service in the country of incorporation
• ·       One year’s Registered Office service in the country of incorporation
• ·       Mailing address in the country of incorporation
• ·       Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)
• ·       Unlimited free legal consultations for 12 months

 

Documents included in your Incorp pack:

 

• ·       Certificate of incorporation
• ·       2 sealed/stamped copies of the company’s Memorandum of Association
• ·       2 sealed/stamped copies of the company’s Articles of Association
• ·       Resolution appointing first director/s
• ·       Resolution appointing first shareholder/s
• ·       Up to 5 share certificates
• ·       Resolution to open a bank account
• ·       Resolution to rent an office
• ·       Resolution/s to engage a Phone, Internet & Website service provider
• ·       Resolution to hire a staff member/s
• ·       Resolution to appoint a company lawyer
• ·       Resolution to appoint a company accountant
• ·       Resolution appointing you as the company’s authorised representative in commercial negotiations
• ·       Resolution issuing a Power of Attorney in your favour
• ·       Agreement authorising you to represent the company in commercial negotiations
• ·       Power of attorney authorising you to sign documents on behalf of the company
• ·       Register of directors
• ·       Register of shareholders
• ·       Expression of wishes (ie an “Offshore” Will)
• ·       Lawyer authored User Guide (“How to Use Your Offshore Company”)

 

Price (all inclusive): $US 2,750

 

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): $ 3,150

 

From second year: $1,850 (+ Nominees as/if required)

 

If you’d like to know more about Labuan companies Please email us at info@offshorecompaniesinternational.com 

 

Every effort has been made to ensure that the details contained herein are correct and up-to-date, but this does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.

 

 

DEVIN NUNES raised eyebrows in 2013 when, as chairman of a congressional working group on tax, he urged reforms that would make America “the largest tax haven in human history”. Though he was thinking of America’s competitiveness rather than turning his country into a haven for dirty money, the words were surprising: America is better known for walloping tax-dodgers than welcoming them. Its assault on Swiss banks that aided tax evasion, launched in 2007, sparked a global revolution in financial transparency. Next year dozens of governments will start to exchange information on their banks’ clients automatically, rather than only when asked to. The tax-shy are being chased to the world’s farthest corners.

 

And yet something odd is happening: Mr Nunes’s wish may be coming true. America seems not to feel bound by the global rules being crafted as a result of its own war on tax-dodging. It is also failing to tackle the anonymous shell companies often used to hide money. The Tax Justice Network, a lobby group, calls the United States one of the world’s top three “secrecy jurisdictions”, behind Switzerland and Hong Kong. All this adds up to “another example of how the US has elevated exceptionalism to a constitutional principle,” says Richard Hay of Stikeman Elliott, a law firm. “Europe has been outfoxed.”

 

The Foreign Account Tax Compliance Act (FATCA), passed in 2010, is the main shackle that America puts on other countries. It requires financial institutions abroad to report details of their American clients’ accounts or face punishing withholding taxes on American-sourced payments. America’s central role in global finance means most comply.

 

FATCA has spawned the Common Reporting Standard (CRS), a transparency initiative overseen by the OECD club of 34 countries that is emerging as a standard for the exchange of data for tax purposes. So far 96 countries, including Switzerland, once favoured by rich taxophobes, have signed up and will soon start swapping information. The OECD is also leading efforts to force multinationals to reveal more about where and how profits are made, and the deals they cut with individual governments, in order to curb aggressive tax-planning.

 

Because it has signed a host of bilateral data-sharing deals, America sees no need to join the CRS. But its reciprocation is patchy. It passes on names and interest earned, but not account balances; it does not look through the corporate structures that own many bank accounts to reveal the true “beneficial” owner; and data are only shared with countries that meet a host of privacy and technical standards. That excludes many non-European countries.

 

All this leads some to brand America a hypocrite. But a fairer diagnosis would be that it has a split personality. The Treasury wants more data-swapping and corporate transparency, and has made several proposals to bring America up to the level of the CRS. But most need congressional approval, and politicians are in no rush to enact them. Some suspect that their reluctance, ostensibly due to concerns about red tape, has more to do with giving America’s financial centres an edge.

 

Meanwhile business lobbyists and states with lots of registered firms, led by Delaware, have long stymied proposed federal legislation that would require more openness in corporate ownership. (Incorporation is a state matter, not a federal one.) America will often investigate a shell company if asked to by a foreign government that suspects wrongdoing. But incorporation agents do not have to collect ownership information. This is in contrast to Britain, which will soon have a public register of companies’ beneficial owners.

 

America the booty-full

 

No one knows how much undeclared money is stashed offshore. Estimates range from a couple of trillion dollars to $30 trillion. What is clear is that America’s share is growing. Already the largest location for managing foreign wealth, it has picked up business as regulators have increased information-exchange and scrutiny of banks and trust companies in Europe and the Caribbean. Money is said to be flowing in from the Bahamas and Bermuda, as well as from Switzerland.

 

A recent investigation by Bloomberg, a news provider, found several wealth managers whose American arms have benefited, including Rothschild, a British firm, and Trident Trust, a provider of offshore services. New business has been booked through subsidiaries in states with strong secrecy laws and weak oversight, such as South Dakota and Nevada. Another investigation, by Die Zeit, a German newspaper, concluded that for the tax cheat looking to pull money out of Switzerland, America was now the safest bet. “It’s going nuts. Everyone is doing it or looking into it,” says a tax consultant, speaking of the American loophole. Some transfers are being requested for legitimate reasons of confidentiality—for instance, by Venezuelans who fear extortion or kidnap if their wealth is known. But much is of dubious legality.

 

America is much safer for legally earned wealth that is evading taxes than for lucre that was filthy from the start. It has shown little appetite for helping enforce foreign tax laws and, unlike some other countries, does not count the banking of undeclared money as money-laundering. “Foreigners looking to evade tax in America are usually safe because of its secrecy,” says Jason Sharman of Griffith University in Australia. “But for those with dirtier money there is a small though real risk the US will investigate and apply the full force of the law, which is a scary prospect.”

 

Dividing the spoils

 

Foreign banks losing business to America can sometimes share in the profits, explains one tax consultant. A Swiss bank, say—generally a smaller one, as big ones are too scared—tells its client to close an account and open one with an American custodian bank. The client then appoints the Swiss bank as investment manager on the custodian account, and that bank instructs the custodian which funds to buy, often the Swiss bank’s own products. The Swiss bank earns fees for advice and fund-management; the custodian picks up business; and the account is deemed for regulatory purposes to be American, meaning it avoids the disclosure rules that apply only to countries signed up to the CRS.

 

Only a few other financial centres have declined to commit themselves to the CRS, among them Bahrain and Nauru. Hong Kong has signed but will implement it one tax-treaty partner at a time rather than using a multilateral shortcut; some regard this as a delaying tactic. Undeclared Asian and Middle Eastern money is moving to Taiwan and Lebanon, respectively, both of which are outside the club. Panama, which vies with Miami for Latin American money, looks set to back out of its tentative commitment to the CRS, using America’s double standards as an excuse (see article).

 

Frustration with America has grown in Europe, which forms the core of the CRS. A group in the European Parliament argues that, if America refuses to reciprocate fully, it should be hit with a reverse FATCA: a levy on payments originating in the EU that flow through American banks. “We don’t want a tax war, but nor can the US have it all its own way,” says Molly Scott Cato, one of the MEPs. One obstacle is that tax measures must be approved unanimously by the EU’s 28 member states.

 

Others point out that the CRS itself has flaws. It was drafted in a rush, and one expert thinks it would fail to catch 80% of tax-dodging. Financial firms have been calling to report loopholes that could benefit less scrupulous rivals, most of which will be closed before it comes into force or soon after, promises the OECD. (Keeping banks’ compliance costs within reasonable limits means that some will inevitably remain.)

 

The Economist

 

With the impending exit of the UK from the EU increasing numbers of clients are looking at the Irish Agency Company/IBC ahead of the UK Agency Company/IBC Model as a means of doing Tax Effective Business in Europe.

 

What is an Agency Company? 

 

An Irish company is formed specifically to operate as a nominee or agent for a principal company – in effect the Irish company acts as a fiduciary or agent for the principal company.

 

How is it used and implemented?

 

The two companies sign an agreement which specifies the terms of the agreement between them. All business and sales is then conducted in the name of the Irish company, but on behalf of the principal company. The customer enters into a contract with the Irish company, is invoiced by them and pays the invoices into the bank account of the Irish company. Income is then remitted to the principal company by the Irish company after deduction of an agreed commission.

 

Ownership and Control of the Company

 

The Irish company is managed and controlled by the principal company and its officers, as is the bank account of the Irish company. It should be noted that the Irish company cannot trade within Ireland or with any Irish businesses.

 

The Irish company will pay tax on the profits which it makes on the fees retained in accordance with the agency or nominee agreement.

 

Why is it Used?

 

1. This structure is ideal for use as a European Trading structure where the receipts of invoices from a Non EU company would not be acceptable.

 

2. This limits the difficulties normally experienced while directly dealing with Non EU companies.

 

Apart from the practicality point of view as stated above there are also tax advantages

 

• Low tax vehicle – Tax is only payable on 5-10% of turnover of the parent company.
• Ideal where receipt from Non EU company would not be acceptable.
• Excellent for situations where an onshore profile is required.
• Can be used effectively in EU VAT triangulation situations.

 

Corporate Structure

 

The Irish Agency Company is a popular trading vehicle with minimum exposing to Irish tax. An lrish Agency Company is only a subject to lrish taxation on the agency fee that it receives, for example 5% on the gross profit, minus administrative costs of the Irish company. Nevertheless high taxation rate 25%, an lrish company in an Agency structure is a tax efficient and cost effective method for structuring the provision of services, commissions and general trading.

 

Key Advantages

•    Irish company can conduct Agency Contract with Offshore principal.
•    All business is conducted in the name of the Irish company. Ready-made Irish Ltd. with VAT available.
•    Corporate tax applies only on the agency commission that Irish company receives.
•    Financial statements will only disclose the agency fee as turnover. While turnover of the offshore principal is not exposed in the statutory accounts.

 

Typical Structure

An lrish company in an agency structure can be used for the supply of services, commissions and the purchase and sale of goods. The lrish company will enter an agency agreement with an offshore principal. The lrish company will undertake as agent to enter into contracts, commission agreements, etc. on account of and on behalf of the offshore principal:

•    Contracts for the purchase of products or services are concluded by the offshore principal directly or through the lrish company on the instruction of the offshore principal.
•    Contracts for the sale of products or the provision of services are concluded by the offshore principal directly (but formalized by the lrish company on the instruction of the offshore principal).
•    The lrish company to be instructed by the offshore principal for all action required to be taken.
•    lrish company will issue invoices with its VAT number. The lrish company will also sign documents and handle funds.
•    The lrish company cannot deal with lrish suppliers/service providers or lrish customers.

 

Taxation

An lrish company in an agency structure will only be subject to lrish taxation on the agency fee that it receives.  The agency fee will generally be equivalent to 5% of the gross profit on transactions undertaken on behalf of the offshore principal. An lrish company in an Agency structure cannot rely on any of the lrish double tax treaties.

 

OCI Irish Company Package Inclusions

 

The incorporation fee as quoted below includes the following documents:

 

• ·       Original Certificate of Incorporation
• ·        2 bound copies of the Memorandum and Articles of Association
• ·       PDF copies of the above documents
• ·       Share Certificate/s
• ·       Minutes of Directors First Meeting
• ·       Luxury Company Seal

 

The fee also includes us supplying Irish Registered agent and office service for the 1st year + mail forwarding and full Company Secretarial Service. 

 

The registered office/registered agent/annual company secretarial service includes specifically the following:

 

• ·       Electronic Filing of the Companies Registration Office (CRO) Annual Return using our Company Secretarial Software.
• ·       Sending updated information and documents on time to the CRO and other relevant bodies
• ·       Looking after all Company Secretarial matters e.g. miscellaneous changes in directors, registered office, shareholders, increase in share capital
• ·       Holding, updating and maintaining the company’s registers including the register of members, registers of directors and company secretaries and their interests in shares and contracts in the company
• ·       Preparation of Annual General Meeting (AGM) Proxy Forms, notices and minutes
• ·       Keeping of AGM, EGM and Directors minutes with register (if required)
• ·       Keeping custody of the Company Seal (if required)
• ·       2.5 hours of company secretary time included
• ·       Monitoring of company on CORE system (protects against fraud)
• ·       Provision of Corporate Company Secretary

 

Price all inclusive $US1,650

Plus (if required):

·       For a non-Irish resident Nominee Director: $US1,000 (or)

·       For an Irish resident Nominee Director: Price on application