Category Archives: Company- Management

Are you looking to launch a Crypto or Blockchain focussed Enterprise?

If so, straight up, you’ll be pleased to know, that Offshore Companies are widely used in the Cryptosphere including for:

• Bitcoin Mining
• Trading Cryptocurrencies
• Investing in Cryptocurrencies
• ICO Launches
• Cryptocurrency Exchanges
• Trading/Manufacturing NFTs
• Launching DAOs
• Crypto Token generation/sale
• And more

Crypto Business License Options

What kind of Crypto business do you intend to do?

Would your prospective/targetmarket dictate (eg in terms of market credibility) that you come to market as a Licensed Organisation?

(if so) firstly you will need to work out what kind of Crypto license you could or should apply for.

There are a number of Licenses you could potentially apply for “Offshore” for Crypto/Blockchain related Enterprises including:

1. A Gibraltar DLT License
2. An Estonian Cryptocurrency Exchange (and/or Crypto Wallet Provider) License
3. A Malta Crypto business license
4. A Mauritius VASP License
5. An Isle of Man ICO License
6. A Swiss ICO license
7. A Lithuanian Cryptocurrency Exchange/Wallet Provider License
8. A Caymans VASP License
9. A BVI VASP License
10. A UAE Crypto business license

The cost to incorporate and apply for a License for businesses of the kind described above typically ranges from $US20,000 to circa $50,00 depending on which jurisdiction you choose.

Decentralized Autonomous Organizations (DAOs)

If you’d prefer to not have to go down the VASP Licensing road you might want to consider setting up as a DAO.

A DAO is a Blockchain structure (like a secure database), that any member can leverage to self-govern through participation; A DAO sets rules – baked into code – and permits voting through digital tokens (a form of cryptocurrency) — all while leveraging smart contracts. Only that DAO’s Token holders have the power to vote.

In essence, a DAO allows groups of participants to create organizational forms beyond the hierarchical, top-down corporate firm (which must be responsive to the needs of a board and shareholders). DAOs essentially eliminate or minimize the roles of executives and managers in the organization, relying instead on transparent rules that apply to all members and participants.

The primary aim behind the creation of a DAO is to create a virtual entity to replace the central management of previous forms of organization. A decentralized autonomous organization (DAO), is an organization, particularized by rules encoded as a computer program, that is transparent, and controlled by the organization members. In terms of decision making a DAO is, in effect, unable to be influenced by any outside party including any central government.

DAOs are particularly prevalent in the Ethereum blockchain ecosystem, combining ideas about organizational forms, coordination, network effects, blockchain, and smart contract technology. A DAO allows a group to organize around a mission or goal and to coordinate the mission via smart contracts, enforced immutably and autonomously on the blockchain. DAOs represent an evolution in how people coordinate with one another, as the organization itself is autonomous from any third party intermediary’s influence and goals.

The main reason a DAO is formed is to decentralize and automate the governance of an organization. The rules by which a DAO operates are encoded as a computer program that is accessible via the blockchain, and controlled by all of the organizing members, rather than by a central governing board. Since the blockchain is essentially a public record, the DAO seeks to provide total transparency, requiring that all of its financial transaction records be recorded by a public facing blockchain. There is no top-down hierarchal structure to a DAO; A DAO depends almost entirely on the operation of autonomous smart contracts to enliven the rules and carry out the decisions made by/within the organization. In terms of where you might incorporate a DAO in a low or nil tax environment:

1. You could set up a Marshall Islands DAO LLC
2. You could set up a Wyoming DAO LLC
3. You could set up a Panama Foundation DAO

You could also potentially set up a Caymans Foundation Company to act as a DAO.  However, you’d need to be able to satisfy the Compliance people in the Caymans that what you’re proposing is a not a licenseable under the Caymans VASP Legislation.

Non Licensed Options??

If you’re a typical start up you’ll probably find it hard to find the 20-50k needed to apply for a Crypto Business License.

If you’d prefer to go down the non-licensing road you could incorporate a Crypto Token Manufacturing/Marketing business as a Company in St Vincent (which has passed a VASP Bill but which has not come into existence) or (ideally) in Panama…. Panama tried to pass a VASP law but it was struck down as unconstitutional by the Supreme Court. Hence there is no risk, if you incorporate in Panama, of a law being passed subsequent to your incorporation requiring you to either migrate/redomicile out of the jurisdiction or apply for a VASP license.  

Samoa also has not passed VASP Legislation (and has not publicly stated an intention to do so).

Samoa is attractive in that it has rather minimal annual compliance requirements (eg there is no requirement to prepare formal accounts or to file a return)

For details in regards to Samoa Company formations check this Link: https://offshoreincorporate.com/samoa-international-business-companies/

For details in regards to Panama Company formations check this Link: https://offshoreincorporate.com/panama-offshore-companies/

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

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

Are you looking to do a Crypto Token Launch?

Or to set up a Cryptocurrency Exchange?

Most Offshore jurisdictions have either passed (eg Caymans, BVI, Mauritius etc) or are in the process of passing VASP (ie Virtual Asset Service Provider) Legislation. The nett effect of VASP Laws is if you propose to do an ITO or IDO or to mint a new Crypto coin (or if you’re planning to set up a Cryptocurrency Exchange business), and if you want to incorporate in a country where such activity is now regulated you need to apply for a VASP License before you can incorporate.

Previously you could set up such a business in Belize or Seychelles or St Vincent without needing to apply for any form of Special License. Unfortunately. these jurisdictions have all announced that they intend to pass VASP legislation/regulations in the near future and until then, as a matter of policy, they won’t be allowing any business that looks or smells like a Virtual Asset Service Provider enterprise to incorporate in the jurisdiction.

Unfortunately to get your hands on a VASP license is not easy. You’ll need to have deep pockets (eg $US50,000+) to cover legal fees/set up costs and you’ll need to be patient as such a license can take 3 months+ to be approved.

But there is still a viable “Offshore” Incorporation option that does not require one to go down the VASP licensing road, ie the world’s second most popular “Offshore” Jurisdiction, the mighty Panama.

How Panama came into play as a VASP Enterprise locale is an interesting story.

The Panama Legislature in October 2022 passed a Bill that would have established a VASP regime in Panama for the following activities:

• Exchange between virtual assets and fiat currencies.
• Exchange between one or more forms of virtual assets.
• Transfer of virtual assets.
• Custody virtual assets or instruments that allow virtual asset control
• Participation and provision of financial services related to the offer or sale of a virtual asset by an issuer, including, but not limited to security token offerings (STOs).
• Financing through virtual assets
•  Authorized virtual asset Liquidity Provider
• Digital Wallet service provider

The bill proposed that the Superintendency of Banks would  be the regulator for VASP (virtual asset service providers), payment systems, and electronic money issuers.

The possibility of payments in crypto assets to the State was also to have been regulated by the bill.

BUT under the Panama model of republic such a law can be challenged by the President of Panama.

Which is exactly what happened…

And the Panama Supreme Court found for the President declaring the law Unconstitutional.

Which means that you can incorporate a VASP business in Panama without needing to apply for any form of Special License (ie providing you’re not planning to create/offer a “Security”)

Panama (which does not tax income earned outside of Panama) offers 2 low cost/low admin entities that could potentially be deployed to own and operate a VASP business ie:

A nil tax SA Company: https://offshoreincorporate.com/panama-offshore-companies/ ; AND

A nil tax Private Foundation: https://offshoreincorporate.com/panama-tax-free-foundations/

OCI specializes in assisting Blockchain startups and can assist you to incorporate in Panama should you wish to head down that road.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

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

This Guide focuses on the legislative enactments concerning the establishment of private trust companies in the British Virgin Islands (BVI) and illustrates the clarity of the new regulations following the wholesale repeal of the Banks and Trust Companies (Application Procedures) Directions 1991.

INTRODUCTION

New rules relating to private trust companies (PTCs) known as the Financial Services (Exemptions) Regulations, 2007 (Regulations) came into force in the BVI on 1 August 2007 following amendments made on 15 January 2007 to the BVI’s Financial Services Commission Act, 2001 (FSC Act), the latter paving the way for the introduction of the Regulations. Further amendments to the trust legislation were introduced in 2013, enhancing the PTC regime.

In this Guide, we discuss the Regulations and outline the conditions which must be satisfied to enable a company to benefit from the exemption from the trust licensing regime in the BVI as well as, in particular, highlighting the new responsibilities imposed by the new rules upon the registered agent acting for a PTC.

Under the current regulatory framework, certain types of company are able to seek an exemption from the usual requirement to obtain a trust licence under the BVI’s Banks and Trust Companies Act 1990 (Act). It was the general intention of the BVI Government to create a system whereby specific classes of trust company are granted an exempt status.

Most unremunerated PTCs which do not offer trustee services to the general public (i.e. do not carry on the business of a trustee) are now able to benefit from the new exemption regime. Also, unremunerated BVI-incorporated companies which merely hold assets as nominees (or bare trustees) are automatically entitled to benefit from the exemption, provided that they do not carry on the business of a trustee.

WHAT IS A PRIVATE TRUST COMPANY?

A PTC is, essentially, a company which possesses trustee powers and which does not conduct trust business with the general public, its sole purpose being to act as a trustee of a family trust or a group of related trusts.

The Regulations define the term “private trust company” to mean a company:

• That is a qualifying BVI company;
• That is a limited company within the meaning of the BVI Business Companies Act, 2004 (BVIBC Act); and
• The memorandum of which states that it is a private trust company

A “qualifying BVI company” in turn is defined to mean a company that:

• has first incorporated under the BVIBC Act;
• has been re-registered under Part II of Schedule 2 of the BVIBC Act;
• has been re-registered under paragraph 6(1)(a) of Part III of Schedule 2 of the BVIBC Act and in respect of which an election to disapply Part IV of Schedule 2 has been registered; or
• has been re-registered under paragraph 6(1)(b) of Part III of Schedule 2 of the BVIBC Act and in respect of which an election to disapply Part VI of Schedule 2 has been registered.

TRUST LICENSE EXEMPTION

A PTC will not be required to obtain a trust licence under the Act where its trust business consists solely of either:

1. Unremunerated trust business; or
2. Related trust business.

For the avoidance of doubt, the business of a PTC shall be deemed to consist solely of unremunerated trust business, notwithstanding that part or all of such unremunerated trust business also qualifies as related trust business. The same rule applies in respect of related trust business.

What is Unremunerated Trust Business?

Unremunerated trust business is trust business which is carried on by a PTC where remuneration is not payable to, or received by, the PTC or indeed any person associated with the PTC, in consideration for, or in relation to, the services that constitute the trust business.

For the purposes of the rules “remuneration” includes money or any other form of property and it matters not whether such remuneration is payable, or is received, out of the assets of a “relevant trust” (defined by the Regulations to mean a trust with respect to which a PTC is providing services that constitute trust business), from the settlor or beneficiary of such a trust, or from any other person pursuant to an arrangement with the settlor or a beneficiary of a relevant trust.

Any remuneration paid to a director of the PTC or a person associated with the PTC is regarded as “remuneration” under the new rules unless it is paid or received by way of the director’s remuneration:

1. With respect to professional director services provided to the PTC; and
2. The director is not otherwise associated with the PTC, i.e. by virtue of having a direct or an indirect beneficial interest in it.

The Regulations make clear that payments which are made to a PTC to indemnify it for costs and expenses paid or incurred by the PTC (e.g. regulatory fees and registered agent fees) will not be regarded as “remuneration” within the meaning of the new rules.

What is Related Trust Business?

Related trust business is trust business provided in respect of a single trust or a group of related trusts where each beneficiary of a trust is either a “connected person” in relation to the settlor of that trust, or is a charity. The term “connected person” refers to any person whose relationship to another is established by affinity or consanguinity (which may also be established by adoption).

A trust is, in respect of another trust, a “related trust” where the settlor of the first trust is a connected person with respect to the settlor of the second trust. Thus, in a group of trusts, the trusts are “related trusts” if the settlor of each trust in the group is a connected person with respect to all of the settlors of the other trusts in that group.

A PTC will be treated as carrying on “related trust business” if it acts as trustee of:

(a) a single trust, all the beneficiaries of which are charities or have certain specified blood, marital or adopted relationships to the settlor or are the settlor; or

(b) more than one trust, each of the settlors of which have any of those relationships to each other and all the beneficiaries of which have any of those relationships to the settlors of the trusts, or are the settlors (or are charities).

WHEN IS THE EXEMPTION LOST?

A PTC will lose the benefit of the exemption under the Regulations where:

• it fails to ensure that at all material times its registered agent holds a Class I trust licence issued under the Act (incidentally, where the registered agent ceases to hold such a licence, it has a period of four weeks’ grace from the date on which the licence ceased before the disqualification applies);
• it carries on business that is not trust business;
• it solicits trust business from members of the public; or
• it carries on any trust business other than either unremunerated trust business or related trust business.

WHAT ARE THE CONSEQUENCES OF THE EXEMPTION BEING LOST?

Where the exemption is lost and a company no longer qualifies as a PTC, there will be an obligation on the PTC’s part to ensure that it forthwith removes any reference in its constitutional documents to it being a PTC. The company will be regarded as carrying on unauthorised financial services business if it either carries on any trust business without having the benefit of the exemption or, having the benefit of the exemption, it carries on trust business which is not unremunerated or related trust business.

The Regulations impose strict duties on a registered agent which acts for the PTC where the exemption is lost (see section 7 below).

SANCTIONS

Unremunerated trust business and related trust business are both deemed to represent “financial services business” under the FSC Act. This means that the BVI Financial Services Commission (FSC) has available to it certain sanctions specified under the Act which will apply in the event that there is any breach or contravention of, or non-compliance with, a requirement on the part of a PTC. The PTC is effectively treated as a licensee under the FSC Act.

For example, section 32 (power to request information and documents) and the enforcement provisions of sections 36 (appointment of examiners), 37 (enforcement action), 37A (public statements) and 40 (power to issue directives) of the FSC Act all apply to a PTC subject to necessary modifications, although these provisions in no way restrict the powers of the FSC to take appropriate action against a PTC which is acting in breach of the Regulations.

DUTIES OF THE REGISTERED AGENT OF A PTC

A registered agent intending to act as such in respect of a PTC is obliged:

• to satisfy itself that the company complies with the requirements of the Regulations;
• on a periodic basis, to take all reasonable steps to satisfy itself that the company continues to comply with the requirements of the Regulations;
• to take all reasonable steps to ensure that up-to-date records of the following documents in respect of the company are kept at the registered agent’s office in the BVI:

(a)   the trust deed or other document that creates or evidences a trust and any deed or document that varies the terms thereof, for each trust; and

(b)   documentation and other information on which the registered agent has relied to satisfy itself that the company complies with the requirements of the Regulations; and

(c)   to immediately notify the FSC in writing if at any time the registered agent forms the opinion that the company has failed to comply with the requirements of the Regulations.

As alluded to above, these duties call for continued vigilance on the part of the registered agent and the degree to which it adheres to these obligations will be an important measure as to its liability in the event that a PTC is found to be in breach of the Regulations.

FORMAL APPLICATION NOT NECESSARY

There is no formal process for application to the FSC seeking approval for the grant of exempt status. Exemption will be automatic if the PTC meets the criteria laid down in the Regulations. Apart from an annual return which will need to be filed by the PTC, the only other document required to be filed publicly are the PTC’s Memorandum and Articles of Association.

The Memorandum and Articles of Association do not need to include the names of the directors or shareholders of the PTC. Such information is retained separately by the registered agent of the PTC and so those details are not a matter of public record in the BVI. Furthermore, none of the substantive documents relating to the trust, copies of which must be held by the registered agent (as mentioned in section 7 above), need to be presented to the FSC. Some clients may find this a particularly attractive aspect the overall BVI regime.

BARE TRUSTEES AND NOMINEES

As mentioned previously, a company is not required to obtain a trust licence under the Act where it acts solely as a bare trustee or a nominee. The criteria for determining whether a trustee acts as a bare trustee for the purposes of the Regulations will be specified in the Regulatory Code (which is yet to be issued by the FSC).

ADVANTAGES OF ESTABLISHING A PTC

PTCs enable family-controlled structures to be created whereby family members and/or trusted family advisers, who together have a wealth of knowledge about the family’s affairs, can become involved in the decision-making processes by assuming the role of director or consultant to the PTC. As the assets of the PTC are controlled by a board of directors comprised of the settlor and his family and/or persons who are familiar to the settlor and his family, this enables them to exercise more control over the trustee’s actions. The structure provides considerable comfort to those who are ordinarily reluctant to relinquish control of assets to third party trustees over whom they are able to exercise little or no governance. This added element of control, also affords greater privacy and confidentiality for the settlor and his family over their assets and activities.

Institutional trustees may not be prepared to take on the role of trustee where the trust is comprised of high risk assets because they may consider the potential liability resulting from their fiduciary duties over such assets as being unduly onerous. Where the PTC provides the trusteeship, there is still a role for the institutional trustee as it may be convenient for the board of directors of the PTC to delegate the PTC’s administrative function to a professional trustee services provider. The provider will be more inclined to take on this purely administrative function as it will have only a contractual relationship with the PTC (rather than a fiduciary relationship) with the consequent mitigated risk and restricted liability over the trust assets. This, in turn, is likely to result in a cost-saving for the family as lower risk invariably translates into lower professional fees.

Lastly, as it is a company, a PTC also offers the benefits of limited liability status.

PTC CAN ACT AS TRUSTEE OF A VISTA TRUST

The BVI’s highly acclaimed VISTA trust legislation was amended in 2013 to allow for co-trusteeship of VISTA trusts. A PTC may now be the qualifying trustee of a VISTA trust as an alternative to a licensed BVI trustee. Thus clients have a number of options when selecting trustees of VISTA trusts: the sole trustee may either be a licensed BVI service provider or a PTC; alternatively, one or more foreign companies or individuals may act as co-trustee together with the licensed BVI trustee or a PTC.

CONCLUSION

In the short time since their introduction, the Regulations have made a positive impact in the BVI as the BVI is now able to offer a more efficient and more cost-effective application process to those seeking to incorporate a PTC than that previously available under the old regime. applebyglobal.com 5 BVI-incorporated PTCs offer significant opportunities for families in their generic wealth planning and protection strategies. Provided that careful consideration is given to the incorporation of the PTC and the transaction is properly structured, a PTC can be a very useful vehicle for those who have previously felt reluctant to adopt trust structures because of traditional concerns regarding trustee control, cost and confidentiality issues. Indeed, it is becoming common practice in the BVI for structures to be established using a BVI VISTA non-charitable purpose trust (which is administered by a locally licensed trust company pursuant to a services agreement) to hold the shares of a PTC, which in turn will hold and deal with the shares of the holding or operating companies in accordance with the terms of one or more family trusts which the PTC is able to administer. As well as benefiting from the advantages offered by the BVI’s VISTA regime thus disengaging the trustee from any responsibility over the management of the PTC and providing an effective succession mechanism in regard to the directors of the PTC through the “Office of Director rules”, the purpose trust is an ideal vehicle for ownership of the PTC where personal ownership can give rise to tax or other problems for individual shareholders.

PTCs have become increasingly popular in offshore financial centres in recent times and the new BVI legislative framework for PTCs is intended to be the latest in a series of financial services-related statutes which have been enacted by the BVI government over the last few years and have established the BVI as one of the leading trust jurisdictions.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

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

With renowned privacy features, relatively low maintenance costs (ie compared to similar onshore entities) and ease of establishment the classic privacy haven International Business Company (eg Belize, Panama, BVI, Nevis, Samoa, St Vincent, Seychelles etc) has risen to become the preferred International Business entity for discerning investors and International/Digital entrepreneurs the world over.     

Advantages include:

• Exemption from most taxes, including income/business tax, stamp duty and capital gains tax
• Shareholder, Underlying Beneficial Owners and Directors’ details are usually not publicly available
• No need to hold annual general meetings, or to file annual returns
• No need to file annual returns
• No need to keep audited accounts
• Low set up and admin costs
• Can carry out a wide variety of activities as of right

IBCs for selling Web Domains

IBCs are commonly used by Web Domain Resellers. 

It makes no difference whether you are producing/registering/selling new Domain names or whether you are buying existing Web domains from different providers, trading profits resulting from the sale of such Domains should be taxed in the country of incorporation. 

Generally speaking, pursuant to the principles of International Tax law:

1)         The purchase of the product in the above example should not give rise to taxation in Country 1; and 

2)         Provided that the IBC does not have a “permanent establishment” or a fixed business address/office in country B, then no tax assessment should be levied against the IBC in country B 

How it Works Practically

Here’s how such a setup usually works:

• A nil tax offshore company (commonly an International Business Company “IBC”) is incorporated to own/operate the business
• You design/launch a website which is owned by the Offshore Company
• The IBC creates or acquires all proprietary items (including also any Trademarks, Operating software/systems, Domain names and other soft products to be sold/delivered to customers etc)
• The website ideally should be hosted in a nil tax/private Jurisdiction (Iceland is currently the most popular destination for such web hosting, Singapore is also often favoured)
• The clients find you and/or contact you via the world wide web. All comms are web based. All products are delivered via the web
• A web based business has no physical store that a tax man/regulator can point to as the point of sales generation. Hence such businesses are usually taxed in the country from which they are seen to be managed/controlled.
• The IBC should seen to be managed and controlled from (and ideally beneficially owned from, see below) Offshore. This is achieved via the deployment of a (nil tax jurisdiction based) “Nominee” director.
• You are appointed, via an  arms-length Consultancy Agreement, as the IBC’s authorised trader (ie you negotiate the deals and place the buy and sell orders on behalf of the Company)
• Your Company’s standard sale agreement/website terms and conditions should provide (a) that a contract is not formed until the customers offer is accepted by you (ie the Offshore Company) and (b) that the source of the income is the contract. Before the client clicks buy he/she clicks on a button acknowledging that he/she has read and agrees to be bound by your terms & conditions
• Acceptance of the buyer’s offer would be provided by the Company (which is seen to be managed from “Offshore” via a nil-tax-jurisdiction resident Nominee Director) sending an email to the buyer, after he/she has paid online; In simple terms what that means is that the situs of the Contract ie the place where the contract of sale (ie the agreement between you and the buyer for you to supply goods in consideration of the buyer paying), at law, is formed is the director’s location ie a nil tax environment…
• Hence the income – from which the contract of sale is the source – has been/is derived, prima facie, in a zero tax jurisdiction (every time a client buys and you send an email thanking him for payment that concludes as contract of sale at law)
• An Offshore account (which can/will also be set up to receive card payments via a merchant account) is opened in a nil tax banking centre
• Customers/clients contract with and pay the IBC; All such monies are banked free of tax in the first instance
• You or your local company would/could also be contracted by the IBC to manage sales/delivery of product/website maintenance/whatever
• (If you need a regular income) You would invoice the IBC periodically (eg monthly) for this service which income would be assessable income in your home state – though a smart Tax Accountant should be able to assist you to claim a series of expenses against this income (eg home office, equipment, travel, phone/internet/utilities etc) to significantly reduce the amount of tax payable on this income
• Ideally once you start to grow you and to add substance you would be wise to set up your MD/Board and or a sales team to take orders and receive income in a low tax onshore environment (eg Hong Kong, Ireland, Singapore, Cyprus etc as per the Amazon/Google model).

As alluded to, in order to minimise the chances of the IBC being taxed onshore, ideally, the IBC should/would be (and be seen to be) managed and controlled from Offshore. How this can be achieved is by including a (nil tax jurisdiction based) “Nominee” Director as part of the Corporate structure.

Ideally – so you can swear on oath in the event of a law suit, tax investigation, or regulatory inquiry – I am not the beneficial owner of this Company, (which should enable your lawyers to be able to argue, in the event of an investigation, sorry this is tax deferral not tax evasion) you might want to set up a Private Foundation to act as the shareholder of your IBC. (This should also assist you to get around CFC rules ie if you live in a country which has such regs).

With a bespoke legal/admin structure in place you should only be liable to declare and pay tax on income paid to you by the company (and/or on any distributions paid to you by the Foundation); as regards the remainder of your Offshore Company’s earnings you should be able to accumulate, and or reinvest, those Offshore in a nil tax environment. Tax should only be payable when you sell the business (unless at that time you’re living in a nil tax country) enabling you to grow your capital far quicker during the lifetime of your business thanks to the power of compounding.

Similarly, if a product that you sell doesn’t perform and a customer tries to sue you the good news is your personal assets should not be at risk as the customer has contracted with a limited liability Company (ie the Company carries the legal risk, not you personally). Moreover, having your business incorporated Offshore in a foreign/strange land is of itself a deterrent. (Have you ever tried to sue/get money out of an “Offshore” Company? It’s the Litigation Lawyers equivalent of climbing Mount Everest!)

Local laws can have an impact. Hence you should seek local legal/tax/financial advice before committing to set up an IBC for such purposes.

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 Private Trust Company (PTC) is, essentially, a company which possesses Trustee powers and which does not conduct Trust business with the general public, its sole purpose being to act as a Trustee of a Family Trust or a group/series of related Trusts.

As long as certain criteria are fulfilled the PTC will not have to obtain a licence to carry out Trust Company business.

A PTC can be particularly useful for wealthy families who either do not wish to relinquish control to professional Trustees or where the Trust fund is to be invested in assets, which a professional trustee may be reluctant to deal with, such as works of art or family businesses.

Key features:

• The board of the PTC may consist of family members or trusted advisors. The residence of the PTC’s directors may have an impact on the underlying Trust’s tax status so professional advice is recommended. Generally, a company is classed as being resident for tax purposes in the jurisdiction where mind, management and control are exercised. Care needs to be taken to ensure that the Directors of the PTC are not deemed to be resident in a high tax jurisdiction;
• Representatives of the Trust Company business are appointed to the board to ensure appropriate governance;
• The PTC may be owned in a variety of ways such as by a Purpose Trust or a Foundation for confidentiality purposes;
• The professional service provider acts as an administrator of the structure and assists the board of the PTC with corporate governance and Trustee considerations.

Advantages:

Control – By retaining the power to appoint the directors of the PTC the Settlor, whether or not a director themselves, will experience a high degree of control over how the Trust is run. The Settlor and his/her family have an opportunity to be involved in the management, investment and disposition of the trust assets.

In Depth Knowledge – Allows family members and their advisors to bring their varied knowledge onto the Board. Particularly useful if the underlying assets are complex, high risk or part of the family business.

Succession Planning – By engaging younger family members in the management of family assets, and involving them in the decision-making process, a training program is instituted preparing the younger generation to effectively and responsibly manage wealth.

Diversity of Asset Base – Professional Trustees may be reluctant to hold certain assets therefore a PTC allows greater choice as to what investments may be made with the Trust fund.

Continuity – The administrator may change but the PTC will remain as the Trustee providing continuity of asset ownership.

OCI can assist you to incorporate a Private Trust Company in Nevis, Seychelles, BVI and the Cook Islands.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

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

Offshore Trusts have been used for decades as high end Asset Protection vehicles.

Whilst Jurisdictions such as the Channel Islands, BVI and the Cook Islands have historically captured much of that business, with Compliance and cost in the traditional Trust jurisdictions increasing markedly in the past few years, new players are beginning to make a significant in the market place. This article examines one such offering ie the Mauritius Trust.

Mauritius Overview

Mauritius is a group of lush tropical islands in the south western Indian Ocean and is located northeast of Madagascar and some 1,000 miles southwest of Seychelles. A former French and British colony, Mauritius offers:

• A British system of law and parliament
• Political/economic stability
• A well-developed Financial Services Sector; and
• A well-educated productive bi-lingual French/English speaking workforce.

Since gaining independence from Britain in 1968 the Mauritian economy has grown steadily from one reliant on agriculture to a more diversified economy with Tourism, Financial Services and Agriculture (primarily sugar cane) as its 3 economic pillars. This has seen a resulting rise in standard of living from low to middle income delivering levels of economic and political stability which are the envy of the region.

Whilst better known as a Banking Centre (Mauritius boasts at least 3 world standard “Offshore” Banks) Mauritius offers two forms of nil tax Offshore Company ie the GBC1 ( a domestic designed to do business or hold shares in companies based in DTA Treaty partner countries) along with a cutting edge Private Foundation and Offshore Trust Product.

A Mauritius Trust gives the Settlor the requisite protection and comfort for a long term wealth management under the Trust. Family assets are preserved over generations with most tax efficiency, succession laws, forced heirship rules, probate and other hurdles are avoided. Once a Trust is set up it can own companies to own and manage any family business or wealth.

Trusts can migrate to and from Mauritius. For example Trusts in Jersey, Guernsey or Isle of Man and other jurisdictions can migrate to Mauritius and vice versa. The tendency over the last 5 years has been for trust to migrate to Mauritius because of various benefits.

Trust Registration & Confidentiality

A Mauritius Trust is not required to be registered anywhere thus providing confidentiality. A Trustee may register the Trust with the Registrar General to receive a “date certaine” which is registering the date of creation of the Trust.

Trust Assets: What can be held in a Mauritius Trust?

Mauritius Trust assets can consist of:

• Real estate (commercial or residential)
• Shares in companies, funds, unit trusts
• Investments
• Insurance policies
• Other assets

Under the Mauritius Trust Act, a Protector can also be appointed to oversee certain decisions of the Trustee. The powers of a Protector are not prescriptive but will vary on the particular circumstances.

Key features of a Mauritius Trust:

• Choice of proper law by the Settlor.
• Possibility for the Settlor to leave on or before his death letters of wishes setting out how he/she would wish the trust to be administered
• Anti-forced heirship rules
• Recognition of Purpose Trusts
• Duration of other Trusts limited to 99 years or less
• Possibility to accumulate income for any period during the duration of the trust
• No perpetuity rules for Charitable Trusts
• Trust instrument may contain power to vary terms of trust
• No disclosure of the trustees’ deliberations, the name of the Settlors and the Beneficiaries unless the latter is a Mauritian resident or a body corporate resident in Mauritius
• Trusts not being void or voidable due to the insolvency of Settlor or proceedings against him or latter being declared bankrupt. However, such trust may be void if the creditors prove beyond reasonable doubt that the intention of the Settlor at the time of the creating the trust was to defraud him. The onus of proof rests on the creditor and no request for setting aside the trust will be entertained after more than 2 years from the transfer or disposal to the trust
• Trust can apply for a Global Business Licence – Category 1 and benefit from double taxation treaties.

A Trust created in Mauritius can provide for, amongst other things:

• Restrictions / controls over the enjoyment of property
• Multiple enjoyment or consolidation of ownership
• The holding ,protecting and controlling of family wealth
• Asset protection against political, family or economic uncertainty
• Commercial transactions
• Overseas ownership of property while retaining beneficial enjoyment
• Strict confidentiality of the identity of the settlor, the beneficiaries and information relating to trust affairs
• Minimizing estate taxes or other inheritance taxes

A Mauritius Trust can elect to be non-resident by the Trustee filing a declaration to that effect with the Commissioner of Income Tax and be exempted from all income tax. All distribution made to non-resident beneficiaries of the Trust are also exempt income tax.

The Virtual Assets Business Act of Saint Vincent and the Grenadines (“SVG”) was recently published by the Financial Services Authority.

The act regulates Virtual Assets Businesses incorporated in St. Vincent.

According to this law, the following categories of business are now subject to regulation in St Vincent & the Grenadines:

• Exchange between virtual assets and fiat currency;
• Exchange between one or more forms of virtual assets;
• Transfer of virtual assets whether or not for value;
• Safekeeping and administration of virtual assets or instruments enabling control over virtual assets; or
• Participating in or provision of financial services related to an issue or sale of virtual assets.

The abovementioned businesses, if incorporated in SVG, must now be registered with the Financial Services Authority as Virtual Assets Business and included in the special register maintained by the FSA. The Act is now published on the website of the FSA.

Additionally, the Act imposes some obligations for such businesses including appointment of an eligible Auditor and submission of Audited Accounts on a yearly basis.

The Virtual Assets Business Act was passed on 10th of May 2022 in order to keep with the global trend for regulation and to create a regulatory framework according to the St. Vincent Times.

Requirements Summary

The main requirements as regards an applicant for a VASP License in SVG are:

• Must pay a security bond of $US100,000 to the SVG FSA
• Must pay an annual license fee of $12,000
• Must have a local Authorised Representative
• Must submit quarterly reports to the FSA including details of number of customer accounts and their USD value
• Must submit annual audited financial statements to the FSA
• Annual economic substance reporting
• Must do customer due diligence, transaction monitoring and PEP screening and
• Must report suspicious activities

OCI can assist you to apply for a VASP License in SVG. Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

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

A Private Foundation is essentially a Corporatised trust. Like a Trust a Foundation is a 3 headed creature ie its set up by one party (called a Founder) and is managed by a 2^nd party (ie a Councillor or board of councillors). Private Foundations typically have beneficiaries nominated ie persons who are designed to benefit financially from the set up of the Foundation.

Unlike a Trust a Foundation has legal/corporate personality (ie it can sue and be sued in its own rights), and has limited liability (ie the Founders/Councillors/Beneficiaries can not be held responsible for any debts or legal liabilities incurred by the Foundation). Moreover is considered at Common law to be both the legal owner AND beneficial owner of any assets it holds. This places such assets beyond the reach of any creditors of the Foundation Founders, Councillors or Beneficiaries.

By its very nature, a Private Foundation has no owners and is thus highly compatible with decentralized autonomous organizations (DAOs) and DeFi projects which prioritize decentralization.

Furthermore, the establishment of a DAO as a separate legal entity grants it reliable corporate standing, leaving it ready to execute contracts on behalf of the DAO as well as open accounts at banks or exchanges. Finally, advanced control mechanisms can be implemented by allocating them to persons external to the Foundation’s Councillors (the Foundation’s version of Directors) — allowing founding members an influence in determining the direction taken by their organization.

DAO Foundations  – Key Roles

A Foundation is established by the (public) filing of a “Charter” (sometimes called a Constitution) ie a document which records the name of the Foundation, the name of the Foundation’s Founder and the general objects/purposes for which the Foundation in question is being established.

When a Private Foundation is deployed as a Legal Wrapper for a DAO there are typically a number of players involved including:

DAO Founders: These individuals launch the DAO by deploying smart contracts and overseeing the initial issuance of tokens. These are the persons who are said to have Founded (ie given birth to) the Foundation. A Foundation need only have one Founder and the Founder/s name/s appear/s in the Charter which is a publicly accessible document. The Founders typically have the right to appoint Foundation Councillors.

DAO Councillors: Elected by the Founders, the primary role of a Foundation Council is to oversee the day to day management of a Foundation (they are the Foundation’s equivalent of Directors in the case of a Company). The Councillors should  make decisions in the best interests of the DAO members. The Foundations need to appoint and have at least 1 Councillor at all times. (Panama Foundations require minimum 3 Councillors)

DAO Managers: The Foundation may or may not have a supervisory board. Managers (also known as Supervisors) oversee – and their powers, rights, and obligations are set out in the Regulations. The DAO Managers, acting as Protectors, ensures that the DAO Councillors adhere to the will of the DAO members during the decision-making process.

DAO Members: They are tokenholders who deposit their virtual assets into the foundation’s treasury, participating in the DAO’s development and decision-making processes. Initial members may also be enlisted as co-Founders of the Foundation. The ability of a Foundation to appoint DAO members and the rights of such Members will typically be set out in the Foundation’s regulations. The Foundation’s regulations can also provide for each Member to be given a seat on the Foundation Council and or the regs can compel the Council to only in accordance with the votes of the members. The voting rights of each member can also potentially be determined in the Regulations by reference to the proportion of assets contributed. Additionally at settlement the rights and responsibilities of the Foundation’s Councillor/s can be reserved to the Founder/s. The Founder/s can then assign any such reserved rights received to any 3^rd party/s (eg Members)

DAO Beneficiaries: These are the persons or class of persons who are entitled to receive an economic benefit from the Foundation. The rights or obligations are set in the Foundation’s regulations (See below). A Foundation may or may not have beneficiaries at any point in time (for example a Foundation can be set up as a “Purpose Foundation” ie to fulfil a specific purpose or purposes).

Note the name of a Foundation Founder/s is recorded in the Charter ie a document which is publicly accessible. If you want to act as a Founder or have the rights of a Founder but don’t want your name to appear in the Charter as “Founder” on record then most Foundation registered agents (for a fee) can supply a Nominee Founder for such purposes;

Foundation Regulations – Overview

Historically any information not required by law to be included in a Foundation’s Charter and which a Founder would rather keep private is written into the Foundation’s Regulations, (sometimes referred to as By Laws) ie a private document that does not need to be filed at the registry whereat the Foundation was/is registered. Typically the only people who will ever see the Foundation’s Regulations are the Founder, the Foundation Council and the Foundation’s legal advisers.

Traditionally, any information containing beneficiary names and their rights over the foundation property is written into the Foundation’s Regulations. This also ensures that the beneficiaries’ identities and succession dispositions are not revealed to third parties.

The law places practically no limits upon the structuring of the beneficial interests of a foundation. One of the more common scenarios is for a Founder to designate himself/herself as a beneficiary for life and appoint successive beneficiaries upon his death. Commonly the Founder’s wishes regarding the use, transference, and final destination of the Foundation assets are also recorded in the Regulations so that such wishes can be easily understood and then carried out privately (post the Founder’s death) by the Foundation Council.

The Panama Foundations law further enhances the confidentiality of this instrument by creating in the Foundations Law article 35 severe sanctions (fines of up to US$50,000 and imprisonment of up to six months) for breach of the duty to maintain the information confidential. This obligation applies to members of the Foundation Council and of the supervisory bodies and public or private employees having any knowledge of the activities, transactions, or operations of the foundation.

Furthermore, Regulations may be kept outside the country of registration, in the hands of the Founder, his fiduciary agent, the Protector, or any other person or institution vested with the confidence of the Founder.

DAO Foundation Regulations

One of the primary goals of a DAO is to establish decentralized governance. This entails granting decision-making power to various stakeholders, including founders, investors, validators, and tokenholders. To achieve effective governance, DAOs must implement clear procedures for voting, vote counting, decision implementation by DAO managers, and the involvement of the DAO guardian. These procedures are usually enshrined in the bylaws/regulations of the Foundation, ensuring legal enforceability for all DAO members.

As for the use of a Foundation for crypto, the private Regulations document could be used to set out a governance model for a DAO, (which could also be the shareholder of a Company that engages in for-profit crypto-related activities). It could hold DAO assets and could be compliant with a bank’s KYC requirements.

Moreover the Foundation’s bylaws can be set forth in the Regulations setting out bespoke rules with respect to who the players are in the DAO in question and how the Foundation will seek to achieve its objectives. The bylaws can establish limitations on the roles and duties of the Foundation’s Councillors and managers; and the Foundation can in the regulations nominate beneficiaries (for example, a DAO’s token holders), who will have only those rights and powers that are specified in the bylaws.

Additionally arrangements between the Foundation and the DAO associated with it generally provide that the Foundation will execute the DAO’s protocols.

Decentralized Governance

DAO members typically receive voting rights within the DAO. The specific procedures for granting voting rights may vary among DAOs. Some DAOs require token holders to stake their tokens in decentralized finance (DeFi) platforms, while others issue separate governance tokens or limit membership to protocol validators.

One of the primary goals of a DAO is to establish decentralized governance. This entails granting decision-making power to various stakeholders, including founders, investors, validators, and tokenholders. To achieve effective governance, DAOs must implement clear procedures for voting, vote counting, decision implementation by DAO Councillors, and the involvement of the DAO Managers/Supervisors. These procedures are usually enshrined in the bylaws/regulation of the foundation, ensuring legal enforceability for all DAO members.

To summarize a set of Regulations is an extremely useful tool for any DAO Foundation in that it can decide, in advance:

• Who the key players are going to be in your DAO Foundation
• What role each player is to have
• What commercial or philanthropic activities the DAO is being established to pursue
• How voting rights are determined
• How your DAO Foundation will make decisions
• Who (if anyone) can/will benefit financially from the Foundation’s investments/activities

The above is a general guide in respect of what you need to be thinking about prior to passing Foundation regulations. If you are looking to set up a DAO Foundation it is recommended that you engage a specialist Web3 Lawyer to assist with drafting of the Foundation’s regulations.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

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

Since their advent the Courts and legislators have considered DAOs (Decentralized Autonomous Organizations) to be unincorporated partnerships. In a partnership, each partner has joint and several liability ie unlimited liability. Therefore, if a DAO is sued or becomes insolvent (ie unable to pay its debts as and when due), each member is exposed to liability for the entire amount of funds owed at law by the DAO.

To address this weakness, ideally your proposed DAO would be “wrapped” inside a legal entity (such as a Limited Liability Company or a Private Foundation) to ensure limited liability.

Over the course of the past few years, for a variety of reasons, Private Foundations have become increasingly deployed to act as Foundation Legal Wrappers.

The object of this Article is to provide a brief synopsis of the Panama Foundation as a potential Legal Wrapper for your DAO.

Private Foundations Overview

A Foundation is a 3 headed creature and (like a Company) is a separate legal entity with Limited Liability. Unlike a Company however a Foundation doesn’t have the typical top-heavy Director focussed hierarchal management structure.

A Panama Foundation:

• Is set up by a Founder/s
• Is managed day to by a Councillor or a board of Councillors
• Is either set up to fulfil a specific purpose or it has nominated beneficiaries ie persons or a class/es of persons who are designed to benefit financially from the set-up/actions of the Foundation

Whilst the day to day decision making responsibilities of a Foundation lies with the Councillor/s the Councillors’ rights can be reserved to the Founders (and the Founders can assign those rights as reserved to them to any third party)

As you may know a DAO legal wrapper typically holds the DAO treasury, protects DAO members from unlimited liability, and permits DAO members to vote. A DAO that has been ‘legally wrapped’ is often more attractive to investors as a DAO with a strong legal framework is less likely to face difficulties with issues of liability, non-compliance with regulation, and ineffective treasury management.

All in all, in a DAO structure, a Foundation performs three main functions:

1. It acts as a liability wrapper to protect the DAO members from unlimited liability for the DAO’s activities;
2. It works as a governance overseer – every Foundation must create a Constitution (commonly known as a Charter) which typically lays out a set of rules governing the Foundation’s operations; (additional rules about how the Foundation carries out its objects etc can be set out in its “Regulations” which is a private document that doesn’t need to be filed with the Registry)
3. It acts as a Compliance manager for the DAO Treasury to implement AML measures and to supervise their realization in the process of disposing of the DAO Treasury.

Limiting Liability

In the Web3 industry, some DAO Founders probably (wrongly) assume that if the DAO Treasury is on-chain and its management is carried out by on-chain voting, the DAO won’t require any legal structure. However, in an unregistered DAO, the community of members can sometimes be recognized by regulators or judicial bodies as an unregistered general partnership which as alluded to can have (potentially severe) legal consequences.

At law the Partners in a Partnership are jointly and severally liable for the debts/liabilities of the Partnership. If a DAO is established/operates as an unregistered general partnership then each member is exposed – ie unlimited legal liability attaches to each member. Consequently, if regulators, tax authorities, or business partners/suppliers have concerns about the legality of certain activities undertaken by the DAO, and can establish liability of at least one member of the DAO, liability can extend to all the Members property/assets ie all the DAO members may be recognized as responsible for the actions (or inactions) of the DAO as a whole.

A Foundation is a legal entity in its own right ie it can sued and be sued. To protect a proposed DAO members from unlimited liability, savvy Web3 founders often look to the registration of a Foundation as a “legal shield” for DAO members. In cases of regulatory investigations, it will act as a “legal representative” for the community of the DAO members and protect them from the risks of unlimited liability.

Moreover, each member of the DAO can act as a Founder or Councillor of the Foundation (as well as a beneficiary) – delivering voting rights – with voting carried out online via execution of smart contracts.

More particularly, if the DAO structure is reasonably straight forward (and if the DAO is looking to generate a profit) then you should be able to use a Panama Foundation with the governance token holders nominated as a class of beneficiaries.

The members would have to agree to abide by the DAO constitution and operating rules which will in effect “marry” the corporate structure with the DAO operations.

Foundations Tokens & VASP Laws

Commonly the purpose of a DAO might be to raise Capital via the issuance of Crypto Tokens (ie a Virtual Asset).

Most jurisdictions have either passed or are on the road to passing VASP (Virtual Asset Provider) Legislation. If you are set up (or hoping to set up) as a Company or as a Foundation in one of these jurisdictions you will need to apply for a VASP License, which typically is an involved (circa 3 months) and costly (20-30k+) process.

Interestingly in Panama the Legislators tried to pass a VASP law but the law was struck down last month as unconstitutional by the country’s Supreme Court. What this means is you can incorporate/register a Blockchain based enterprise in Panama (including a Foundation DAO) without needing to apply for a VASP License!

OCI can assist you to set up a Panama DAO Foundation from as little as $2,900.

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

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

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

A number of leading Offshore jurisdictions have taken the step of regulating Blockchain focussed enterprises including the Cayman Islands, The British Virgin Islands and Mauritius.

This article takes an in-depth look at the Mauritius model of regulation.

The Mauritius Virtual Asset and Initial Token Offering Services Act 2021 (the “Act”) came into force on the 7th of February 2022.

The Act sets out a comprehensive legislative framework to regulate the business activities of virtual assets service providers and initial token offerings.

It has been developed inter alia in accordance with international standards established by the Financial Action Task Force to manage, mitigate and prevent anti-money laundering and countering the financing of terrorism risks associated with these emerging and innovative business activities.

CATEGORIES OF ACTIVITIES LICENSED

The Act regulates two main categories of activities:

A. VASP, meaning a person who conducts, as a business activity, for or on behalf of another person one or more of the following activities or operations, namely:

(a) exchange between VAs (“Virtual Assets”) and fiat currencies;

(b) exchange between one or more forms of VAs;

(c) transfer of VAs;

(d) safekeeping of VAs or instruments enabling control over VAs;

(e) administration of VAs or instruments enabling control over VAs; or

(f) participation in, and provision of, financial services related to an issuer’s offer and sale of a VA; or an issuer’s offer or sale of a VA.

B. Issuers of ITOs, are companies registered under the Act and making issuance of ITOs. An ITO is an offer for sale to the public of a VT in exchange for fiat currency or another VA.

What are the different licences available under the VASP regime?

VASP consists of several sub-categories of licences as follows:

a. Holders of Class M (Virtual Asset Broker-Dealer) licences carry out activities such as exchange between VAs and fiat currencies; or exchange between one or more forms of VAs.

b. Class O (Virtual Asset Wallet Services) licences pertain to the transfer of VAs.

c. Class R (Virtual Asset Custodian) licensees are responsible for safekeeping of VAs or instruments enabling control over VAs; administration of VAs or instruments enabling control over VAs.

d. Class I (Virtual Asset Advisory Services) licence is required for the participation in and provision of financial services related to an issuer’s offer and/or sale of VAs.

e. Virtual asset exchanges must apply for a Class S (Virtual Asset Market Place) licence. A Virtual Asset Exchange is a centralised or decentralised virtual platform, whether in Mauritius or in another jurisdiction which facilitates the exchange of VAs for fiat currency or other VAs on behalf of third parties for a fee, a commission, a spread or other benefit and which:

(a)  holds custody, or controls VAs, on behalf of its clients to facilitate an exchange; or

(b)  purchases VAs from a seller when transactions or bids and offers are matched in order to sell them to a buyer.

WHAT IS A VIRTUAL ASSET?

A Virtual Asset (“VA”), according to the VAITOS Act 2021, is a digital representation of value which may be digitally traded or transferred, and may be used for payment or investment purposes, but does not include a digital representation of fiat currencies, securities and other financial assets that fall under the purview of the Securities Act.

The definition of Virtual Asset Exchange also includes the owner or operator of the virtual platform, but excludes a platform only providing a forum where sellers and buyers may post bids and offers and a forum where the parties trade in a separate platform or in a peer-to-peer manner.

What are the requirements for the application of a VASP licence?

1.        An application for a VASP licence, specifying the relevant class or sub-category of licence sought, must be made to the FSC.

2.       The applicant must:

i.          be a duly registered company carrying on business activities in or from Mauritius;

ii.         be directed and managed from Mauritius;

iii.        have a physical office in Mauritius and

iv.        ensure that each of its controllers, beneficial owners, associates and officers satisfy the ‘fit and proper’ criteria of the FSC.

In its determination of whether the applicant is directed and managed from Mauritius, the FSC may consider:

i.          the location of the strategy, risk management and operational decision making;

ii.         the location of the executives responsible for such decision making or the management team meets to effect policy decisions;

iii.        where board meetings take place; and

iv.        the place of residence of officers, employees or directors, amongst other factors.

OCI can assist you to apply for a VASP license in Mauritius. Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

ocil@protonmail.com

oci@tutanota.com

oci@safe-mail.net

ociceo@hushmail.com

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