We are often asked what the process would be, practically speaking, for a Foundation to form/own a new Company. How it normally works is:
Let’s assume you have already set up a Foundation.
You (ie our client, ie the person who set up the Offshore Entity) are, or should already be, appointed by way of Consultancy Agreement as the Foundation’s Authorised Representative or Investment Adviser.
- You would advise the Foundation Council of the need to form, or desirability of forming, a new Company and would suggest a Company name/s
- The Foundation Council would call a meeting and pass/sign a resolution (a) authorizing the new Company to be formed and (b) appointing OCI/Your International Corporate Service Provider as the agent to form the new Company.
- You would submit a Company order form signed by you as authorized representative of the Foundation
- We will issue an invoice for/re the Company formation
- Once the invoice is paid the formation will proceed forthwith
Foundations are widely used as part of an Offshore Corporate Structuring Plan, ie to own/hold the shares of a tax-free Offshore Company.
Setting up a Foundation to own your Offshore Company can be beneficial in two ways:
(a) It can potentially enable you to avoid Controlled Foreign Corporation Laws – meaning you shouldn’t have to declare/pay tax at home on your Offshore Company’s income (you should only have to pay tax if/when the Company or Foundation actually pays you “income”).
(b) Having a Foundation holding the shares of your Company makes you no longer the “beneficial owner’ of the Company. This is the ideal position to be in (i) when opening a bank account for your Company (ie so your name doesn’t appear in the bank’s records as the “beneficial owner” of the Company) or (ii) if you are ever facing a laws suit or governmental investigation/prosecution (in that case you can swear under/on oath “I am not the beneficial owner of the Offshore Company under investigation”).
Would you like to know more? Then please Contact Us: