Many people who set up Offshore or International Business Companies (“IBCs”) have good reasons for wanting to keep ownership of their IBC quiet. For some it’s to avoid offending a sensitive commercial relationship, for others it’s about keeping big brother at arm’s length, for many it’s about keeping a greedy ex-wife (and/or that ambulance chasing litigation lawyer) away from your hard earned!
If you want to minimise the chances of underlying ownership of your IBC ever being discovered there’s a few things you can do:
- When incorporating, choose a jurisdiction:
- which does not require owner, shareholder or director’s details to be filed publicly; &
- which does not have a Tax Information Exchange Agreement (“TIEA”) with the country where you are ordinarily tax resident
- Have a Professional “Nominee” director included as part of your Incorp package
- Have a Nominee shareholder included as part of your Incorp package
- (If you choose nominees) have yourself appointed as a Consultant or Adviser to the director with particular areas of responsibility. That way if your relationship to or contact with the IBC is ever discovered you have a perfectly legitimate explicable reason at hand that you can point to in order to explain your involvement with (or communications with) the IBC
- Be careful and discreet in your communications with the Offshore Company Manager/Director. Most onshore authorities have an advanced ability to listen into phones and to view non secure email (and fax) communications. It also helpsto pay serious attention to IT security. Most computers are easily hacked
- When opening a bank account, choose a jurisdiction:
- which respects banking and ownership privacy; &
- which does not have a Tax Information Exchange Agreement (“TIEA”) with the country where you are ordinarily tax resident
- Never assume that offshore bank issued debit or credit cards can’t be traced. It is rumoured that some “onshore” countries now have the ability to connect you to an offshore bank debit/credit card used by you (even if your name doesn’t appear on it)
- If you’re setting up a trading business offshore and are likely to do business in major “onshore” financial centres think about setting up a more sophisticated type of Offshore company/structure. To a qualified nose if something smells bad it’s not hard to prove it is bad
- Consider adding layers to your structure. Setting up a 2nd Offshore Company or a Trust or a Private Interest Foundation (especially if the 2nd structure is established in a jurisdiction other than the one in which your IBC is registered) to own the shares of your IBC creates an extra layer of privacy and another set of hurdles for hungry hunters to climb over
- (For much the same reason) Consider having your IBC bank account opened in a country other than where your IBC is/was incorporated
- Seek advice and assistance from experienced competent professionals wherever possible, especially before bringing any of your IBC’s money back “onshore” (offshore money is ideally spent offshore). There are lots of cowboys in the offshore world. Anyone can sell you an Offshore company. Not many people know how to structure or manage a company (a) so as to avoid coming into conflict with onshore law or (b) in order to achieve the goal of maximum privacy. If you get it wrong the (legal) consequences can be very serious indeed
- Keep it real! Whatever business you transact with or on behalf of your IBC must have an air of commercial reality to it. This is the simplest way to avoid problems. You have to assume at some stage that your involvement with your IBC might be noticed. If it is will your structure survive the blowtorch being applied?
Happy (Offshore) Investing!
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This is a generic example of how an offshore corporate entity can or might be used. Local laws may impact on your situation. Hence we would recommend that you seek local legal and/or tax advice before establishing such an entity
