Recently I was asked by a client can I transfer ownership of my local Company to an Offshore Tax Free Private Foundation?
The answer is you can but, as ever, you’ll need to be sure that you dot your I’s and cross your Ts!
To legally effect a change of ownership of an Onshore Company to an Offshore Private Foundation you need to effect a Share Transfer.
To achieve this all you should require is a stock transfer form to be signed by the current holder/s of the shares and deposited at the Company’s Registered Office (or at the Company Registrar’s Office ie if the Company you are transferring ownership of is incorporated in a country which has a public register of shareholders).
To minimise the chances of the legality of the transfer ever being questioned:
(a) You should ensure that the Onshore Company and IBC both sign a contract (ie a sale and purchase agreement)
(b) Once the contract is signed a Share Transfer (ie a document which effects legal transfer of ownership) will need to be signed, usually by both parties and lodged with the relevant authority/Registrar
(c) The sale should be seen to be on commercial terms (such as would otherwise exist between a buyer and seller “at arm’s length”). That said the sale contract could be an instalment or vendor finance contract ie where a deposit is paid and ownership is transferred but the seller retains a mortgage until such time as all the instalments have been paid.
(d) The price paid for the shares should be seen to be fair market value
How do you determine, or buy at, fair market value? Ideally by either:
(a) Advertising the shares for sale publicly and matching the price of the highest bidder; or
(b) Have a Licensed Valuer or a Certifier Practising Accountant review the Company’s books of account and place a value on the shares
Capital Gains tax may apply hence you should seek local legal/taxation/financial advice before committing to transfer ownership of an onshore Company to an Offshore Private Foundation.
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