Are you a US based Forex Trader and looking for better Trading Terms?
If so, then you might want to set up a Company Offshore to get you access to a wider range of Brokers abroad, such as are guaranteed to offer you better trading conditions than you could ever hope to get at home.
Since the GFC, American Brokers have been limited by regulation in terms of the range of trading terms that they can offer Forex Traders particularly in terms of leverage.
Hence more and more American based Forex Traders have begun to look abroad for better terms.
The challenge however is that most brokers won’t accept an individual natural person American as a client.
The smart Traders are beginning to realise that by setting up a Company Offshore one can get access to Offshore (non-American) Brokers most of whom offer better Trading Terms than their American counterparts
The devil, as always however, is in the detail.
In most cases Offshore Brokers won’t accept an Offshore (ie non-American) Company as a client if:
- The director of the Company is an American; or
- The shareholder of the Company is an American; or
- If (say where a nominee shareholder is deployed) the beneficial owner of the Company is an American
If you want to get access to the widest range of Brokers what you’ll want to do is set up an Offshore Company wherein the Director is not American and the shareholder is not an American and the beneficial owner of the Company is not an American.
To achieve that you will need to:
- Set up an Offshore Company with a Nominee (ie non-American) Director;
- Set up a Private Foundation to act as shareholder of the Company.
Why will you need a Foundation?
The Private Foundation is a creature of European Common Law. It is in essence Europe’s version of a Trust.
Like a trust a Foundation is a 3 headed creature:
(a) It is set up by one person called a Founder (a Trust is set up by a person called a Settlor)
(b) It is managed day to day by a Councillor (a Trust is managed day to day by a Trustee)
(c) A Foundation, just like a Trust, has beneficiaries – ie persons who are designed by law to benefit financially from the set-up of the Foundation and any assets it might own.
Unlike a Trust (which is more like a contract or an arrangement between the Settlor and Trustee) a Foundation has Corporate/Legal personality, that is, it can sue and be sued AND (here’s the key part) a Foundation is presumed under European Common law to be both the legal owner AND beneficial owner of any asset it holds;- If a Foundation owns, for example, a piece of real estate the legal AND beneficial owner of that real estate is the Foundation itself. (If a Trust owns a piece of real estate the registered owner of that piece of Property is the Trustee but the beneficial owner of that piece of property is the beneficiary/s of the Trust).
Whenever we open a Brokerage Account we have to tell the Broker the name of the Beneficial owner of the Company.
In most cases if the beneficial owner of the Company applying for a Brokerage Account is an American the Broker will refuse to open the account.
But if the beneficial owner of the Company is a Foundation (that is, if the shareholder of the Company is a Private Foundation) the Broker should open the account.
One jurisdiction (ie Seychelles) has actually taken this aspect of European common law and codified it ie put it into legislation. In section 71 of the Seychelles Foundations Act, it actually provides that the legal and beneficial owner of any asset of the Foundation is the Foundation itself. Hence most clients in your position usually choose to set up a Seychelles Foundation…
Such a Corporate Structure (if set up and administered a certain way) can also enable you to potentially defer paying tax at home on your Trading Profits.
Local laws can have a unique impact. Hence it’s always wise to seek local legal/financial advice before committing to set up an Offshore Corporate structure.
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