Offshore Company FAQ

What is Offshore Corporation?

Offshore corporation is a legal entity incorporated in a tax haven free from local taxes, having limited liability and paying just fixed annual fees that are rather small. Offshore corporation has the option to sell shares, the right to sue and be sued, and has perpetual existence.

How are Offshore Corporation Most Commonly Used for?

Offshore corporations are most commonly used for investment activities and for offshore banking to conduct international trade. They may be used to own and operate businesses, issue shares, bonds, or otherwise raise capital, guarantee obligations, etc. They are used for the ownership of land property and land, for ownership of intellectual property, licensing and franchising, offshore e-business.

This is not the full list. Offshore corporations may be used in many other ways to save on taxes. AMOst offshore corporations are private and closely held, but some are publicly traded on major stock exchanges.

What Are Articles of Incorporation?

It is the basic document establishing the corporation and including the initial information the name, share structure, purpose of the corporation.

Articles of Association

Rules the corporation creates for its shareholders, officers, and directors; adopted by the Board of Directors as one of the first organizational steps is setting up a corporation.

What Are Bearer Shares?

The certificate of bearer share does not include the name of the owner, and the owner of the share is any person having physical possession of the certificate. Bearer shares facilitate the transfer of assets, because transfer of ownership is accomplished simply by the transfer of the certificate.

Now, Bearer shares are required to be held in the country of incorporation by a Fiduciary Institution in all  the jurisdictions, except for Panama. Also, some businesses are not likely to enter into agreements and contracts with companies which have issued bearer shares, and the banks are reluctant to open bank accounts for companies that have issued bearer shares.

What Are Registered Shares?

Registered share certificates are those where the name of the owner is indicated. The name of the shareholder is also recorded in the internal corporate records of the company. Although the registered owner is recorded in the corporation's internal records, no public registry of shareholders is maintained.

The share registry is an internal corporate document available only to directors, officers and shareholders of a company, under conditions specified in the jurisdiction's corporate statute;.

What Are Offshore Shelf Companies?

Ready-made, never used corporations that have been created to meet a client's immediate needs.

What Is a Registered Agent?

A Registered Agent ensures that the corporation has an assigned representative at a known address, and all services of process are received on its behalf. Registered Agent also forwards these documents to the address of record of the corporation.

What is a Power of Attorney?

POA is a legal agreement that empowers a person with the authority to pass on this authority to another person or persons, and making him the Attorney in Fact. This POA may be general (unlimited), or limited to a specific function. The POA can also be time for a fixed period in time, or it can be a perpetuity.

When do I Have to Pay up the Authorized Capital?

You do not have to pay up the authorized capital at the time of incorporation, or when you open an account. If the company cannot pay its debts, the shareholders have personal liability to the limit of their share which has been declared.

What is the Difference between a Registered Shareholder and a Nominee Shareholder?

Registered shareholder: when the beneficial (real) owner records his/her name on the share certificate and in the Register of Shares, as the owner of the allotted shares.

Nominee shareholder: when the beneficial owner chooses not to have his/her name on the share certificate or in the share register. Then, the third becomes a nominee for the real owner. The nominee appears on the certificate and in the register, in return the nominee signs a Declaration of Trust to the beneficial owner, giving up any right to exercise any powers over the shares, including voting rights or the right to sell or transfer these shares.

The nominee shareholder is used where the Companies Registry may be open to public scrutiny, or if the owner requires maximum privacy level.

What is the Nominee Director?

This is a third party registered as the director of the company. On his appointment at the first meeting of the subscriber to appoint the board, an undated letter of resignation is signed by the nominee director and can be executed by the beneficial owner at any time. The nominee director also provides the beneficial owner or other person (who the beneficial owner may appoint) with a general POA, which vests total authority and control in this person over the affairs of the company.

The main function of the nominee director is to simply facilitate the beneficial owner in matters of privacy; he is not intended to assist in the management of the company, or sign documents and contracts on their behalf.

What is Share Capital?

The share capital of a company is more known as the authorized share capital  - a statutory requirement which sets out the total value of the shares that may be sold and distributed. In many jurisdictions there is no minimum authorized capital requirement, and the chosen capital is not affected by fees.

Is it necessary to visit offshore jurisdiction for incorporation or opening bank account?

No, only if you wish to. The information for incorporation is normally provided online, by phone or fax.

What is Apostille?

An apostille to a document is the authentication, by a specially appointed government official, of a copy of a public document which has been notarized as a true copy by a notary public. Apostille is internationally accepted under the Hague convention, which includes the majority of English speaking and European countries.

Most banks require company's public documents to have an apostille guaranteeing them to be authentic documents, and bearing the official stamp of the office of the authorized person to sign the apostille.