Incorporating an Offshore Company

Incorporating a company offshore is simply the process of registering a business in a country that is different than the one that you live in. There can be many benefits associated with incorporating a business offshore and that includes;

Anonymity – the name of the principal owner or partner is normally kept private and out of any forms of documentation Asset Protection – assets and transactions are protected against liabilities by virtue of the way in which they are organized Financial Assistance – provisions of financial assistance for the acquisition of their own shares is not prohibited Reporting – registrars of companies, based on their jurisdiction and location, require different levels of information Simplicity – unless the type of business falls under the banking or financial category, most jurisdictions make it easy for the set up and maintenance of offshore companies Taxation – overall tax liabilities are usually minimized based on the structuring of profit realization Thin capitalization – (see the definition in Wikipedia); these rules are generally not imposed on offshore companies by the jurisdiction they are in — exception: banking, financial, and insurance entities

There are two main types of of offshore company that can be registered; an International Business Company (IBC) and a Limited Liability Corporation (LLC). So what is the difference between these two Offshore Company types?

An IBC is registered in a tax haven. This is an offshore company, incorporated as a tax-free entity, and is not permitted to conduct business operations within the jurisdiction of its incorporation. A LLC is a legal business company that offers limited liability to its owners and provides a more flexible type of ownership.

When it comes to categorizing a type of business that an offshore company incorporates as, there are three entities that seem to be the most common:

Offshore Company That Has Share Capital This is any offshore company that issues share certificates. The shareholder’s obligations are terminated once the value of the share has been paid. Some companies allow share certificiates to be sold or transferred.

Offshore Company Limited By A Gaurantee If an offshore company terminates business due to bankruptcy the member’s agree to pay out up to a maximum limit. The rules of the offshore company are what dictate what a member’s benefits are within the corporate structure. Death ends the member’s relationship with the company.

Protected Offshore Cell Company This type of offshore company is identified by the seperation of its assets and liabilities into different “cells” in such a way the one cell’s assets cannot pay for another’s liabilities. These companies are also called Segregated Portfolio Companies (SPC) which are normally used for unit linked insurance bonds and umbrella mutual funds.

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