1. What is a Shelf Company?
• The term “Shelf” refers to the fact that incorporation documents are literally purchased of a bookshelf filled with pre-registered companies that are instantly transferable to the buyer. As the official corporate documents for a new company can often take up to 2 weeks to arrive, company names are normally pre-registered to save waiting time. The cost to purchase a CMS ready made company and a company with your own chosen name is the same. Other common names include a “Shell company” and a “Ready-made company”.
2. I change the name of my company?
• However, the proposed new company name must first be approved by the registrar in the country of incorporation to ensure that the same name does not already exist – CMS will be happy to conduct a name search free of charge. A board resolution must be drafted and signed by the director(s) of the company and the new name must be officially filed with the company registry in the country of incorporation.
3. I change the director(s) of my company?
• A board resolution must be drafted and signed by the director(s) of the company and officially filed with the company registry in the country of incorporation. The new director(s) must provide a copy of their passport, proof of permanent home address, telephone/fax number and email address together with a signed letter stating that they wish to become a director of the company.
4. Can I change the shareholder(s) of my company?
• A board resolution must be drafted and signed by the director(s) of the company and officially filed with the company registry in the country of incorporation. The new shareholder(s) must provide a copy of their passport, proof of permanent home address, telephone/fax number and email address together with a signed letter stating that they wish to become a shareholder of the company.
5. Can I establish a bank account for my company?
• Yes, however CMS is only able to assist in establishing corporate accounts for companies under our management. All the banks we work with consider the prevention of money laundering and terrorist financing to be of the utmost importance. Banks have adopted ‘know your customer principles’ following the worldwide introduction of new money laundering legislation. These principles make it a requirement for them to know the identity of the beneficial owner, the source of monies being transferred into an account and the type of business a company will undertake. The supply of this information is a legal requirement and clients should expect to provide full and detailed information about themselves, their business activities and their future plans. A personal bank reference and proof of business activities using company brochures, a company website, business contracts, a lease agreement will help support your bank account application.
6. What happens if I do not need my company anymore?
• It is imperative that your company is officially removed from the company registry to avoid any government fines and penalties. Each country has different requirements and procedures to close a company, therefore, we recommend you to discuss the most cost effective solution with our staff.
7. Is setting up offshore illegal?
• No, setting up offshore is not illegal. However, withholding information about your offshore investments is illegal in some countries. An offshore jurisdiction should be perceived as just another foreign country, but with certain advantages. These can take the form of banking secrecy laws, advantages in forming companies for international trade through tax treaties, no interest tax, no inheritance taxes, no capital gains tax, no individual tax, and many others.
Depending on your personal needs or preferences, there will normally be one or more offshore jurisdictions offering the services you are looking for.
8. Is offshore only for the rich?
• This might have been so a long time ago. However, in this modern age with the high quality of services offered by CMS, offshore is now a relatively simple and affordable procedure for almost anyone. Once having moved all or part of your business offshore, the savings made by the low-tax or tax-free status opens up a whole new world of investment and business opportunities. If required, we will be happy to introduce you to an independent offshore investment advisor.
9. Where do I start?
• Start with a Business Plan and a budget, as maintaining an offshore company requires paying an annual registration fee. Do you want to set up a small trading company, or an international empire? Do you want to sell your product on the internet? Decide on your target market and the types of currencies you want to accept. You may first wish to set up a Virtual Office to test the market with your product. The flexibility in moving offshore will automatically open up new possibilities for you and your business.
10. Can I move my existing business offshore?
• Some companies move parts of their business offshore almost immediately as separate subsidiaries and profit centers. However, you will need to look at your business with a view to re-structure your activities and maybe look for new business opportunities on a cross-border basis into other countries. The possibilities are quite extensive, and we are able to assist you when it comes to applying offshore advantages to your existing company operations.
11. What about my personal taxes?
• CMS does not provide tax advice and do not assist you to evade taxes. This would be illegal for BOTH of us, however, it is our business to show you the opportunities available on how to reduce or even avoid incurring a tax liability.
We always advise our clients to seek advice from a tax lawyer and/or accountant in their respective country before proceeding with the purchase of a company.
12. How do I find the right jurisdiction?
• This depends on what the corporation is going to be used for and your own personal or business circumstances. If you don’t have a personal preference or a recommendation from a friend, please ask our experienced advisors for suitable suggestions. They will be able to help you make the right decision to match your budget and personal requirements. Alternatively, please feel free to use our Jurisdictions section for further information.
Some important factors to consider when choosing a suitable jurisdiction: Incorporation & annual maintenance costs, the tax regime, legal system, confidentiality, exchange controls, banking facilities and the political and economic stability.
5 Golden Rules
When purchasing a company it is important to remember these 5 Golden rules:
1. Choose a respectable corporate services provider which has a physical office you can visit to discuss your requirements in confidence.
2. Choose a recognized bank in a stable country and ensure that they will accept instructions by fax or offer internet banking services
3. Beware of general costs such as “Disbursements” and “Other Expenses”
4. Deal with a company whose office is located away from your country of residence – as your personal records will be kept there.
5. For maximum confidentiality, try to ensure that the company and the company’s bank account are located in 2 different jurisdictions.
13. Are there any other advantages besides tax?
• Yes, there are many advantages including: Anonymity, asset protection, foreign property holding through a company in a third country, limiting of liability in business transactions, unrestricted flow of capital, transfer of assets etc. etc.
14. What is the future of the offshore industry?
• Since the 911 incident, the international crackdown on money laundering has created a divide in the offshore industry, primarily between jurisdictions eager to comply with international standards of anti-laundering regulation and those that are less co-operative. The driving force behind those initiatives, have been influential organizations such as the Financial Action Task Force (FATF). The FATF was established by the G-7 countries in 1989 and is an inter-governmental body whose purpose is the development and promotion of policies, both at national and international levels, to combat money laundering and terrorist financing. As the FATF seek to apply more international pressure, it will become increasingly difficult for the less well-regulated regimes to do business.
Another major issue is the exchange of information, the profile of which has been raised in the current climate. The recently agreed EU Savings Tax Directive will change the face of the offshore industry, although to what extent is somewhat harder to predict. Previously no information was exchanged automatically in Europe unless there were concerns about illegal activities on a bank account. However, with the introduction of the EU Tax Directive, customers living within the EU are likely to be forced to engage with these issues, either by having to pay a withholding tax or agreeing to exchange information. The new directive will affect not only the EU Member States but “all territories under their control”, Switzerland and the USA. The UK has recently announced that if the Cayman Islands fail to voluntarily to comply with these new rules, the United Kingdom will legislate on its behalf.
To this effect, Hong Kong will soon become a much more important jurisdiction for tax planning as it is one of the only respectable and well-regulated “offshore” banking centres which will not be subject to the new EU directive on automatic exchange of information and withholding tax.
Hong Kong should also be seriously considered for clients wishing to register an offshore company, as it is one of the few respectable locations in the world that tax on a “Territorial Basis”. Consequently, this means that corporation tax is ONLY charged on profits derived from a trade, profession or business carried on in territory of Hong Kong. Income sourced elsewhere, even if remitted to Hong Kong, is treated as tax free.
15. How are Offshore Corporations used?
• Offshore corporations may be used to own and operate businesses, issue shares, bonds or otherwise raise capital, guarantee obligations, hire employees, buy goods and services, sell goods and services, make contracts, rent office space, maintain checking and saving accounts, and maintain retirement plans for employees. Although most offshore corporations are private and closely held, some are publicly traded on major stock exchanges.
16. What are articles of incorporation?
• The Articles of Incorporation is the document which establishes the corporation and contains basic information such as the name, share structure, and purpose of the corporation.
17. What are by-laws?
• The By-laws, or in some jurisdictions “Articles of Association”, are rules the corporation creates for its shareholders, officers, and directors. By-laws are adopted by the Board of Directors as one of the first organizational steps in setting up a corporation. Upon instruction, we can adopt a standard set of By-laws for a new corporation. Unlike Articles of Association, By-laws are usually maintained internally but may be publicly filed if requested.
18. What does a corporate search reveal?
• A corporate search will reveal the name of the corporation, the date of existence, amendments, and any other publicly filed document. Under Panamanian law for example, there is no requirement that the names of corporate officers, directors or shareholders be filed in any public registry. Such information, therefore, remains confidential.
19. What are bearer shares?
• Bearer share certificates do not indicate the name of the owner. The certificate is endorsed in blank such that the person having physical possession of the document is the owner. Bearer shares facilitate the transfer of assets because transfer of ownership is accomplished simply by the transfer of the certificate.
20. What are registered shares?
• Registered share certificates indicate the name of the owner on the document. 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, under conditions specified in the jurisdiction’s corporate statute
21. What is a registered agent?
• A Registered Agent is required to ensure that the corporation has an assigned representative at a known address to receive all service of process (legal notices) on its behalf. The Registered Agent forwards these documents to the address of record of the corporation.
22. Isn’t moving assets offshore illegal?
• There is nothing illegal about moving assets offshore. It is when you move the assets into accounts offshore and do not declare their existence to the tax authorities that you break the law. Any assets over which you have control, domestic or offshore, are probably liable to taxes in your home jurisdiction.
23. Why should I move offshore?
• Moving some of your assets offshore provides you access to modern (and ancient) methods of protecting your assets and reducing your taxes using trusts, international corporations, foundations and other legal entities.
24. What is Asset Protection?
• Asset Protection is a term used to describe the concept of legally transferring your assets into a legal entity which will protect them from attack by frivolous litigation, seizing from government, attack from an estranged spouse – in fact anything which may threaten your hard earned wealth.
25. Do I need to declare my offshore assets?
• Taxes must be paid on profits made on assets under your legal ownership. By the use of certain offshore entities, which vary according to your home jurisdiction, a certain proportion of your assets will no longer bear taxes at the same rate. Please contact us for a plan based on where you reside.
26. If I open an offshore structure, will this lead to tax authority scrutiny?
• What we advocate is not illegal; it therefore does not attract undue attention from the authorities. It is activities like money laundering, tax evasion and controlled accounts that the tax authorities are interested in, not law-abiding citizens protecting their assets and lowering their tax burdens.
27. Which is the best offshore center to use for asset protection and/or estate planning?
• Most modern tax havens are very alike with respect to their tax laws and services, although some do offer entities not available in others. Certain tax havens have developed bad reputations over the years due to abuse by certain elements of the offshore industry, but most are quite safe. As with any financial plan, it is usually best to use a mix of jurisdictions, picking the best from three or four areas.
28. Can I retain control over my money, possibly through investment or bank accounts in my home country?
• Many people would like the ‘safety’ of an offshore asset protection structure but would like to keep complete control over the assets, trading accounts etc. This is possible but gives a direct link to the assets and will probably lead to any legal structures that were set up being ignored for both tax and protection purposes. Offshore asset protection does require you find people you trust to advise you and take care of finances for you.
29. Are there any other advantages to going offshore?
• Once a structure has been legally created it can be used for international trade and investment. This opens up a whole new arena that the average unstructured citizen cannot usually access.