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STRUCTURE OF AN
Structure of an offshore company Registered agent and address Most offshore jurisdictions also require maintaining a registered agent within their territory. In Gibraltar, this position is called Resident Secretary. Usually, the registered agent is located in the registered address of the company. The purpose is again the same, to have some person (or, more often, a firm) who acts as an "intermediary" between the government and the particular offshore company. The name and address of the registered agent are registered on public file in the Registrar of Companies, so this information is accessible to anyone who cares to ask. Memorandum and Articles of Association First Minutes Obviously, when the company starts to operate any further changes may be effected by separate resolutions. Such can be carried out by the shareholders or by the directors of the company, depending on the character of the change. If the particular change is such that requires to be registered in the Registrar of Companies, it should be put to the notice of the registered agent or resident secretary, for further filing with the Registrar. Directors and officers Many offshore jurisdictions, including Gibraltar, permit the director to be a corporation. This may sound weird, but just imagine a management firm comprising of a team of highly competent management specialists who would take the duty of managing the company's regular business. Nevertheless, utilizing a corporate director may blur the clear structure of a company and make it difficult to comprehend, especially for people who live in countries where corporate directors are not a common practice. More often than not the existence of a corporate director will also indicate that the company is most probably an offshore entity. An individual director makes the whole structure more straightforward, just because we are more used to the fact that a director of a company must be a living, breathing person. There are not many drawbacks for an offshore company to have an individual director, apart from the fact that the services of individual directors would usually be more expensive than corporate. Another aspect, distant as it may sound, is the possible complication when such individual director falls ill, goes away for vacation or, as it may happen, dies. In case of a corporate director there will always be some person who will be empowered to sign or act on behalf of the company. In case of an individual director, there might not be. In such case the company would have to go through a lengthy process of registering a change of director in its file before the new director can act. Electing an alternate in the first place would therefore not be a bad idea. Just as well, a company may have one or several addition officers to fill various managerial and administrative roles within the company. The most common officer categories include President, Vice-President, Treasurer and Secretary. Some jurisdictions require that some or all of these roles be filled at incorporation. The company directors may sometimes appoint managers or attorneys of the company, granting them certain powers to manage the affairs of the company. The manager may, for example, have a signing authority on a bank or securities account, or the powers to negotiate certain types of contracts for the company or do anything else that may be written in his power of attorney. Company shareholders or beneficial owners are quite often appointed as managers of the company for such purely practical reasons. Shareholding structure There are a few different types of capital Then there is the subscribed capital. This is the amount of money that the prospective shareholders actually agree to invest in return for their shares. The subscribed capital can quite often be less than the authorized capital. This would simply mean that the company has actually issued (or sold) only a part of its shares to the shareholders, whereby the other part remains unissued. Thus, if company XYZ has an authorized share capital of 50,000 shares and Joe agrees to take 1000 shares, and then the company's subscribed share capital is 1000 shares. Joe would own 100 percent of the company. If the company also issues 1000 shares to Mary, the company's subscribed share capital is 2000, and each of Joe and Mary would own 50 percent of the company (1000 shares each of the total issued 2000). There is also the matter of the paid-up capital. The subscribed capital becomes paid-up capital when the subscriber (the prospective shareholder) actually honours his part of the deal and pays for his shares to the company. In the most trivial case it would simply mean that the shareholder has made a payment into the company. Usually, only from this moment the shareholder acquires the right to take part in the decision-making process of the company, that is, to vote in the shareholders meeting. The dependence of the voting powers on the fact of paying-up for the shares would usually be set forth in the Articles of Association of a company. There is a substantial difference in how the various aspects of share capital are treated in most high-tax countries and in the offshore financial centres. In the "first world" countries, especially in Europe, the legal requirements for minimum authorized, subscribed and paid-up capitals for a domestic company are quite high, often in tens of thousands of euros. There are also strict rules that these capitals should all be paid-up at or shortly after the registration of the company. The logic behind those rules is apparently that a company in, say, France, can not realistically commence any business without a substantial money available for this purpose. In most offshore havens it's radically different. Mostly, the size of the authorized capital of an offshore company does not have a legally prescribed minimum. If it does, the minimum is really small - think 2 US dollars or equivalent. Consequently, there are no requirements to have a substantial amount of paid-up capital. Thereafter, the law does not require that the subscribed capital be paid-up in a certain timeframe. Therefore an offshore company can have an authorized capital of 10 US dollars, of which the amount of 2 US dollars is subscribed for (by a nominee company), but remains unpaid. At the same time, this flexibility allows the owners of the company to choose any amount of capital they wish, and to be very flexible with the rules of how and when the capital has to be subscribed for and paid up. Flexibility is the keyword here. In most offshore jurisdictions there is a government duty or capital tax payable at incorporation (and often annually thereafter) of the offshore company. The amount of this duty depends on the size of the authorized capital of the company. However, usually there is a pre-set minimum of the government duty. As in Gibraltar, the capital tax at incorporation is 0.5% of the authorized capital but not less than 10GBP. It's easy to calculate that the maximum possible authorized capital that you can get registered by still paying the minimum duty, is therefore GBP 2000. This is the amount that you will usually see registered as "standard" by the offshore service provider. Going to higher capital is possible, but will involve higher duty. Going lower is also possible, but needless, as the duty will remain the same anyway. This concept of "maximum authorized capital to which minimum duty applies" is repeating itself virtually through all offshore jurisdictions. Another distinct feature of offshore companies is registration of shareholders on the public file, in the Registrar of Companies. Many offshore territories do not register the shareholders of offshore companies in the Registrar. Thus the ownership structure or a company is in a way left to remain the internal matter of the company. In such case the shareholder information (Registrar of Shareholders) will usually be kept on file with the company secretary or the registered agent, or by the director. Obviously, in such event each individual shareholder should take care to receive appropriate proof from the company confirming his shareholding interest in the company. Such proof can be a share certificate. Some offshore territories, like Gibraltar, do keep shareholder information on the Registrar's file. It does not influence shareholder confidentiality very much, because the shares can be registered in the names of third-party nominees, or left registered in the name of the initial Subscriber. In this case, again, it is up to the shareholder to keep the appropriate proof that he is the actual owner of the company. Such proof can be an appropriately drafted declaration or an agreement between the nominee and the actual owner. Direct registration of the shares on public file can, however, be attractive to those company owners who wish to be completely assured that their private holdings remain protected by being properly registered. This becomes especially important when the company is owned by several owners. All in all, the corporate characteristics and structural elements of an offshore corporation are just the same as they would be for a typical business company in any country. The difference is in the fact that with offshore companies, all these elements are made extremely simple and flexible, with minimum government regulation and red tape involved. This in turn makes an average offshore company just a more practical vehicle through which to transact business. And that's before any tax benefits come into consideration.
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