General Knowledge About Offshore Companies
A "tax haven" (or "tax shelter") is neither a legal, nor a political, official or scientific term. It`s purely colloquial. It is actually ill-advised to openly call any particular country a "tax haven", because this name is disliked and frowned-upon by government officials. Therefore, in this chapter, we are NOT calling any particular country a tax haven.
A more official name for the same thing is an "international financial centre", although many countries call themselves this way rather aspiringly, without actually having much finance to show for it.
Regardless of how you call it, countries, which offer substantial tax benefits to businesses (in particular, foreign businesses), are generally referred to as tax havens or tax paradises. In this respect, the notion of tax haven is, of course, a relative one. As compared to a 35% income tax in one country, a neighbouring country with 12% tax would very much qualify as a tax paradise - and still fare less than a country with zero taxation on income.
In the traditional sense, a tax paradise is a country where one can register a business which will remain completely tax-free in that country (except for certain government fees), as long as it does not operate inside its own country. Some tax haven jurisdictions have gone even further, by abolishing business and income taxation for all businesses, both domestic and offshore.
A proper tax haven jurisdiction would normally have a whole complete network of regulations, laws and precedents aimed at the attraction of international business to register there. Such attractions may not only include zero taxation on business, but may also feature extremely fast and efficient business incorporation procedures, minimum mandatory reporting, strict secrecy provisions in the financial and corporate sector, a developed financial system and no information-sharing agreements with foreign governments.
There is no definite answer to this question. A varying range of fiscal and financial benefits to international business are offered by over 40 jurisdictions around the world. The actual choice may depend on such variables as the geographical location of the client, the type of business for which the offshore company is intended, price of incorporation and management, speed of service, language and, of course, the range of services offered. For more detailed review, please read the article "Which is the best offshore jurisdiction?" in our Offshore Knowledge Base.
Most of the tax haven countries have small territories and small populations. So even relatively minor amounts of money can and does make a difference. The direct Government duties paid at IBC registration and its annual renewal fees are only the tip of the iceberg in respect of the overall impact of a successful offshore formations industry in a particular country. A $100 Government licence fee, multiplied by tens of thousands of offshore companies, provides millions of budget revenue without ever burdening the country`s infrastructure. The non-government revenue is even larger. It`s made up of the professional fees paid by all those offshore companies to local Registered Agents, company managers and administrators. In addition, there`s money settling down and turning over in offshore banks, insurance companies and investment funds. All in all, a successful offshore financial sector provides jobs, career opportunities and income for a whole lot of people. The offshore services sector creates demand for quality telecommunications, office space, computer equipment and software, office furniture and business supplies. Ultimately, all that offshore revenue filters down into all sectors of the national economy. The result is notable increase in overall prosperity and social stability of the country. That, in turn, strengthens the independence of that country - in particular, it`s ability to withstand pressures from foreign governments and international organizations.
Well, aren't domestic companies used by these guys, too? Offshore tax havens have for decades been targeted by blackmail campaigns by the powerful high-tax jurisdictions. Many high-taxing, high-spending governments would like everyone to believe that offshore companies are only used by fraudsters, terrorists and crooks. That`s completely unjustified. While there is always a rotten apple in any box (especially, if the box is large enough), 99% of all business transacted through offshore companies is completely legitimate. In fact, due to the inherent need to maintain their reputations clean and well in order to withstand international pressure, most leading tax haven countries nowadays have proper systems to detect and prevent financial crime and money-laundering. Many of the big, powerful nations, who are so eager to criticize the offshore financial centres, should better look into their own backyard for fraudsters and embezzlers.
This is another myth. Tax havens and offshore companies have been around for many decades. Tens of thousands of new offshore corporations are incorporated worldwide every year. Millions of IBC`s are in operation all over the globe. Offshore companies are owned and operated by practically all of the big, Fortune-500 sort of supranational corporations. In this time and age, it`s actually a necessity: offshore operations may decrease Your overall overhead (on tax and management costs), so You become more competitive. True for big corporations and startups, alike. So offshore is not something on the fringes of the business society, rather, it`s right in the middle. Some estimates say that more than half of all the money in the world (just imagine how much it is!), actually resides in offshore accounts at any moment in time. All international trade in goods, commodities and services is predominantly transacted through low-tax or zero-tax companies. Investment funds are routinely registered in tax havens, so they are not burneded with excessive tax and can provide most competitive returns to their investors. A variety of offshore holding companies help businesses invest abroad with minimum loss on witholding tax. Much of the global e-business resides offshore - it`s a marriage in heaven. The list can go and on. To understand this trend, just think of money as water - it will always flow from high (tax and burden) to low, and both will always find it`s way through!
Yes. Owning shares in an offshore corporation, either directly or indirectly, is no different to owning a domestic business. Certainly, an offshore ownership should be considered along with some proper advice. Many high-tax countries have legislated certain countermeasures in their tax regulations against known offshore finance centres. In particular, some high-tax governments have introduced a discriminating witholding tax on direct payments from domestic businesses out to corporations, situated in certain offshore jurisdictions. Therefore, it is a good idea to check if Your country has such "blacklist" or any discriminating regulations against transactions with offshore companies. A competent tax lawyer or accountant back at home should be able to clarify this question. All-in-all, offshore company is just the same as Your domestic firm, only the offshore corporation is not burdened by excessive tax, is faster to incorporate and easier to manage. As such an offshore company is completely legal to own and to use.
Offshore companies simply have different names in different countries. The most popular name is IBC - International Business Company. Other names You may find are non-resident companies, exempt companies, or simply business companies, etc. Regardless of the name, all of those entities are corporate bodies or, in legal-speak, "juridical persons", with their tax benefits set forth by the actual laws of their registration country. Sometimes, as in case with the recently "renamed" BVI Business Company, the name popularly used will not exactly be the name You would find in the law. The most popular name for an offshore company is IBC - the International Business Company.
There are two main purposes. The first is tax avoidance, minimization or deferral. The second is asset protection and confidentiality. Both reasons are quite independent. Some offshore companies actually do not pursue any tax-reduction purposes at all, but mostly serve as a protective shell for some part of the assets of their owner. More often, though, both reasons overlap and complement each other. For more information, please see the our Offshore Knowledge Base section.
The main advantages are: (a) zero or absolute minimum taxation on profits and capital gains; (b) confidentiality, due to no sensitive personal information registered on public file; (c) protection, due to secrecy provisions enshrined in the law and no information-sharing agreements; (d) corporate flexibility: no paid-up capital, no requirement to declare operational objects, minimum requirements on directors and shareholders, speedy incorporation, and so on; (e) simplicity of management - shareholders` meetings can be held anywhere, and also by electronic means, the corporate decision making process is extremely flexible; (f) minimum reporting - no audit, no tax reporting, no financial information on public file. All in all - a lean, mean international business machine...
OK, there is a serious risk that the tax haven jurisdictions will die out one day. When? Exactly when all the high-tax countries will lower their corporate, income and capital gains taxes to nil, or at least close to nil. Impossible? We thought so... Despite the political and economic pressures exerted by the European Union, the United States and some of their notorious puppy organizations like OECD and FATF, the leading offshore financial centres have showed surprising resilience and are now doing better than ever. There is a simple reason for that - so many business people worldwide have voted with their wallets and have chosen to incorporate offshore, that offshore has penetrated all aspects and facets of global economy. A \"critical mass\" of global offshore-based businesses have been created a long while ago, and it`s growing stronger by the day.
Up to the end of 2018 Seychelles International Business Companies were freed of any tax by definition of law. However, starting from 2019 a new legal system, more flexible and more correspondent to the modern international tax trends, was implemented. By a few significant changes of key legislation pieces the so called "Territorial Tax System" was established in Seychelles. The amended IBC Act prescribes that even Seychelles IBCs are now obliged to pay taxes; but only for the taxable income that originates in Seychelles.
Article 361.(1) of International Business Companies (Amendment) Act, 2018 declares that "Notwithstanding any provision of this Act, where a company incorporated, continued or converted under this Act derives assessable income in Seychelles, it shall -
(a) within one month of deriving the first assessable income, notify the Registrar in writing that it is deriving assessable income and the nature of the activities giving rise to this assessable income; and
(b) within one year of deriving the first assessable income, file with the Registrar an Annual Return accompanied by the documents to be annexed to this Annual Return as required under the Companies Act (Cap 40).
Meanwhile, article 5.(1) of the Seychelles Business Tax (Amendment) Act, 2018, a cornerstone of Seychelles tax legislation, defines "assessable income" as follows:
5.(1) An amount derived by a resident person in carrying on business is derived from sources in Seychelles if derived from activities conducted, goods situated or rights used in Seychelles <…>."
All-in-all, this means that, as long as a company income is obtained abroad of Seychelles, it remains free of income tax. A Seychelles IBC is also exempt from any stamp duties on all transactions relating to its business, in particular, on any transfers of property to or by the company, and on any transactions in respect of the shares, debt obligations or other securities of the IBC.
If Your government would not require to keep and file all those numerous financial reports and forms, what kind of financial recording would You do at Your own will? The difference would be quite substantial, right? Many offshore jurisdictions do not require any financial records to be officially filed. Quite simply, offshore companies are free to keep their books as they wish. However, since recently, some of the more advanced offshore financial centres have gradually realized that a mandatory requirement to maintain some formal financial records in an offshore company would actually be in the best interests of the beneficial owners of the companies, as this would provide the company owners with extra peace of mind. This aspect becomes specifically important when an offshore corporation is owned by several individuals, thus requiring a more elaborate system of management and controls.
In Seychelles, companies are required to maintain, internally, such accounting records that enable the financial position of the company to be reasonably determined at any time. However, there is no requirement to file any financial information on public record, nor is there any audit requirement - as long as the particular company does not obtain any assessable income in Seychelles (i.e. keeps its business activities outside of the country). Apart from that, the company may be asked, by Seychelles Revenue Commission or Financial Intelligence Authority to furnish its records - but this can happen only in strictly limited circumstances, as part of an ongoing investigation in Seychelles.
Structure and Registration Procedures of Offshore Companies
In terms of the internal structure - there is very little difference! An offshore company is quite simply the same sort of legal entity (a corporation), only registered outside the domicile country of its owner(s). Historically, though, the term "offshore" has been narrowly associated to a company, which is not only formed outside the home country of its owner, but also has a number of benefits, that are not exactly available back home. An onshore corporation pays income tax (sometimes, lots of it), an offshore company is tax-free. An offshore company is also free from financial reporting and mundane book-keeping requirements. To form an offshore company, its owners don`t need to come up with big paid-up capital. Offshore corporation is not required to register its shareholders on a public file. It`s easy and quick to register, simple to operate and maintain. Apart from those "perks", the internal structure and management principles of an offshore company are still largely similar to those of any "regular" business corporation.
As in any country, using some words in IBC names is restricted or prohibited. The first group of those words are related to specifically licensed activities. If You want to refer the company name to activities like banking, insurance, re-insurance, trusts, Registered Agent services, asset management. In fact, You can use such words, but only through a prior licensing procedure aimed at the particular activity. For instance, to use a "banking" word in Your company name, You would have to apply for the banking license with the Central Bank of the Republic of Seychelles.
The other group of restricted words are the ones that would misleadingly imply an official patronage or connection with the Republic of Seychelles or the government of Seychelles, as well as similar patronage of any other country or its government. However, the final word in approving such names is with the Registrar, who may permit the incorporation of a company under a name that includes the word "Seychelles" if there is a good logical reason for doing so.
The third group of restricted words is open-ended, and much at the discretion of the Registrar of Companies. Any obscene words or expressions will be refused. Names that allegedly copy or resemble too closely an existing business name will be refused.
Generally, the name restrictions are aimed to prevent the misleading of general public.
The company names are subject to several restrictions stated in the Seychelles International Business Companies Act. A Seychelles IBC may not be registered under a name that:
- is identical to the name of an existing Seychelles IBC;
- is so similar to the name of an existing Seychelles IBC that the use of the name would, in the opinion of the Registrar, be likely to confuse or mislead;
- suggests or is calculated to suggest, in the opinion of the Registrar, the patronage of or any connection with the Government of Seychelles or the with the government of any other country;
- is, in the opinion of the Registrar, in any way offensive, misleading, objectionable or contrary to public policy or to the public interest;
- includes a prohibited word, phrase or abbreviation: "Bank", "Building Society", "Chamber of Commerce", "Chartered", "Cooperative", "Credit Union", "Government", "Licensing", "Municipal", "Parliament", "Police", "Royal", "Tribunal", "Stock Exchange" or a word or abbreviation conveying a similar meaning. Besides these prohibited words, there is a rather extensive list of words that may be included in the IBC name upon previous written permission from the IBC Registry. Please contact us for more information about them.
No. There are no minimum paid-up capital requirements for a Seychelles IBC. The owners of the IBC may freely decide as to the amount of the authorized capital to be stated in the IBC formation documents. The law does not prescribe any deadlines as to when the authorized capital must be paid-up - this is for the shareholders to decide. As in many other offshore financial centres, it is acknowledged in Seychelles that a private company may start its business with any amount of capital, or no capital at all.
The shares of a Seychelles IBC may be denominated and issued in any currency. The most popular currency of capital is US dollar, because it is also the currency in which the Financial Services Authority calculates the Government license fees for IBC`s.
No. The only mandatory legal requirement is to have a "minimum local presence" in the country. This means having a Registered Office and a Registered Agent in the Seychelles. This service is usually provided by us, as a licensed Registered Agent, for all International Business Companies we register and maintain for our clients. If Your business circumstances so require, several optional services are available for Your offshore company - such as mail and fax forwarding, document re-mailing and telephone call handling. These services will provide a more "bricks and mortar" look to Your IBC. However, by definition, an IBC is not supposed to operate locally, with the exception of entering into business transactions with other IBC`s.
Yes, certainly - although this may not be the best option from the secrecy point of view.
Yes, corporate shareholders are allowed. Corporate directors are allowed, too.
A nominee shareholder is an unrelated person, who is officially registered as the holder of shares in an IBC. The purpose of the nominee shareholder is to shield the actual owner of the offshore company from being publicly associated with the ownership of that particular corporation. If a nominee shareholder is engaged, a confidential legal document (a declaration of trust, nominee services agreement or similar document) would be issued by the nominee for the beneficial owner. Such document would evidence the actual situation - namely, that the shares are only held by the nominee for the benefit and on behalf of the beneficial owner, and that only the beneficial owner may dispose with these shares and is entitled to all benefits and profits from those shares.
Nominee shareholding is routinely provided by Registered Agent firms to their client IBC`s. It`s an optional service. In-house nominee shareholders would normally be included under the umbrella license of the Registered Agent firm and would be similarly regulated and accountable.
Both options are about the same in terms of secrecy. However, usage of nominee shareholder is more viable in long-term, as there is a general tendency in the offshore financial services industry all over the world to restrict or entirely prohibit the usage of bearer shares. In particular bearer shares have been phased out in Seychelles and, as of 2014, Seychelles IBC's are prohibited from issuing bearer shares.
Even in those few jurisdictions where bearer shares are still allowed, they are mostly in process of being phased out. Also, in such jurisdictions, the registered agent of the company must create and keep an internal register of bearer shares, where the names and addresses of all individuals, to whom the bearer shares have been issued, are recorded. A subsequent transfer of a bearer share will not be effective until the name of the new holder of a bearer share is recorded in that register. This effectively negates the main perceived benefit of a bearer share - the anonymity of holding and transfer. Another particular drawback for bearer shares is that many banks outright refuse to open accounts for offshore companies featuring bearer shares.Thus, even when theoretically possible, the usage of bearer shares is not recommended at this point in time.
A nominee director, also known by the more politically correct name of "third-party director", is an unrelated person (corporate or individual), who would be officially registered and act as the Director of an IBC. Nominee director services are provided by licensed Registered Agent firms to their client companies as an optional service. In-house directors, being either private individuals or dedicated corporate bodies, operate under the umbrella license of the International Corporate Service Provider (Registered Agent). Thus, the functions of nominee directors are regulated by the official financial services supervisory authority, same as those of the Registered Agent itself.
The main aim of a using a nominee director is to prevent the general public from knowing that a direct relationship exists between the beneficial owner and his offshore company. Employing a nominee director or a nominee manager for an offshore company helps to avoid implications that the beneficial owner is closely controlling and operating the particular offshore company (the "management and control" concept). So, essentially, the main purpose of the nominee director is to protect the confidentiality of the client.
The nominee director can perform various managerial functions which would otherwise have to be performed by someone directly related to the company. The actual involvement of the nominee director in the daily matters of the offshore company can vary according to the necessities and circumstances of the client. Generally, the more involved nominee gets into the company management, the more expensive this service becomes for the offshore company. Quite often (but not always), the involvement of the nominee remains, as the name suggests, nominal. In this case all practical functions of the regular management of the company are routinely carried out by the owner of the company himself, acting as a "representative" of the IBC on grounds of a power of attorney. For more information on this topic, please refer to the Company Management chapter.
In reference to offshore company management, a Power of Attorney (POA) is a legal document, by which the operational right to represent the IBC and to act on its behalf is granted to an particular person. By virtue of the Power of Attorney such person becomes a representative of the company. A common practice in the offshore services industry is the issue of a Power of Attorney by the nominee director to the actual beneficial owner of that company, to act on behalf of the offshore company.
The Power of Attorney can either have a full scope of representational powers (General Power of Attorney), or it can be limited to some particular rights and activities only (Special or Limited Power of Attorney). A Power of Attorney can convey to its holder such rights as the opening and management of bank accounts, entering into business contracts, opening and managing branches and subsidiaries, assuming obligations and executing rights on behalf of the offshore company. A company may issue one or several Powers of Attorney, with identical or varying scope of operational rights. Thus the operational activities of the same company can be split or shared between several representatives - for instance, by the beneficial owner of the company himself and his associates or family members.
While the concept and usage of Powers of Attorney is arguably the most convenient method of the practical management of an offshore company by its benefical owner, it allegedly has its risks. It may be a valid argument (by some tax authority, for example), that an individual who routinely uses general Powers of Attorney to enter into contracts and obligations on behalf of the offshore company, is in fact controlling that particular offshore company. Such implication may lead to the dealings between that offshore company and a domestic company owned by the same individual, being considered as concluded "at arms length" and may be therefore disregarded for tax purposes as bogus transactions. From this perspective it may be more appropriate to directly involve the third-party company manager into the conclusion of contracts and to limit the practical usage of the Powers of Attorney only to those transactions which are not subject to potential controversy.
Apostille certification is a formal name for a bureaucratic procedure, by which official documents issued in one country are certified in a uniform way, so that they become formally acceptable in a different country. This procedure was established by the 1961 Hague Convention. Almost all countries of the world are part to this Convention as of today.
During the Apostille process, the signature of the officer, who has certified the document locally (usually, the Notary or the chief Registrar of the Companies Registry) is authenticated by a second-level certification. A specific stamp or sticker, called "Apostille", is attached to the document, on top of the Notarial text. Contrary to a popular view, the Apostille does not confirm the actual contents of the document. Apostille merely certifies that the first-level certifier - the Notary or the government officer - is been real, and has the appropriate rights and powers to make the underlying certification in the first instance. In essence, Apostille is the confirmation of the powers of the Notary or government official to do what they normally do.
Apostille is usually issued by a designated government department, like the Foreign Office, or by the Supreme Court of the country.
Otherwise You may not be able to use the corporate documents back at home in your own country, or anywhere else you plan to do business.
Documents issued and notarized in one country are normally acceptable only inland. To make an official document legally accepted abroad, the second-level certification - the Apostille - must be obtained. Without Apostille there will be little use of the documents of a Seychelles IBC or CSL, as soon as they are outside the Republic of Seychelles.
If you wish to open a bank account or an investment account for your offshore company, to purchase real estate or any other asset requiring public registration, to establish an affiliate office or a joint venture with your offshore company, or to enter into any similar transaction where you would have to present the company documents to an official third party outside Seychelles, Your documents need to be certified by Apostille in order to be accepted.
A Certificate of Good Standing (CGS) is an official document, issued by the Registry of Companies. A CGS confirms that a particular company legally exists, has complied with all the administrative requirements as to its continued registration and has paid all government duties, and, therefore, is "in good standing" vis-a-vis the Companies Register as of the date of issue. In its form and substance, the Certificate of Good Standing resembles the initial Certificate of Incorporation of the IBC.
The Certificate of Good Standing is used to formally confirm the continued legal existence of an offshore company after some time has already passed since its incorporation. The CGS confirms that the status of an independent legal entity (a juridical person) has not been revoked or became void for the particular offshore company, that this company has not merged with another firm, has not filed for dissolution and has not been struck-off.
Most banks tend to ask their clients regularly to provide a fresh Certificate of Good Standing in respect to their offshore companies. Such requirement is normal as soon as the IBC is more than one year old. Any other party, for instance, a potential business partner, may ask for a CGS to assure himself that your firm is in legal existence. The Certificate of Good Standing can be requested and obtained from the Registry of Companies, as and when required. This is a standard service, provided by the Registered Agent. As the Certificate of Good Standing is basically a "snapshot" of the legal health of the company as of a particular moment in time, there is no need or common sense to order the CGS in advance, without a special need.
If, over time, the offshore company has not been properly maintained or has not paid its renewal fees, it will lose its status of good standing and, ultimately, will be struck-off by the Registrar. For such companies, of course, the Certificate of Good Standing can not be obtained until all fees are paid and the good corporate status is restored. Reinstatement of a "bad" company is possible, but it`s a costly and time-consuming process.
Some beneficial owners of offshore companies routinely request Certificate of Good Standing for their own companies, thus checking if their Registered Agent has done the job of maintaining the IBC in good legal standing.
Ordering and Pricing
No. All licensed Registered Agents are required by the law to know the identities of their client. Therefore, the client is not only asked to reveal his name, but also to provide certain documents that will verify his identity and residential address. This requirement is known as Due Diligence or KYC (Know Your Client) and is found in all reputable offshore jurisdictions with minimum variations. A completely anonymous purchase of an offshore company is legally impossible. That being said, all personal information of the beneficial owner remains only with the Registered Agent. None of this information becomes part of public record. Severe criminal penalties are prescribed by the law for illegally disclosing any client information to third parties. If implicated in breaching client confidentiality, the Registered Agent will most certainly lose its license and will be out of business. Therefore, all Registered Agents are inherently interested to keep client information completely secret.
No. All pre-incorporation and post-registration procedures can be carried out without personal presence of the client. All formation documents are routinely signed and filed by a licensed Registered Agent or its in-house nominee (known also as the "Subscriber"). The post-incorporation documents are also fully prepared by the Registered Agent, providing a full legal chain of documentation which enables the client to assume practical control over the new IBC.
That being said, Fidelity Corporate Services is real, "bricks and mortar" Registered Agent firm - so clients are always welcome to visit our offices in downtown Victoria, Seychelles.
No. But before the Registered Agent proceeds with a new incorporation, all new clients must provide the company formation order in a prescribed form, and agree to our standard terms and conditions of business. The incorporation documents themselves (Memorandum of Association, Articles of Association, First Minutes and Resolutions) would all be signed by the initial Subscriber, as provided by the Registered Agent, according to standard incorporation procedure prescribed by the International Business Companies Act.
This is a standardized set of information and documents, known as KYC (Know Your Client) or Due Diligence. These requirements are applied uniformly by all licensed Registered Agents, in accordance with the respective requirements by the financial services regulator (Financial Services Authority). In line with these requirements, we will need a clear passport copy and proof of address for all beneficial owners and (if any) individuals involved with the company in any major capacity - directors, shareholders, signatories. We will also need our standard Terms and Conditions countersigned and our standard Order Form, completed. To speed up the incorporation process these Due Diligence documents can initially be sent by fax or, better yet, scanned and emailed. Nevertheless, we will need to be in receipt of this paperwork in original form before the company documents are sent out.
A proof of address is any original document which features the full name of the individual together with his residential address. A utility services bill, bank statement, credit card statement, mortgage or credit union statement, local authority tax bill, local council rent card, statement of the residential address issued by the local municipality, notary or banker can all serve as proof of address. A national identity card or drivers licence can also serve as proof of addres, if it contains the residential address and if such document is provided in addition to the passport of the same individual. For Due Diligence purposes, a proof of address document must be in original form (no photocopies!), and not older than 3 months. The logic behind requiring the proof of address is to have a reasonably accurate information of what is the the real, actual residence address of an individual.
A bank reference is one of the usual documents for KYC / Due Diligence purposes. Bank references are routinely asked from new clients at new bank account openings, including opening of the account for an offshore company. Bank references are required from all all individuals involved with the new account, including the beneficial owner of the underlying offshore company. Requesting bank references from new clients is standard procedure in practically all banks, including offshore banks. In some cases we may also ask new clients to provide a bank reference for our own Know Your Client purposes.
A bank reference is a fairly standard letter from Your "home" bank, stating You are their customer for a period of years (preferably, for at least 3 years). A bank reference should simply confirm that Your banking relationship has been acceptable, without any defaults from Your part. Ideally, the bank reference could also confirm Your address, as featuring in the records of the bank - if so, the bank reference can also serve as proof of address, so there is no need to provide a separate proof of address. A bank reference may be obtained in regards of Your personal account, as well as based on a business account (of a company), if You have signatory rights in that business account.
A bank reference is a standardized document, well known to all bankers, so they won`t be surprised when You ask for it. Every bank usually has its own, slightly different wording. That`s perfectly acceptable. Some banks may also include a disclaimer to the extent that the reference letter is for information purposes only and does not provide any representations or guarantees on banks' part. Such wording is also no problem, as the purpose of bank reference is not to guarantee anything - just provide a basic confirmation that they know a particular individual.
As a rule, bank reference does not reveal any confidential information! Bank reference does not have to state the account number, the amount of funds on the account, the outstanding loan or any other kind of personal financial information! If by some reason or misunderstanding the bank is purporting to include any more confidential details in the reference, like account number, You may request them to withold any such details. A bank reference should be nothing more than just an informative letter, stating that the bank knows You for certain period of time as a decent customer - without going into any further detail.
For Due Diligence purposes, the logic and practical reason for the bank reference is to establish that the particular person is an ordinary, economically active member of the society (all of which would normally have some sort of bank account), and that his/her identity and address can be confirmed by an independent, reputable financial institution (the bank).
The preventive purpose for requesting the bank reference is to avoid fraudulent attempts to register an offshore company in the name of a "ghost", a dead person, or in the name of a marginalized, destitute individual, who might just have sold his passport for a bottle of booze. It is quite improbable that any of such individuals would have a long-standing banking relationship. Therefore, appearance of such individuals as beneficial owners of a new IBC would be a signal to look more closely into the overall circumstances of the registration order.
A professional reference may serve as a suitable alternative to the bank reference, which was described in the previous question. Same as bank reference, a professional reference may state that the issuer of the reference knows the particular individual for a prolonged period of time, at least several years, and should briefly describe the manner of relationship - usually that would be a professional relationship. A professional reference may be be issued by an attorney-at-law, a notary, a judge, an auditor, a chartered accountant, a financial advisor or just about any other reputable individual, with whom the addressee of the reference has a long-standing professional relation.
Yes, but not in too much detail. In general terms, we would need to know what is the intended type of operation for Your new IBC. Indication as to what You indend to do with Your offshore company would often be to Your own benefit, as sometimes we could prevent potential trouble in case if the intended business turns out to be among the activities requiring a special licence. Sometimes we could also suggest some fine-tune adjustments to the corporate structure of Your IBC, if we know what exactly You expect to do with it. Anyway, to register an offshore company You do not need to come up with any commercially sensitive information, names of Your potential clients or anything like that. We would also need to know, in broad terms, the expected geographical area of operation of the new IBC. Again, in many occasions this knowledge may allow us to give You some suggestions as to the most appropriate structure or utilization of Your offshore company.
Because we are bound by the Anti-Money-Laundering laws to do so. We are a licensed and regulated Registered Agent (International Corporate Service Provider). In terms of Due Diligence regulations, we are much like a bank. Hence, under the terms of our licence, we are bound by strict rules to identify and know our clients. Therefore, we are just obliged by the law to clearly determine the identities and whereabouts of all our clients. As indicated before, this information remains in strict secrecy, on our internal file only. We may be criminally punished for divulging this information.
The incorporation of a Seychelles International Business Company normally takes between 1 and 2 business days. Additional certification of primary documents by Notary and Apostille may take another 1 to 4 business days, depending on the actual workload of the relevant notarial offices and Government departments. While Your IBC would usually come into legal existence within 24 hours after Your order is received and confirmed, it may be up to two weeks until You receive the documents. Please note that the actual timeframe of completed incorporation will mostly depend on whether we are in receipt of complete Due Diligence information and the payment. Before sending out the finalized company documents we will need to be in funds and in receipt of the orginal KYC documents, as described above. Delays with any of these two items will delay sending out the corporate documents.
We accept payment by all major credit cards or by a bank wire transfer. We DO NOT accept any forms of e-money (PayPal and similar). Certainly, clients preferring to visit us personally may pay for their new offshore incorporation in cash, on the spot.
Generally - no refunds once the company formation order has been received, confirmed and put in motion. This is in part because a large portion of the fees are paid to the Government - and the Government does not provide any refunds. Neither can we.
As a matter of exception, however, we may provide a refund or a partial refund in case of a new incorporation that is cancelled for good reason. If such new incorporation has had a fairly generic (non-specific) name and a standard structure, where not much change would be required in order to adjust it for a different customer, we may keep the new IBC in our ready-made companies list and refund the client all or part of the fees paid. Of course, that could only be done if the IBC documents have never left our office.
No. It is impossible for us to verify that the company has not been involved in any transactions or obligations. We absolutely do not buy back or re-sell any companies once they have been transferred to the client. However, You may re-sell the offshore company privately, to anyone who agrees to buy it. In such case we will stand-by to assist with whatever changes are necessary in the internal structure of Your IBC in order to formally complete the transfer of its ownership to a new owner.
Yes, there are some. We will generally refuse to register an offshore company for clients intending to operate any variations of a multi-level marketing scheme. We will also not provide IBC incorporations for clients who purport to raise funds from general public while avoiding to be properly licensed and regulated, or in any other way attempt to bypass the usual licensing requirements in regulated areas like securities trading, insurance and banking. We will not provide our services to companies trading in weapons, ammunition or military technology, regardless of the fact that it may be legal where the client comes from. We will not register politic and social organizations, non-profit organizations and charities. We will also not register offshore companies for Politically Exposed Persons, i.e. individuals, who are members of any state or municipal governments of any country or high-ranking government officers.
In general, we may resign and refuse the provision of any services, at any time, if it appears that our client has not been truthful with us and has intentionally and grossly misinformed us on their intended area of business operation and if this business appears to be compromising on legality. For instance, we may resign from providing any services for clients, who operate adult internet sites featuring controversial content.
At this stage the legislative background in the Republic of Seychelles is not entirely suitable for registration of offshore/interactive gambling operations. The existing laws and regulations are not entirely complete and comprehensive in order to successfully finalize such application.
While a Mutual Fund Act has been adopted in Seychelles since 1997, the supporting regulatory infrastructure does not provide for a clearly understandable and transparent procedure of offshore investment fund registration and licensing in the Seychelles. As a result, registration of offshore mutual funds in Seychelles have been practically non-existent.
In respect to offshore mutual funds, one of the most popular jurisdictions for that purpose is British Virgin Islands, with more than 3000 offshore funds registered. Fidelity Corporate Services Ltd office in the BVI can provide further information and assistance in this respect. For further information on BVI offshore mutual funds, please follow the link to the site of our affiliate office: http://www.offshorebvi.com/offshore.mutual.funds/
Please note that the potential success of the licensing of an offshore mutual fund or hedge fund largely depends on the character, previous experience and business background of the principal. Substantial amount of information and documents will be required from all potential applicants for an offshore mutual fund license.
Shelf companies go by their other name of "ready-made companies". These are offshore companies which have already been registered by the Registered Agent and are awaiting "on the shelf" until they are bought by an interested client. The primary purpose of buying a ready-made company is to save some time which would otherwise be lost while going through the complete new-registration procedure.
In some circumstances it may also be necessary to deploy an offshore company, which has already been in legal existence for some time - for formalizing an existing de-facto deal, or for purely having a company that can already show some age. A variation of this option are the so-called "vintage" or "aged" companies. A vintage company may have been held one or more years "on the shelf" before it is sold. A purchase of a vintage company is justified when there is a genuine necessity to show that the company has actually been in legal existence for quite some time.
While a regular shelf company would usually cost the same as new incorporation, a vintage company will always be substantially more expensive. This is because the government fees, the Registered Office and the Registered Agent fees for all the previous years since registration would have to be covered on top of the primary incorporation and document preparation fees.
Ready-made IBC`s are guaranteed by the Registered Agent to have no "history" whatsoever - they have been dormant since their incorporation. Documents of a shelf company have never left the Registered Agents` offices. Written guarantees can always be provided by the Registered Agent to confirm that the shelf company has not traded.
Yes. It will just cost extra, because the name change for any existing IBC is a separate procedure. Therefore, it involves additional government and professional fees. Some Registrars in certain offshore jurisdictions are slightly discouraging and slow about name changes, but generally this is not a problem, apart from the additional professional fees.
Yes. There is a specific procedure for that, called continuation. The Seychelles International Business Companies Act permits foreign companies which are registered and in good standing in their own country, to be re-domiciled into and become registered in Seychelles. Such continuation must, however, be allowed under the laws of the country of origin. Most, but not all, countries allow their corporations to be re-domiciled and continued in other jurisdictions. The continuation procedure itself is largely similar to a standard registration process for a new IBC or CSL. The main difference is that a number of additional documents must be presented to the Registrar to confirm the legal existence, good standing and proper resolution of the foreign company to be continued in the Seychelles. Such documents will specifically have to be obtained by the owner of that company, from its home jurisdiction. Therefore, the continuation process is not entirely automatic and requires certain input from the client. A related matter is that of the company name. In an ideal situation, the name of the foreign corporation should be "free" for registration in Seychelles. However, if such name is already taken or unavailable for a different reason, the name of the continued company would have to be amended or changed.
The end result of the continuation procedure is the conversion of the foreign company into a Seychelles International Business Company or a Special License Company, as the case may be. The new Seychelles company legally remains the carrier of all assets and liabilities of the "old" company, the only difference is its country of formal registration.
Ownership and Control of my Offshore Company
Yes. Change of Agent is a fairly standard procedure for IBC`s. It can be done by requesting the current Registered Agent to resign and pass the administration of Your offshore company to another licensed Registered Agent. Such request should be provided in writing. All reputable Registered Agents would honour such request without question.
Although legally the change of the Registered Agent is pretty straightforward, those clients, who act in bad faith (for instance, trying to avoid the payment of confirmed and past-due company renewal fees) will encounter difficulties. Quite simply, they may not find a single Registered Agent willing to accept the administration of their company.
Yes, absolutely. The formal procedure for removing the directors of the IBC and appointing new ones will depend on the structure of the particular offshore company - how many directors, how many shareholders, what are the quorum requirements for corporate resolutions, etc. For companies where full management services are provided by the Registered Agent firm, the change of the director(s) or any other change in the internal structure of the IBC would be effected as soon as the beneficial owner(s) of the IBC expressly require such change. Apart from such request, nothing else is required from the owners, as all the procedures are carried out by the Agent.
To the contrary, when the Registered Agent firm does not provide the nominee director and nominee shareholding services - so all those managerial positions are filled by the clients` appointees - then the Registered Agent can only advise on the necessary formalities and paperwork. In such case, the execution of the respective resolutions will have to be arranged by the owners of the IBC themselves.
In any case, it is important to emphasize that any change of directors of the IBC should be reported to the Registered Agent; the changes will come into force only after they are properly formalized in the Register of Directors, which is maintained by the Registered Agent. Also, the information on the new director will be submitted to the authorities (this is a law requirement) where it will be kept in a confidential manner.
A shareholder is a person (a private individual or a corporate body), who is the formal holder of shares in a particular offshore company. So, it basically is what the name suggests - the "holder" of shares. However, in respect to offshore companies, a distinction must be made between "holding" the shares and actually owning them. Quite often the shareholder may hold shares for the benefit and on behalf of another person. Such shareholder would be called a "nominee shareholder". In such instance, the other person - who is accordingly the real owner of the shares - is called "the beneficial owner". Effectively, then, a nominee shareholder acts as a "shield" for the beneficial owner, preventing general public from seeing who is the real owner of the IBC.
In the nominee shareholding relationship, the beneficial owner is the person who is the real, de-facto owner of the shares, entitled to all gains, profits and benefits accruing to such shares. The beneficial owner would also be the one who decides on the eventual sale or transfer of shares. So, not all beneficial owners are shareholders and not all shareholders are beneficial owners - while, certainly, it is also possible that both are the same person.
The director of the offshore company can obviously sign on its behalf. Directors` signatory powers are based on the executive powers granted to him by the Articles of Incorporation of the IBC. If the beneficial owner himself serves as a director, his signatory right is apparently unconditional. If the director is a third-party (nominee) director, then such director would only sign on the basis of express instructions or authorizations to do from the beneficial owner. Under no circumstances would a nominee director be entitled to sign without such instructions, as it would be contrary to his mandate and the Terms and Conditions of our business with the client. The only exception, when the nominee would be permitted to act in its own discretion, is in cases when a claim or legal action is taken by a third party against the company or when any such circumstances arise in which in the opinion of the nominee it is necessary to take urgent action in order to protect the best interests of the beneficial owner or the company itself, and if at the same time the beneficial owner fails to provide clear, sufficient and lawful instructions. Then, in order to protect the company, the nominee is allowed to act independently.
A person, who holds a valid Power of Attorney can also sign on behalf of the company, within the limitations contained in the scope of that Power of Attorney. It is quite common for the beneficial owners or their appointees to enjoy direct signatory powers on behalf of an offshore company through the rights granted by a Power of Attorney.
The owners always have the control over the IBC! Whether they also have a direct signatory right, depends on the internal structure of the company. The owners of the company may have direct signatory rights in the following instances: (A) if they are appointed as directors or officers (this can be done in cases when there is no concern about confidentiality); (B) if a Power of Attorney or a Special Resolution assigning them signatory powers is issued by the offshore company. In (B), the beneficial owners can at will request such signatory rights be assigned to them.
This depends on the actual configuration of the IBC. If You are a direct shareholder in the company (without using the nominee shareholder service), then Share Certificate(s) and an entry in the Register of Shareholders is Your ultimate proof of ownership. If nominee shareholder is involved, then the clients` proof of beneficial ownership is confirmed by a different legal document. A declaration of trust, a deed of transfer, a nominee services agreement, a beneficial owner declaration can serve as such confirmation. Regardless of the name, such document, signed by the nominees, would confirm in absolute certainty who is the real owner of the offshore company.
A declaration of trust in the context of an offshore company is a written confirmation by the nominee shareholder to the beneficial owner, to the effect that the nominee is in fact holding the shares in an IBC for and on behalf of the beneficial owner. Such document would clearly state the name of the beneficial owner as the real owner of such shares, and would also reiterate, that the nominee can not transfer, deal with or dispose with the shares otherwise, than only under express written instructions by the beneficial owner. It would also state that all rights, profits, dividends and other benefits potentially accruing from such shares belong to the beneficial owner, and not to the nominee.
Apart from the declaration of trust from the nominee shareholder, the beneficial owner can obtain a similar undertaking from the nominee director. As an alternative, the nominee director can issue an undated resignation letter, which can be executed by the client at any time, thus removing the director from office with immediate or past effect. Finally, a specific Company Management Services contract may be drafted and concluded between the beneficial owner and the Registered Agent firm (who would also represent all nominees involved). In most circumstances, our standard Terms & Conditions of business serves as such contract.
As a licensed Registered Agent firm, our operations are monitored and regulated by Financial Services Authority, which supervises all corporate and trust service providers in Seychelles. Any dissatisfied client with a valid claim can directly complain to Financial Services Authority, in which case our actions will be investigated. If any wrongdoing on our part is determined, our firm will lose the license and we will be out of business, period. In this respect, the business of International Corporate Service Providers is supervised and monitored in the same way as the business of banks or insurance companies.
On a more practical side, an offshore company can be set up in a way that neither the Registered Agent nor any associate or nominee related to the Registered Agent have direct access to company funds and assets. The Registered Agent may even have no knowledge as to where in the world such funds and assets are located. Such setup would require the involvement of the beneficial owner as the sole signatory on company accounts, which is not the best option for secrecy purposes. However, if the beneficial owner chooses such option, even a theorethical possibility of embezzlement is virtually eliminated.
The name, registration date, registration number, Registered Office address and the name of the Registered Agent. There is an option, available to any Seychelles IBC, that - only if it wants - it can submit its Register of Directors and/or the Register of Shareholders to public file as well. If this has been done, then the information on directors and/or shareholders would also be publicly available. However, this latter filing is an option, and would only have been done under express instructions from the beneficial owner(s) of the company.
Offshore Bank Accounts
No. A Seychelles IBC may open the bank account, or even several accounts, wherever the owner wishes. There is absolutely no requirement for a Seychelles company to operate a bank account in Seychelles.
However, having a local bank account in the country of registration may positively influence the credibility and "good looks" of the offshore company. The location of the account AND the company itself in one and the same country would appear as the most "regular" setup. This would lead to a perception that the particular company is indeed a regular, local business - as opposed to an "offshore" company. The opposite is also true - a Seychelles company with an account in, say, Channel Islands, would not seem entirely "normal" to a casual observer. Such setup would largely stand out as "offshore" and, therefore, possibly suspect.
First of all, it should be determined if the country, where Your offshore bank account will be located, has tax information exchange agreements, mutual legal assistance treaties or any similar official agreements with Your own country? If yes - not good. The legal and practical aspects of bank secrecy should also be clearly established: what penalties does the law prescribes for the person who would illegally divulge bank information? Are they strictly enforced, or remain only on paper? The quality of work ethics in the bank must be considered. There are countries with good legal and regulatory environment, but with poor work culture in the services sector. In such locations, You can expect delays, mistakes and attitude problems. Finally, what are the services available in the particular bank, and what are the costs? In this regard, huge variations are possible. Is the bank in Your time zone? Does the staff speak Your language? All in all, there is no single answer as to the best location of an offshore bank account. More often than not, it is a compromise between convenience and confidentiality, cost and reliability.
No. While the registration of an offshore company is a pretty straightforward process, opening of a bank account, even for the same newly registered IBC, is a whole different story. The success of the offshore bank account opening does not depend on the legal status and structure of the company, but largely on the personal and business details of the beneficial owner. The main guarantee for a successful bank account opening is providing a clear, straightforward and logical information to the bank in regards the intended business of the company and the details of the beneficial owners of the company.
The offshore bank account introduction is a professional service, whereby we as Approved Introducers of the bank refer our client to the bank, provide the client with a full set of account opening forms, assistance or instructions as to how these forms should be appropriately completed. Following the completion of the account application file, we introduce the client to a dedicated customer services manager in the bank, who would take the whole account application process directly from there. The bank account introduction is a one time service, charged at a rather nominal amount.
In most cases, the bank account opening can be completed by mail, without a personal presence of the client. At the same time, there are banks which require personal presence of the beneficial owner, either at the time of account opening, or within a certain timeframe after opening.
In some circumstances, the Registered Agent`s involvement in the bank account opening process may also include evaluating the clients` needs and background in order to suggest which could be the most appropriate bank to approach. We may also complete some of the account forms for the client or, ultimately, get involved into some of the regular management functions of the account.
During the whole bank introduction process we spend quite a lot of our time in order to assist the client with the account application. Quite often the time spent by a qualified member of staff on any particular offshore bank account opening much exceeds the time spent on a new IBC formation. Therefore, it is quite logical that this service involves a fee.
A bank introduction service is optional. Nothing precludes the company owners from approaching any offshore banks at their own discretion.
No. The bank account introduction fee does not guarantee a successful opening of the offshore bank account.
The success of an offshore bank account opening mainly depends on the particulars of the beneficial owner, his background and his business. This information is provided to the bank by the client himself, not by us. In essence, the bank will attempt to determine how safe and promising the potential client is for the bank, is it worth accepting as a client or is it only going to be trouble? On these considerations, banks do sometimes reject new account applications. Prior to bank introduction, the best we can do is provide an "educated guess", estimating the potential success or failure, based on our knowledge of similar earlier applications. The end decision, however, will always be with the bankers!
Yes, some banks require this. However, in most cases, the account opening can still be completed by sending the documents over the mail. Note, however, that a personal appearance of the beneficial owner in the bank substantially increases the chances for a successful offshore bank account opening! This is because the bank's Know Your Client rules place great value on personal meeting with the potential customer, as opposed to only having the file of documents.
The time actually starts ticking after the bank has received the completed account application file. As the account application must contain a substantial number of documents and information from the beneficial owner, we can not really influence the time taken by the client to fill these forms and to obtain these due diligence documents. From the moment the file is with the bank, it can take from a couple of days to a couple of months until the bank comes up with a letter of acceptance - or, sometimes, rejection. In some cases the bank would ask for clarifications or additional documents from the applicant. Then, obviously, it would take additional time until such information or documents are furnished. All in all, it is rather impossible to determine an exact timeframe for offshore bank account opening. Any previous experience with the same bank may be the only reference to go by.
Even if the company structure involves nominee directors, You can certainly have the signature in the offshore bank account, allowing You to control the banking transactions. The relationship between the beneficial owner and the nominee director is regulated by the standard Terms & Conditions of business and, if necessary, by a more specific client-manager agreement. Such agreement could determine, in particular the method of passing any instructions and information from the client to the manager and the fact that the account signatory shall never act on his own accord without express consent by the beneficial owner.
It is certainly possible, and advisable, for nominee director to be appointed as one of the bank account signatories. This amounts to a "full company management", and is actually the most elaborate and most confidential form of managing the affairs of an offshore company. Having a nominee director as bank account signatory amounts to a "full company management", and is actually the most proper and most confidential form of arranging the affairs of an offshore company - while, certainly, simpler arrangements exist and are sometimes preferred.
An account signatory is an individual who has signatory rights in a bank account. Such rights are granted by a company mandate (a special Resolution, signed by the company Director(s), resolving to open a bank account and to appoint particular individuals as account signatories). An account signatory may "sign" on the account - execute payments, sign cheques and otherwise dispose with the money on the account. An account signatory may either have a single signatory right, or a joint signatory right together with someone else. In the latter case, only two signatures are good to execute a transaction. In principle, the possible options of how to configure signatory rights on a bank account are fairly endless.
For any regular company, the most obvious option is that the director is also the account signatory. However, any person can be an account signatory - even if such person is not formally related to the company. For instance, the beneficial owner of an offshore company, even if he is not formally registered as director or shareholder of the company, may be appointed as account signatory - either singly, or alongside a director. In offshore company management, licensed company managers, who are obviously not the actual owners of the funds, would routinely act as account signatories for and on behalf of the beneficial owner. In such case, the actions of the signatories would mainly be determined not by their mandate, but by their client-manager relationship with the beneficial owner. Such appointed account signatories would in fact only be allowed to execute any banking transactions if expressly required by the beneficial owner, and not on their own accord.
No. The client (the beneficial owner of the offshore company) is at least supposed to confirm to the bank that he is the actual beneficial owner. In addition to that, the owner would also be required to provide his Due Diligence documentation to the bank.
Yes, certainly.
The regular set of documents of Your Seychelles IBC (if properly certified by notary and legalised by apostille) corresponds to the formal requirements of most banks, as far as the internal structure and configuration of the company itself is concerned. However, as described above, in order to open a bank account for an offshore company, the most important matter is the background and the proposed business details of the actual owners and controllers of the company.
Many beneficial owners would operate their offshore companies in a fiercely independent fashion and would open their offshore bank accounts independently, with bankers that they may already know. This is a perfectly acceptable.
We only offer bank account introductions to client companies, which are registered and administered by us, or by any of our affiliates within the Fidelity Corporate Services group.
Some banks do offer personal offshore accounts, and such service can be arranged.
Yes, practically all offshore banks do credit cards. It's one of their best businesses...
By default, no-one in Seychelles is going to pass Your offshore account information to any foreign agency. However, a Seychelles bank would be obliged to comply with a LOCAL court order, requesting to divulge such information. In principle, a Seychelles court order could be obtained, via litigation, by a foreign government or its agency. To obtain such court order, the foreign plaintiff would need to claim and prove in a (fairly reluctant) court, that the request is directly necessary for an ongoing criminal investigation on money laundering, fraud or other general crime. If this is proven beyond reasonable doubt, the Seychelles court may grant an information release order. However, in practice, the success of such cases have been severely limited.
Yes, but we can not guarantee any success at application for such account. While we can introduce the client to a few reliable merchant service providers, the success of obtaining a merchant account will depend on the actual business background of the client.
Annual Maintenance of Offshore Companies
The annual renewal fees are the annually recurring government and professional fees that You (or, rather, Your offshore company) have to pay in order to continue and maintain the company in good legal standing as per the laws of the state of registration, for as long as the company exists. These costs can be compared to taxes and the administration overhead of a regular "domestic" company. Obviously, the total maintenance costs for an offshore company are normally much less than for a business based in any high-tax country.
The annual renewal fees consist of two main parts: (1) mandatory fees, covering the absolute minimum necessary to maintain the company in good standing, and (2) optional fees, for services which enhance and improve the offshore company, but are not mandatory. Usually, the amount of the optional fees depend on the exact configuration of the offshore company and on how much time and effort has been required from the Registered Agent in the course of day-to-day operation of the IBC.
The mandatory fees always include (a) the Government fee (fixed tax), and (b) the Registered Office and Registered Agent fee.
The Government fee is essentially a fixed amount of state duty paid by all offshore companies instead of the income tax. Regardless of the name it`s called (franchise tax, exempt duty, registration fee, etc), the Government fee is quite simply a fixed tax levied by the Government for the privilege of being incorporated "under the flag" of the particular tax haven territory.
The Registered Office and Registered Agent fee is a professional fee. It is paid for the Registered Agent acting as the official intermediary between the owners of the company and the Government. This fee also covers the usage of the Agents` office address as the legal address of the offshore company. This fee also covers the minimum adminstrative services necessary to comply with the requirements of the International Business Companies Act. The law requires that in order to be in good standing every offshore company must have a Registered Office and a Registered Agent, so this service is pretty much obligatory.
The optional fees would be payable for offshore company management services, like (a) third-party (nominee) directorship services; (b) nominee shareholding services; (c) third-party (nominee) account signatory services; (d) "virtual office" services, such as mail and fax forwarding, document remailing and call handling; (e) miscellaneous secretarial, legal and managerial services, billed either on fixed-fee or time-spent basis.
For the sake of simplicity, the annual renewal fees are normally invoiced once a year, shortly before the registration anniversary of the offshore company. The fixed-amount annual renewal fees are payable in advance, for the next following year. In more complicated offshore company management arrangements some fees may be billed on time-spent basis. These are invoiced post factum, either monthly or quarterly.
You do use them. More exactly, Your offshore company does. Apart from lending his office address to be used as the legal address of Your IBC, the Registered Agent is also legally responsible for safe custody and update of certain corporate documents - namely, the Memorandum and Articles of Association of the IBC, the Register of Members or a copy thereof, the Register of Directors or a copy thereof, copies of all Resolutions, notices and filings produced by the company during its course of existence. Furthermore, unless the directors of the company have resolved otherwise, the Registered Agent is also the custodian for all Minutes of the meetings and Resolutions of Shareholders, and all Minutes of meetings and Resolutions of Directors. It is the duty of the Registered Agent to keep these documents up-to-date and available for inspection by the directors, shareholders and owners of the IBC. Finally, the Registered Agent acts as the official intermediary between the offshore company and the Seychelles Government, in particular what concerns timely payment of the Government renewal taxes. All in all, the Registered Agent performs several important legal functions, without which the IBC would not be able to legally exist.
Non-payment of annual renewal fees will make the offshore company lose its status of good standing. The IBC will also incur heavy late penalties and legal consequences.
Late payment of the Government duties in Seychelles will result in a 10% penalty fee if the payment is up to 90 days` late, and 50% late penalty fee, if the payment is over 90 days` late. After that time, the Registrar of Companies will proceed to strike-off the company from the Registry for non-payment of fees.
An IBC, which is struck-off the Registrar shall remain liable to any due and unpaid fees. Such company also remains liable to all its debts and obligations. Any creditor may legally raise a claim against a struck-off company for debts and pursue the collection of those debts through litigation. A struck-off company may not legally continue to trade or enter into any new transactions, and its directors, shareholders, managers and owners may not enter into any transactions with the assets of the Company. If they do, they are personally liable for any debts or legal consequences resulting from such transactions. If the struck-off company is operated by appointed third-party managers for and on behalf of a beneficial owner and under his instructions, the personal liability will also extend to the beneficial owner. Essentially, striking-off an International Business Company means that all its assets and funds are legally frozen until the IBC is restored in good standing - or until legally wound-up.
It is possible to restore a company after it has been struck-off the Registrar, but substantial government fees will apply for restoration. These reinstatement fees will be in addition to all past-due renewal fees and penalties thereof. In addition, hefty professional fees will also apply if a struck-off IBC has to be reinstated in good standing.
The proper procedure for discontinuation of an International Business Company is a voluntary winding-up. It is a fairly straightforward process, which involves preparing and filing a declaration of solvency, producing a statement of assets and liabilities, appointing an administrator, publishing announcements the local media, preparing and filing several resolutions and documents with the Registry. Most of this procedure can be performed by the Registered Agent, but some client involvement is also required. After a voluntary winding-up is properly completed, there is no more recourse for any creditors against the IBC, neither there is any deferred or potential liability for the directors, shareholders and owners of the IBC.
Seychelles International Trust
A Trust is a legal arrangement, or relationship, NOT a legal entity. To understand Trusts, and the benefits they can provide, it is essential to remember that Trusts more closely resemble contracts than legal persons.
In the simplest terms possible a Trust is established when the owner of property (the settlor) transfers his ownership to another individual (the trustee) with the restriction that the property be held for the benefit of a third party (the beneficiary) as described by the settlor’s wishes or a written document (the trust deed), which governs the administration of the trust. Despite trustees having full legal title to the trust assets, they are bound by fiduciary duty to administer trust assets for the benefit of the beneficiaries and not for themselves. This slightly confusing concept of dual ownership is the fundamental characteristic of trusts, and the reason they are so useful for tax planning and minimization, estate planning, succession planning, wealth management, and asset protection. The original owner of the property avoids any tax or other liabilities associated with the trust property by transferring the property out of his estate, yet retains influence over the future administration of that property through the terms of the trust deed by creating a relationship in which legal title to property is vested in one person, but beneficial ownership in another.
Trusts were introduced into the legal system of Seychelles by the Seychelles International Trusts Act of 1994. Amendments to the original act were made in 2011 by the International Trusts (Amendment) Act of 2011, which served to increase the desirability of Seychelles as an international trust jurisdiction by introducing greater flexibility into Seychelles International Trusts.
The government of Seychelles drafted the Act after a thorough study of different practices in other top trust jurisdictions. After careful consideration the drafters in Seychelles incorporated all of the best features of other trust legislation, while also including various modifications and innovations that allowed for greater flexibility and stronger asset protection. As a result, Seychelles law is an exemplar of premier asset protection trust legislation.
Seychelles International Trusts are commonly used in conjunction with the Seychelles International Business Companies. By using a trust to hold shares in the IBC, an additional layer of legal protection is provided for the owner. Moreover, this can enable beneficiaries to defer or avoid any possible tax on the profits of the IBC for an indefinite period.
Trusts have been used for estate planning and asset protection for centuries, and their usefulness and flexibility for these purposes have been proven by the test of time. The origin of trusts can be found in the eleventh century crusades. Crusading English knights left their manors and estates in the care of trusted friends for safekeeping while themselves away on crusade. However, trusts are not just some dusty, antiquated notion from manorial England!
Not only are trusts a well-established feature of the common law with a staid history, they are quite resilient and endure today as an innovative element of modern legal systems. The flexible character of trusts has allowed them to be adapted to the ever-changing global legal and financial landscape, meaning new uses and adaptations of trusts are constantly being developed to suit the needs of property holders worldwide. In fact, trusts have proven so useful and popular they have expanded beyond common law jurisdictions, with a number of civil law countries recently modifying their codes to allow for recognition of the trust relationship.
Trusts were introduced in the Seychelles in 1994 with the passage of the International Trusts Act of 1994. Since that time Seychelles International Trusts have come into widespread use, and are widely recognized for the flexibility they afford to settlors, and the ease with which they can be established.
International trusts can provide a wide range of benefits and serve countless purposes, including confidentiality, asset protection, tax minimization, superior financial planning, an investment vehicle, providing for spendthrift relatives, or an essential element of an estate and family succession planning arrangement.
Because legal title to property is no longer held by the settlor in a trust relationship, trusts can protect assets from creditors, or from devastating damages from lawsuits in litigious jurisdictions, or allow you to optimally plan your estate and succession needs while also allowing your heirs to avoid the burdensome and often costly probate process.
Trusts are also often used in combination with International Business Companies, with the trust holding the shares of the IBC, thereby providing an additional layer of confidentiality and protection to the beneficial owners. Trusts have even been used to administer employee payroll and compensation needs.
As the trust relationship is extremely flexible, the use of trusts is essentially limitless.
Here are some examples of common uses of trusts:
- Privacy - Trusts may be created purely for privacy. The terms of a will are public and the terms of a trust are not. For some individuals this element of privacy alone makes the use of trusts ideal.
- Asset Protection – Trusts allow individuals to protect assets they would otherwise own from creditors. By putting property in trust the settlor ensures he is no longer the owner of the property, which extinguishes creditors’ claims. This means that future creditors will be prevented from reaching those assets, even though they may be able to bankrupt the individual. One potential asset protection arrangement can be achieved by creating a Seychelles International Trust for which the unnamed settlor is the protector, and a beneficiary, but not the sole beneficiary. Such an arrangement can allow a settlor to discreetly be in a position to benefit from the trust assets, without actually owning them, which means the assets will be unavailable to his creditors. Such a trust will typically have a completely unrelated name and thereby fully preserve anonymity.
- Corporate Structures - Business arrangements can utilize trusts as holding vehicles for other entities or structures. This can help to maximize efficiency of planning and control of interrelated entities, while also maintaining confidentiality and protecting beneficial owners. For example, a trust may be the sole shareholder of an IBC, thereby allowing beneficial owners to discretely enjoy the benefits of their business.
- Tax Planning – In many situations the tax consequences of using a trust are better than the alternative, and trusts are therefore frequently used for legitimate tax minimization and avoidance.
- Wills and Estate Planning - Trusts frequently appear in wills, and are an effective way to administer an estate.
- Charities – Trusts are often used for charitable purposes, such as the eradication of poverty or education. Seychelles supports the creation of charitable purpose trusts.
- Unit Trusts – Trusts have proven to be so flexible as to be capable of working as an investment vehicle, sometimes called the unit trust.
- Pension Plans – Employee pension plans can be set up as a trust, with the employer as settlor, and the employees and their dependents as beneficiaries.
- Remuneration Trusts - Trusts can be set up for the benefit of directors and employees, or their families, or dependents.
- Co-ownership – Joint ownership of can be achieved by a trust.
- Spendthrift Protection - Trusts can are useful for protecting beneficiaries (e.g., one´s children) against their own inability to handle money. This can be achieved by setting up a trust with a corporate trustee who may only distribute funds to beneficiaries for causes specifically articulated in the trust document.
The Seychelles International Trusts Act allows for trusts to be created by oral declaration, by an instrument in writing, by a will, or by codicil.
The official fee for registration with the Registrar in the Seychelles is a one-time charge of $100 USD.
Seychelles International Trusts generally allow for any kind of property to be held in trust. However there are a few crucial exceptions.
- The trust property may not include any property situated in Seychelles;
- The trust property may not include any shares, debentures, or any interests in any body corporate, with an exception made for non-Seychellois entities, Seychelles International Business Companies, and other International Trusts.
The International Trusts Act states that the law governing an international trust is the law chosen by the settlor to be the proper law of the trust, and this choice may be expressly stated in the trust deed, or implied. The one condition is that the trust must be created in such a way so that it would be considered valid under the law chosen to govern the trust. As the Seychelles International Trust Act is quite flexible it can be useful to select the Seychellois law as the governing law.
According to the International Trusts Act international trusts are valid and enforceable in Seychelles, and the Supreme Court of Seychelles shall have exclusive jurisdiction over cases involving Seychelles International Trusts.
- Seychelles International Trusts must be registered, though no trust deed or confidential information is submitted or filed with any Seychelles government registry.
- No information regarding the personal details of the settlor, or any beneficiaries are required to be made public, an exception being made for Seychellois beneficiaries.
- The International Trusts Act permits both revocable and irrevocable trusts.
- Both charitable purpose and non-charitable purpose trusts are permitted.
- An international trust or the transfer or disposition creating an international trust cannot be invalidated by any foreign rule of forced heirship.
- Additionally, the trust concept being unknown to or not admitted by the laws of a foreign jurisdiction cannot serve to invalidate an international trust.
- Creditor claims against settlors are not permitted by Seychellois courts 2 years from the date assets are transferred to the trust.
- There are no restrictions on the accumulation of trust income.
- Seychelles imposes absolutely NO tax on any trust income.
- There is no requirement for stamp duty or capital gains tax.
- Property worldwide of any kind can be included in the trust property, except for property in the Seychelles. However, trusts can own shares in Seychelles International Business Companies, own other international trusts, and maintain bank accounts in Seychelles.
- Settlors may not be residents of Seychelles at any time during the establishment or duration of the trust.
- Settlors are permitted to be beneficiaries of the trust, however, they may not be sole beneficiaries.
- Trust beneficiaries must be identifiable by name or ascertainable by reference to
- a class, or
- a relationship to another person, whether or not living at the time of the creation of the trust or at the time by reference to which, under the terms of the trust, members of a class are to be determined.
- Seychelles International trusts require a minimum of two trustees unless administered by a licensed resident Seychelles Corporate Trustee. Licensing of corporate trust service providers is carried out by the Financial Services Authority. Additional co-trustees are permitted. Co-trustees may be resident or non-resident.
- Protectors are permitted.
Seychelles International Trusts are permitted to exist for a maximum term of 100 years from the date of their creation. Upon reaching 100 years, the trust will automatically terminate. Termination results in a final distribution of the remaining trust assets to any remaining beneficiaries, or, if the trust deed provides alternative terms of trust termination, then termination will occur according to those. Termination of the trust may occur earlier than 100 years from the creation of the trust, should the terms of the Trust Deed provide so.
The 100 year maximum duration does not apply to charitable, or purpose trusts, which may have an indefinite duration.
In short, a trust is created when one party with property, the settlor, transfers that property to another party, the trustee, for the benefit of a third party, the beneficiary or beneficiaries. In principle this means there are at least three essential parties to a trust: the settlor, the trustee and the beneficiary/ies. It is important to note, however, that the settlor is not officially a party to the trust, because he no longer has a legal interest in the trust property. Nonetheless, no trust could exist without a settlor, as the settlor is the party who transfers assets to the trust to begin with.
Trusts also allow for a protector, which is a party who oversees the trustee´s administration of trust assets, and whose permission is required before the trustee can take certain actions.
The settlor is the owner of property who settles a trust by initially transferring his property to the trustee. The settlor no longer has legal title to the property transferred. In Seychelles, a settlor may also be a beneficiary of the trust, but may not be the sole beneficiary.
A trust may be settled by any individual, or any legal entity, who is not a resident of Seychelles, and has the capacity to transfer property. Seychelles International Business Companies are not considered Seychelles residents for the purpose of the International Trusts Act.
No information regarding the personal details of the settlor, or any beneficiaries are required to be made public, with an exception being made for Seychelles resident beneficiaries.
Nonetheless it should be noted that the 2011 amendments to the International Trusts Acts requires trustees to keep an International Trust Register at their place of business wherein the full name, address, nationality OR place of incorporation of each trustee, beneficiary, or settlor is recorded. This International Trust Register IS confidential. It is NOT a part of any public registry, and NOT accessible to the public. This record is accessible ONLY to the Trustee, and parties to the trust according to the terms set out by the trust deed. Disclosure of any information or document relating to an international trust is strictly prohibited by law, except under an injunction of the Seychelles Supreme Court on application made by the Seychelles Attorney General and only for the purpose of an inquiry or trial into orrelating to the trafficking of narcotics and dangerous drugs, arms trafficking or money laundering.
Confidentiality is maintained within the boundaries of the law. Seychelles prides itself on being a premier international financial center, and has enshrined the principles of nondisclosure in their laws and business life. Moreover, disclosure of any information or document relating to an international trust is strictly prohibited by law, except under an injunction of the Seychelles Supreme Court on application made by the Seychelles Attorney General and only for the purpose of an inquiry or trial into or relating to the trafficking of narcotics and dangerous drugs, arms trafficking or money laundering.
The beneficiary is the third party for whose benefit and profit the trust asset is held and managed by the Trustee. Beneficiaries may be individuals or entities. The beneficiary or beneficiaries may be either specifically named in the Trust Deed or may be a sufficiently defined group of persons, for example "all children and grandchildren." As a particular twist the settlor of a trust may also be named as the beneficiary, but may not be the sole beneficiary.
The main purpose of trusts is to ensure that the beneficiaries receive some kind of benefit from the trust and its assets, without actually owning those assets themselves. These benefits can be a payment or payments of income from the trust, regular distributions from the trust, or up to the Trustee’s discretion. Another possibility is that the corpus of trust assets is transferred to the beneficiaries in full at a certain time or upon the occurrence of a specified event. Details regarding the beneficiaries’ benefits are set forth in the trust deed.
Seychelles also supports trusts for charitable purposes, as well as general purpose trusts.
Beneficiaries may be individuals or entities. The beneficiary or beneficiaries may be either specifically named in the trust deed or may be a sufficiently defined group of persons, for example "all children and grandchildren."
Seychelles also supports trust for charitable purposes, and general purpose trusts.
A trustee is an individual or legal entity to which the settlor transfers legal title to the trust asset(s). Trustees must also agree to manage the trust and its assets for the benefit of the beneficiaries in accordance with the terms of the trust deed. While being the holder of legal title means the trustee is in full control of the trust assets, the trustee is nevertheless under a legal obligation to exercise a heightened fiduciary duty of care - trustees must maintain trust property in the best possible manner for the benefit of the Beneficiaries. Trustees are required to act with due diligence, care and prudence, and to the best ability and skill of the person. Moreover, the trustee is legally precluded from using the trust assets for his own ends, as the beneficial ownership resides with the beneficiary.
Trustees are also subject to demanding professional licensing standards. All Seychelles trust service providers must comply with stringent regulation and strict requirements. All practitioners in the offshore industry, including trustees, must be licensed by the Commission before engaging into any of the international financial services. The regulatory authorities in Seychelles pay particular attention that Trust firms prove a high standard of staff competence and integrity, have adequate internal system of controls and procedures, and are substantially capitalized.
Trustees of a Seychelles international trust have the following duties:
- Fiduciary Duties
- Duty To Preserve Trust Property
- Duty Not To Profit
- Duty To Keep Accounts
- Duty To Keep Trust Property Separate
- Duty of Impartiality
A protector is not a mandatory party to all trusts, but may be chosen by the settlor. The function of the protector is to supervise the trustee, thus providing additional assurances to the settlor that the trust assets are properly managed. Essentially, a protector is a person whose prior consent is legally required ahead of the trustee taking specified actions. For example, trustees may require permission from the protector before:
- adding or excluding Beneficiaries;
- making new, or changing previous arrangements for payments of trust income;
- adding or revoking Trustee/s.
In extreme circumstances, the protector may even remove or replace the trustee. The function of the protector may be undertaken by the settlor or the beneficiary, although it is usually vested in a trusted friend or advisor of the settlor.
The Seychelles International Trusts Act does not specifically refer to protectors or guardians, but does expressly provide for the establishment of Trusts, which require the trustee to consult or obtain the consent of another person before exercising a particular function. As such, there is no impediment to the appointment of a protector or guardian. However, the appointment terms and the powers of the protector should be explicitly set forth in the trust deed or other appointment instrument in order to maintain the formalities required by the International Trusts Act.
The settlor may be a beneficiary of a Seychelles International Trust, but not the sole beneficiary. Likewise, the Settlor may establish himself as a co-trustee or protector of a Seychelles International Trust, but he may not be the sole trustee. Fidelity recommends against appointing oneself as the trustee of a trust, on account of this being a red flag to authorities, and a factor which could be considered in holding the trust to have been established as a sham trust.
Seychelles imposes absolutely NO tax on any trust income. There is no requirement for stamp duty or capital gains tax.
The Seychelles International Trusts Act was designed to protect the assets held in trust, and to ensure trusts perform their intended asset protection purposes.
The law states that an international trust shall not be void or voidable in the event of or by reason of the settlor’s bankruptcy or liquidation of the settlor’s property in any action or proceedings.
The one exception to this rule is if the Seychelles Supreme Court finds that the trust was made with the specific intent to defraud persons who were creditors of the settlor or the settlors was insolvent at the time when the trust property was vested in the trustee. However, this is a difficult case for creditors to prove, as the Seychelles Supreme Court applies the heightened beyond a reasonable doubt burden of proof typically reserved for criminal trials.
The Financial Services Authority (FSA) is the regulatory body dealing with Trusts in Seychelles.
Financial Services Authority is also responsible for the licensing of Registered Trust Agents and Trustee Service Companies. Financial Services Authority’s webpage can be viewed here: http://www.fsaseychelles.sc/
The Seychelles Courts have exclusive jurisdiction in respect of all matters relating to an international trust.
An international trust or the transfer or disposition creating an international trust cannot be invalidated by any foreign rule of forced heirship.
Seychelles International Trusts are deemed to be irrevocable by default, but revocable trusts are also permitted. The majority of Seychelles international trusts are established as irrevocable discretionary trusts, which allows trustees to exercise greater flexibility in dealing with changes in the needs and situations of beneficiaries, but prevents the dubious presumption created by revocable trusts.
The Act specifically provides for the following types of trusts:
- international trusts
- charitable international trusts
- purpose international trusts, and
- other trusts – these are referred to in the Act and include commercial (trading) trusts, life insurance trusts, cash deposit trusts and trusts resulting from acts of the Court.
This list, however, is not exclusive, and alternative trust varieties tailored to client specific needs are also available.
Yes, the Seychelles International Trusts Acts allows for the charitable purpose trusts. Charitable purpose trusts must have as their main purpose or object one or more of the following:
- The relief of poverty
- The advancement of education
- The advancement of religion
- Any other purpose beneficial to the public in general
There are no restrictions on the accumulation of trust income or property.
A letter of wishes is a document provided by the settlor of a trust, in which s/he more explicitly describes his or her wishes regarding the administration of the trust. Such wishes often include, but are not limited to, instructions regarding distributions, timing of distributions, the deletion or subsititon of beneficiaries, names of professional service providers for investment consultation and others. Though trustees administer trusts at their discretion, and are not legally bound by the settlor’s letter of wishes, it is common practice for trustees to observe the wishes and follow through with the desires expressed in such instructions, because this furthers the aim of maintaining the purpose for which the trust was created, and achieving the benefits to the beneficiaries the settlor originally desired.
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