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Also referred to as non-resident companies, an offshore company is an entity that is incorporated in a country different from where a person resides. The list of benefits that an offshore company brings to individuals or other companies include:

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

Two types of of offshore company exist that can be registered; an International Business Company (IBC) and a Limited Liability Corporation (LLC). What is the difference between an IBC and an LLC?

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

In general, there are three business categories that an offshore company can be a part of;

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

Company Limited By Gaurantee If a company goes bankrupt the member’s agree to pay out up to a maximum limit. The rules of the offshore company are what dictates what member’s rights are within the company including benefits. Membership terminates upon death.

Protected Cell Companies This type of company is normally identified by the segregation of its assets and liabilities into different “cells” in such a way the one cell’s assets cannot pay for another’s liabilities. These companies are also called SPC’s or Segregated Portfolio Companies, and are primarily employed for unit linked insurance bonds and umbrella mutual funds.

Tags: Business