Why set up an Offshore Corporation
Traditionally, it was often perceived and carried the stigma that an offshore company is good only for tax evasion. This is no longer the case. With changes in laws in the many offshore jurisdictions, such as the British Virgin Islands, Bermuda, Cayman and the like, their reputation is quite stellar. Corporations incorporated in these jurisdictions may now be listed on stock markets, such as the Hong Kong Stock Exchange.
Whilst they may not be the preferred choice as a company for carry on business ordinarily, they offer certain benefits that are not available from companies incorporated in other jurisdictions.
Privacy is obviously one of the well known benefits offered by some offshore jurisdictions in that the officers and shareholders are not publicly accessible. Such privacy would be beneficial in family trusts where family assets may be kept away from prying eyes of paparazzi or other non-immediate family members.
In the corporate world, they offer many benefits. Primarily they are often used as an intermediary holding company for holding onto assets. The can be used as a joint venture company, which itself does not conduct business but which in turn hold other companies, such as a Hong Kong operating company. Such structure allows simplicity in subsequent transfer of interests in the joint venture. The lack of a need to prepare year end accounts in some offshore jurisdictions means that they do not need to prepare and file accounts for the joint venture company, thus simplifying corporate compliance needs.
As an intermediary company, they can also act as a buffer against claims by third parties against the principal owner or its other operations in the event of any claim against a group company. The intermediary company and any operating subsidiary under it being sued can easily be removed from a larger group company
The lack of a need to make annual filings in respect of its officers and shareholders also means a company used as a holding company for investment assets does not need to persistently worry about annual filings or that late filing of annual returns may result in penalties.
The convenience in the transferability in shares in some offshore jurisdictions make M&A deals extremely efficient and convenient without the tight deadlines for payment of ad valorem duties.
The above are merely some of the convenience factors of using an offshore company as a holding company, though it is not intended to be an exhaustive list and subject to varying requirements in different jurisdictions.
Whilst they may not be the preferred choice as a company for carry on business ordinarily, they offer certain benefits that are not available from companies incorporated in other jurisdictions.
Privacy is obviously one of the well known benefits offered by some offshore jurisdictions in that the officers and shareholders are not publicly accessible. Such privacy would be beneficial in family trusts where family assets may be kept away from prying eyes of paparazzi or other non-immediate family members.
In the corporate world, they offer many benefits. Primarily they are often used as an intermediary holding company for holding onto assets. The can be used as a joint venture company, which itself does not conduct business but which in turn hold other companies, such as a Hong Kong operating company. Such structure allows simplicity in subsequent transfer of interests in the joint venture. The lack of a need to prepare year end accounts in some offshore jurisdictions means that they do not need to prepare and file accounts for the joint venture company, thus simplifying corporate compliance needs.
As an intermediary company, they can also act as a buffer against claims by third parties against the principal owner or its other operations in the event of any claim against a group company. The intermediary company and any operating subsidiary under it being sued can easily be removed from a larger group company
The lack of a need to make annual filings in respect of its officers and shareholders also means a company used as a holding company for investment assets does not need to persistently worry about annual filings or that late filing of annual returns may result in penalties.
The convenience in the transferability in shares in some offshore jurisdictions make M&A deals extremely efficient and convenient without the tight deadlines for payment of ad valorem duties.
The above are merely some of the convenience factors of using an offshore company as a holding company, though it is not intended to be an exhaustive list and subject to varying requirements in different jurisdictions.
