Shareholder, Director and Secretary
Is it possible to be a sole shareholder and/or a company director?
Largely, it depends on what is stipulated by the laws of a particular jurisdiction. In most offshore jurisdictions it is necessary and sufficient for a company to have one director and one shareholder, which may be the same person. There are usually no particular requirements to their residence status. Some jurisdictions, however, may have their particular requirements. In Panama, for instance, the number of directors must not be less than three.
However, when considering directorship/shareholding in the company, you should also take into account the laws of the country where the director and the shareholder are from. In many countries, citizens are allowed to be shareholders and/or directors of foreign companies, while in some other countries it might be necessary to obtain special permission (licence) to buy shares of a foreign company.
What is the minimum size of the share capital?
The laws of offshore jurisdictions do not usually set any limits for the minimum size of the share capital to be issued by the company. Thus, an offshore company may issue just one share and that would be quite sufficient for the company to be deemed a fully functioning business entity.
Do you need to pay in the share capital of an offshore company?
All issued share capital of an offshore company has to be paid in at par. It should be noted, however, that offshore laws do not normally stipulate particular terms, forms and procedures for payment, neither is the director obliged to confirm the fact of payment of the share capital to any government authority.
What is the difference between authorised, issued and paid-in share capital?
The authorised share capital of an offshore company is the maximum number of shares this company is authorised to issue. The amount of the authorised capital must be stated in the company’s formation documents.
The issued share capital of a company represents shares which have been issued to shareholders (not exceeding the number of shares a company is authorised to issue). There is no minimum amount of shares the company has to issue, so the minimum issued capital may be just one share.
The amount of paid-in capital has to coincide with the amount of issued capital. Still, as we have already mentioned, the company is not obliged to provide any evidence of payment to state authorities in the country of its incorporation.
What are bearer shares?
Bearer shares contain no reference to the owner’s name. The person who holds a bearer share certificate is deemed to be a shareholder.
Most offshore jurisdictions have prohibited the issuance of bearer shares or require that they should be kept in special custody. In Belize, for instance, bearer shares must be kept by the company’s registered agent, and in the BVI bearer shares must remain with a licensed or recognised custodian.
What is the difference between bearer shares and registered shares?
The main difference between registered shares and bearer shares lies in the presence/absence of the holder’s name on the share certificate (kept by the client) and in the register of shareholders (kept with the company’s registered agent).
The rights of holders of bearer share certificates and registered shares in the company are absolutely identical. You should remember, however, that the annual fee for a company, which wants to retain the power to issue bearer shares in its memorandum and articles, will be much higher than for a company that does not hold bearer shares.
How to execute and then transfer bearer shares?
On the face of a bearer share certificate there is usually the company’s name, the number of the certificate, the amount of the authorised capital, the number of shares held by the bearer of the certificate and the date of its issue. Instead of the owner’s name there is an “issued to the Bearer” inscription. In other words, the owner of the certificate is a person who actually holds the certificate at the moment.
In the majority of the offshore jurisdictions, share certificates have to be signed by the director or any other authorised officer of the company, or they may just be sealed with the corporate seal. When selling bearer shares, you do not have to make any endorsement upon the certificate. The shares are transferred by means of physical transfer of the certificate from the seller to the buyer.
However, in such countries as Belize or the British Virgin Islands, any transfer of shares is deemed to be completed only when a corresponding entry is made in the register of the company’s shareholders or the register kept by the custodian.
How many directors and shareholders may a company have?
The laws of offshore jurisdictions do not usually stipulate a particular number of directors. In the majority of those countries it is quite sufficient for a company to have just one director resident in any country. The maximum number of directors is not limited either, but is usually seven.
Does a company have to have a resident director to be a tax resident?
It depends on the country of incorporation. There are two main criteria for determining a company’s tax resident status.
Firstly, it may be defined according to the place of incorporation of a company (like in the UK, for example);
The second criterion is the place of effective management. There are several requirements to be met. First and foremost, it is the place where the executive body sits (the director/ board of directors), then it is the place where the main decisions are taken, where the company’s files, records, registers, etc. are kept, and where the company’s current account is maintained. Cyprus may serve an example of this type of jurisdiction. In Cyprus, having a resident director might prove helpful for obtaining a tax resident status.
What is a Secretary for?
Not all jurisdictions require that a company appoint somebody as a company secretary. But wherever a company is required to appoint one, the rights, obligations and liabilities of the secretary are established by local laws.
Generally speaking, a secretary is a person, whose function is to provide assistance to the main executive body of a company (a director/board of directors), deal with internal corporate documents, arrange general meetings of shareholders, keep registers, file documents to registration bodies, keep in correspondence with tax authorities etc.