Offshore Company Incorporation and Maintenance

How to incorporate an offshore company?

In accordance with the laws of offshore jurisdictions, companies are usually incorporated by registered agents. They are professional players and have special licences. Agents prepare and sign constituent documents of a company, make filings to state registration authorities and, having obtained the incorporation certificate, appoint the first director. Only then does the Director conduct the first issue of shares.

According to this procedure, all you need do to incorporate an offshore company is go to an adviser providing such services, tell him or her what the company’s structure should be (the number of directors and shareholders, the amount of the authorised share capital and issued share capital), pay the incorporation fee and wait for the incorporation documents to arrive.

The registered agent prepares the documents, files them with the corresponding authorities and has the documents duly legalised. You keep in touch with the registered agent through corporate agents, that is, the employees of the legal firms who administer the companies ‘on site’ (so to speak).

How long will it take to incorporate a company and receive a set of corporate documents?

Incorporation starts with a check of the offshore company name for availability (uniqueness) and compliance with the laws. This will take about one day. Typically, the incorporation certificate will be obtained by the registered agent within 2 – 3 days from the date of filing of registration forms. About another 5 – 7 days will be needed to legalise the documents and to have them delivered. The whole procedure from order placement till transfer of documents to the client therefore takes, on average, 12-14 working days.

What are the restrictions on names for offshore companies?

Each company should have its own name and the founders may choose any name they like, provided it is in compliance with certain regulatory requirements and has not yet been used. If the requirements are all met, the Registrar cannot reject the chosen name.

According to the corporate laws of most offshore jurisdictions, a company name has to contain an indication of its legal and incorporation form (“Limited”, “Corporation”, Ltd., Inc., Corp., etc). The company may use a full or abbreviated form of any word or words, provided the name does not sound similar to existing or previously existing company names and does not contain any offensive, prohibited or unacceptable words.

If you want to use a sensitive word or phrase in the company’s name (e.g. Royal, Bank, Trust, Insurance Services etc.), you will have to obtain the permission of the Financial Services Commission. This requirement was put in place in order to protect potential counteragents of a company from being misled by information concerning a company’s status and activities.

What are the ‘sensitive words’ in a company’s name?

Sensitive words and expressions refer to business preferences, special status or certain type of activities available for your company, for instance:

‘Sensitive’ words such as these should be used with the utmost care in order to avoid future problems for your business.

Is it possible to change a company’s name?

Yes. The owner of the company may at his own discretion change the company’s name. This can be done by a special resolution of the director or in any other way stipulated by the company’s charter. The corresponding notification must be sent to the Registrar.

When the Registrar is satisfied that all legal requirements have been met, he or she will record the relevant changes in the register and issue a new certificate of incorporation. The change of name becomes effective on the date shown on the new certificate.

Who can own and run a company?

There are no particular requirements with regards to the tax residence or citizenship of the company’s directors and shareholders in the laws of offshore jurisdictions. That is why in such jurisdictions it is legal for a citizen of any state to found a company or to become a director of an incorporated entity there.

Who owns the company?

The company is legally owned by its shareholders, and where a trust relationship has been established between a shareholder and the beneficial owner, the company is owned by the latter.

Where the company is owned by shareholders, their ownership is confirmed by share certificates, issued upon the entry of their names in the company’s share register. In the latter case, the shareholder and the beneficial owner make a deed of trust, regulating their rights, obligations and liabilities with regards to the shares issued by the company.

Offshore company formation, filings and paperwork

First of all, you have to submit some alternatives for the name of your company so that they may be checked for availability. Then you have to provide information on the corporate structure: names of directors and shareholders, whether nominee services are required and the name of the company’s beneficial owner. Passport copies of these individuals must be provided to the registered agent.

In some jurisdictions, you are required to go through the due diligence procedure, and in that case some additional documents will need to be provided. These could be, for example, bank references, residential address confirmation etc.

Can I buy a ready-made company?

As we have already mentioned, the laws of offshore countries do not require that directors or shareholders be present during a company’s incorporation. Therefore, legal firms who sell and provide maintenance for offshore companies may register ‘shelf’ companies and then sell them to the public.

A client who buys a ready-made company may rest assured that the company has not been involved in any business activities at all.

Who can guarantee that a ready-made company will be a ‘clean’ one?

The set of corporate documents of a shelf company usually contains letters from directors confirming that the company has not had any business activity and does not have any debts or liabilities. This may also be guaranteed by the company not having a current account.

The main point here is that you should always choose qualified and well reputed providers of corporate services.

How do I customise a shelf company?

When you buy a shelf company, a procedure is begun in order to change the first director (for shelf companies this is a nominee appointed by a registered agent). The new director will be the person named by the client. Then the newly appointed director will conduct the first issue of shares.

When does it make sense to create your own ‘tailor-made’ offshore company instead of buying a shelf company?

A new, ‘tailor-made’ offshore company will normally be an option when there are special requirements to the company’s name or when the client needs an offshore company with a particular date of incorporation.

In this case you will, of course, have to wait for (lose) some time until all the corporate documents are ready.