Documents and Services
What does an annual maintenance of an offshore company include?
The annual maintenance of an offshore company includes payment of the following fees:
- a government fee;
- registered agent fees;
- fees payable to nominees (if applicable).
In all offshore jurisdictions, tax in the country of incorporation is substituted by an annual government fee which is paid to keep the company on the register. The government fee depends on a variety of criteria (country of incorporation, authorised share capital, or whether the company’s articles allow the issue of bearer shares etc). The minimum fee is in the range of 100-350 US dollars. The fee is payable from the second year of company’s existence onwards.
The deadline for payment of the government fee is different in each jurisdiction, but normally depends on the date of incorporation.
In addition to government fee, registered agent fees (for the provision of a registered office, maintaining a register of directors and a register of shareholders, the agent’s readiness to inform clients about prospective changes to corporate law etc.) must also be paid on a yearly basis. Such fees also vary depending on the jurisdiction and particular registered agent, but, as a rule, are no higher than 1200 US dollars per year.
It should be noted that nominee services (directors and/or shareholders) are also due annually.
What happens if annual fees are not paid or paid late?
If the company has missed its government fee payment deadline, it still continues to be on the register for some time, though ‘Not in good standing’. Usually, this period is not longer than nine months, after which the company is taken off the register.
During this time, the company also incurs penalties which depend on where the company was incorporated and how long it has been since the annual payment deadline date.
For example, in the British Virgin Islands, a two-month delay will incur a penalty of 10 per cent of the annual renewal fee and a delay of more than five months will make the penalty 50 per cent. In the Seychelles, a delay of one to 91 days will make the company liable to a penalty of 10 per cent, which then rises to 50 per cent. In Belize, if the government fee is paid within three months of the annual fee deadline, the penalty is 100 US dollars, if within five months the penalty is 200 US dollars.
Attention. If a company fails completely to pay the annual fee with the accrued penalty, it will be struck off the register.
Can I move the offshore company to another jurisdiction and keep the company name?
Yes, you can. The laws of most offshore jurisdictions allow companies to change the country of domicile, whilst keeping the company name. This is called redomiciliation and takes from one to two months. The procedure and costs to change a company’s domicile vary significantly from one jurisdiction to another.
A company may only be ‘moved’ between offshore jurisdictions. Re-registration of such a company in Russia, for example, or the United Kingdom or any other onshore country, is not allowed.
Being a lengthy and costly procedure, redomiciliation is not very common and used only in extreme cases. For example, when there is no other opportunity to replace the existing company with a new company incorporated in another jurisdiction. Or when the corporate law of an offshore jurisdiction has dramatically changed and you would prefer your company to remain under the old regime.
Can I abandon an offshore company?
The offshore company is regarded as abandoned if it has failed to pay the government fee in time. However, as mentioned above, the company continues to be on the register for some time and then it is struck off.
The danger of ending a company in this way is that within 10 years of the strike-off the company can be restored upon paying all government and restoration fees, and penalties.
Normally, in these cases the nominee directors resign and the beneficial owners are appointed as directors. The aim is to indemnify the directors against possible debts and liabilities of the company.
How to liquidate an offshore company?
The liquidation of an offshore company varies depending on the country of incorporation, but in any case involves a director/shareholder deciding to put the company into voluntary liquidation, appointing a liquidator, and filing the relevant application to the registering authority. In order to go into voluntary liquidation your company must have satisfied all creditor claims, fulfilled all outstanding obligations and have no assets.
In some jurisdictions, liquidation involves the courts; in others, publication of a relevant notice is required. On completion of liquidation, a record of liquidation is made in the register of companies and the registered agents (and client) receive a certificate of liquidation.
This procedure differs from striking the company off the register in the case of failure to pay annual government fees (strike-off). Before the record of liquidation is entered into the register, the company must confirm that it has discharged all debts and obligations to third parties, which is why during this period a liquidator is appointed to perform the director’s functions. The major difference between a liquidated company and an abandoned company is that the former can never be fully restored.
What is included in the package of documents of an offshore (onshore) company?
After the incorporation of an offshore company, the client receives the following documents:
1) Certificate of Incorporation (original);
2) Memorandum and Articles of Association (original);;
3) An apostilled set of documents, including:
- copy of Certificate of Incorporation;
- copy of Memorandum and Articles of Association;
- Resolution appointing the First Director.
4) Resolution to issue share certificates;
5) Share Certificates.
The set of documents of an onshore company may vary slightly from the above list, depending on both the jurisdiction and the type of company.
In any case, there is always a document confirming the registration of a company in the register of companies. This may be a Certificate of Incorporation, like in Cyprus and the UK, or an Extract from Chamber of Commerce, like in the Netherlands, etc. The same is true of the constitutive documents – there may be a Memorandum and Articles of Association in the case of a limited liability company or an LLP Agreement in the case of a limited liability partnership.
Documents must be prepared in order to appoint the director and issuing shares – written resolutions, or minutes of the meeting, and the share certificates themselves must be made.
A number of countries may issue their own special obligatory documents which are included in the set delivered to the client. For example, in Cyprus, the Registrar of Companies (the authority that registers companies) issues the Certificate of Registered Office, Certificate of Directors and Secretary, and Certificate of Shareholders.
If you have a nominee director or a nominee shareholder, additional documents are issued, which aim to safeguard the interests of the beneficial owner in the case of a conflict with a nominee (director’s resignation letter, resolution approving director’s resignation from his/her office, declaration of trust etc).
How can documents be certified?
Documents can be certified in a number of ways. These include traditional certification by notary public, as well as certification by solicitor, barrister, certifying officer, or district officer, etc.
The certification method each time depends on: the country where the document is issued, the type of document, the facts certified in the document and its destination – where it needs to be delivered to.
However, in order to submit a public document to foreign authorities, certification alone is not sufficient. Documents must be legalised in either of the following ways:
- by apostille (putting Apostille stamp);
- by consular legalisation.
What is an Apostille and how does it differ from legalisation?
Apostille (putting the apostille stamp) and consular legalisation are ways of legalising public documents for their use in a foreign country.
An apostille is a stamp in an established form which confirms the authenticity of a signature, stamp or seal on the document and the capacity of the person who signed it. This is why, more often than not, before a seal is put in place, the notary certifies that the signature is genuine or that the document is a copy of the original.
An apostille is made in the country of issue of the document and allows the document to be recognised in any foreign state that is party to the Hague Convention of 05 October 1961 on Apostille, which abolished additional legalisation of foreign public documents that bear the Apostille stamp. However, an apostille cannot be used with all types of documents.
Consular legalisation is needed where the documents are going to be presented in a country that is not party to the Hague Convention on Apostille. Such certification can be obtained in the Ministry of Internal Affairs and consular offices both in the country of issue and in the country of presentation. Legalisation attests the conformity of the document to the laws of the document’s country of origin. A document certified in this way cannot be used in any third country.
What is a Certificate of Good Standing?
A Certificate of Good Standing is a document issued by the state authority (Registrar of Companies) of a number of countries as proof of the current legal status of a company. The certificates confirm that a company is active and operational.
As a rule, a Certificate of Good Standing includes the name of the company, its registration number, and a statement that all the necessary fees and penalties have been paid and no procedures such as reorganisation, voluntary liquidation or strike-off have been initiated by or against the company.
In practice, a Certificate of Good Standing is requested by banks on an annual basis as proof that the company is still on the register. A business partner may also wish to see the certificate.
Can a company not in Good Standing continue to operate?
A company not in Good Standing is considered to be struck off the register of companies, though, as mentioned above, it will remain there for some time. Conducting business on behalf of a company in ‘bad standing’ is recognised as fraud and regarded as illegal entrepreneurship by most countries.
What is a Certificate of Incumbency?
A Certificate of Incumbency is a document issued by the registered agent (in a number of countries, by the secretary) and including the details of company status and structure.
The certificate contains:
- the company name and registration number;
- еits current status (a statement that all the necessary fees and penalties have been paid and no procedures such as reorganisation, voluntary liquidation or strike-off have been initiated by or against the company);
- the names of the directors (current directors or all directors appointed from the date of incorporation, with appointment and resignation dates);
- the names of the shareholders (current shareholders or all shareholders from the date of incorporation, with or without number of shares held);
- any other information requested by beneficial owner.
The certificate may be on the list of documents to be provided to the bank in order to open an account and can be requested by partners as proof of company structure.
What other documents may an offshore company need to conduct business?
It would be impossible to compile an exhaustive list of all the documents an offshore company may need for its activities because these documents mostly depend on the requirements of business partners, banks and authorities.
In practice, in addition to the basic constitutive documents (Memorandum and Articles of Association, Certificate of Incorporation, etc.) the following documents may be requested:
- Certificate of Good Standing;
- Certificate of incumbency
- Tax certificate
- Extracts from the register of directors and the register of shareholders;
- Certificate of Dissolution.