Partie 1: offshore company and its benefits

Section 1: Offshore Company Formations

An offshore company can be broadly defined as a business entity

established outside the owner's country of residence. In the financial

sector, the term offshore has become associated with commercial

practices abroad that deal in investments, bank accounts, insurance

policies or real estate, to name a few. The specific definition of an offshore

company varies by jurisdiction.

Offshore companies function like any other company, can carry out the
same business activities, have similar management structures, issue
shares to shareholders, etc.the main difference being the tax structure
and the level of confidentiality.

Many nations aim to attract the business of offshore business people by

making their corporate laws friendly to specific types of
companies. Offshore jurisdictions offer tax-exempt status to foreign
companies, provided they restrict commercial activities to outside the
jurisdictions borders and do not engage in any type of business exchange
with local residents. Additionally, many offshore jurisdictions corporate
laws are written to ensure client confidentiality, the details of which are
not usually made available to the public or intruding foreign governments.

There are no clear-cut boundaries, however, as offshore financial services

can be found in traditional onshore jurisdictions. The US state of Delaware,
for instance, is one of the most historically significant corporate havens. Its
simple legal structure and favorable corporate tax laws were shaped in the
early 20th century to make it attractive and easy to form and manage a
corporation within the state. Today, around 60 percent of the companies
on the Fortune 500 list are incorporated in Delaware.
 Similarly, offshore companies often exist and conduct themselves just like
any standard company. Panamas corporate laws, originally modeled after
Delawares in 1927, but blended with Spanish civil law, have evolved to
include progressive business regulations from jurisdictions such as
Lichtenstein. Corporations formed in Panama enjoy a unique legal climate,
making this jurisdiction a popular destination for businesspeople choosing
to set up companies offshore.

Types of Offshore Company Formations

Each company has a variety of unique features and structures dependent

upon the jurisdiction and its unique corporate laws. In this section, well
cover two main offshore formation vehicles:

International Business Company (IBC)

Limited Liability Company (LLC)

Visit these links for more information on setting up:

Trusts and Foundations

Financial Services Companies

International Business Company (IBC)

An International Business Company (IBC) refers to a type of offshore

company, which engages in international business activities in trade or
investment and remains exempt to local corporate taxation, provided
that its revenues does not come from local sources.

Jurisdictions provide varying degrees of tax benefits, though most

usually offer exemption of corporate tax, income tax and stamp duty. An
IBC also benefits from confidentiality of ownership, asset protection, a
wide versatility of share issuance, flexible management arrangements,
and minimal financial reporting requirements.

There are many such structures available, some of the more popular
being Panama, BVI, Belize, Dominica and St. Vincent. For all options
featured by Sovereign, view the Corporations (IBCs) menu at right.

Limited Liability Company (LLC)

 A Limited Liability Company (LLC) is a company different from a
corporation that provides limited liability to its owners and partners. It is
a hybrid business entity with a flexible arrangement, allowing power and
responsibilities to be named and distributed through its charter.

An LLC provides a tax-neutral vehicle that bypasses corporate

taxation due to its existence as a partnership. Therefore, the burden of
tax falls upon the individual members of the company rather than the
entity itself.

A Member of an LLC has the same responsibilities as a shareholder

in a normal company, which may include individuals, companies or
trusts and allows for flexible levels of ownership and remuneration.

The flexibility of an LLC is ideal for structuring international

orientated joint venture arrangements, as the company can enjoy all of
the benefits of incorporation, without any tax liability.

Read Benefits of an Offshore LLC for more details and

information. For all options featured by Sovereign, view the Limited
Liability Companies (LLCs) menu at right.

Setting Up an Offshore Company

The formation of an offshore company is a simple straightforward

process. The Articles of Association and the Articles of Memorandum are
drafted, which represent the details and by-laws of the company and are
filed by an offshore company agent (such as Sovereign Management and
Legal); together with the initial company registration documents, it is sent
off to the appropriate Register. Once these documents are approved, a
certificate of incorporation is issued signifying the formation of the new
company.

Any additional requirements of a newly formed company post-

incorporation are dependent upon your needs and wishes, which may
include the appointment of the companys first director, the first meeting
and appointment of company officers, registration of directors (in which
nominee services may be used), and issuance of company shares.