Explanations of terms
Anonymous Debit Card
A Debit Card, which does not bear any personal details about its holder.
Apostille
A special form attached to a public document (e.g. Certificate of Good Standing)
issued in accordance with the standards of the Le Hague Convention of 1961.
Documents issued in a convention country, which have been certified by an
Apostille are entitled to recognition in any other convention country without
any further authentication. Authentication of a foreign legal entity's documents
submitted is often requested e.g. when forming a subsidiary or opening an
account with a bank or a brokerage.
Asset protection
The legal steps a natural or legal person undertakes to protect his/her/its
assets from possible seizure by creditors. Such offshore tools as International
Business Companies, Delaware Limited Liability Companies, and Trusts are
being used by our clients for the above purpose.
Assets
From the accounting point of view, assets of a legal
entity are the entries on a balance sheet showing all properties (cash,
inventories, securities, property rights, and goodwill) and claims against
others. The assets may be applied to cover the liabilities of a person or
business. Similarly, the assets of a natural person make up the entire property
owned by him/her that can be used to settle creditors' claims.
Association
Within the context of our site it's an organization established by legal
entities that have an interest, activity, or purpose in common.
ATM
An acronym, which stands for Automatic Teller Machine. It's a fully automatic
electronic machine providing some banking services (i.e. cash withdrawal) to the
owners of credit and debit Cards.
Bearer Shares
The natural persons or legal entities
holding bearer shares are considered to be the shareholders; there is no
official record of ownership kept by the company that issued the shares or by
authorities.
The International Business Companies (IBCs) incorporated in most Offshore
Financial Centres are allowed to issue bearer shares.
Beneficial owner
Same as Beneficiary
Beneficiary
A natural person or a legal entity enjoying the right to receive benefits
through a legal design (i.e. a Trust, International Business Company)
Bond
A long-term certificate of debt issued by a government agency or private
company. A bond represents an obligation on the part of the issuer to pay
interest and repay principal of a loan.
Branch
A division of a company. As opposed to a
subsidiary, a branch is not a separate legal entity.
British Common Law
See Common Law
British Commonwealth of Nations
It is a voluntary association of 54 independent sovereign states comprising 30%
of the world population. Commonwealth members adhere to the statements of
beliefs set out by their respective heads of governments. The basis of these is
the Declaration of Commonwealth Principles, agreed at Singapore in 1971, and
reaffirmed in the Harare Declaration of 1991.
Commonwealth activities are diverse: e.g., they include observing elections,
public health issues, international trade and law, etc. Most
Offshore Financial Centres in the world belong to the Commonwealth, e.g.
Bahamas, Britain, Cyprus, Mauritius, St Kitts and Nevis.
Broker
A person, other than a bank, who acts as a qualified intermediary in the
purchase of securities. Called a broker when buying securities, and a dealer
when selling them.
Brokerage
A corporate broker/dealer.
Brokerage Account
An investment account opened by a buyer/seller of securities with a brokerage.
Captive (Re)insurance Company
Such a company is a specialized subsidiary of a
non-insurance "parent": a parent company,
holding or association. Its primary goal is to improve risk management
of the parent's business while optimising cash flows and
tax-planning issues.
Certificate of Formation
The document of a Delaware LLC corresponding to the
Certificate of Incorporation for a corporation.
Certificate of Good Standing
A Certificate of Good Standing (CGS) is issued by the authorities of the
jurisdiction of incorporation/formation to a legal entity such as an
International Business Company, Panamanian Private Foundation, Delaware Corporation or Limited Liability Company.
The document attests that the aforesaid legal entity actually exists and is in
good standing owing to compliance with all requirements of the local laws
(timely payment of annual fees and local taxes, if any, as well as filing of
annual statements and/or returns where applicable).
CGS is often requested by local authorities when a foreign legal entity is
forming a subsidiary as well as by banks and brokerages when opening an account
with them.
Certificate of Incorporation
A Certificate of Incorporation (CI) is issued by the authorities of the
jurisdiction of incorporation/formation to a legal entity such as an International Business Company
or Delaware Corporation. The
document bears evidence of actual formation and registration of the aforesaid
legal entity with the authorities in accordance with the local laws. It contains
some basic data about the company (name, date and place of registration, entry
number in the register, etc.)
CI is often requested by local authorities when a foreign legal entity is
forming a subsidiary as well as by banks and brokerages when opening an account
with them.
Certificate of Incumbency
A Certificate of Incumbency (CI) of a company (e.g., an International Business
Company) is issued by its registered agent or authorities of the jurisdiction of
incorporation. The document attests that the person(s) listed is (are) actually
director(s) of the company.
The CI is often requested by local authorities when a foreign legal entity is
forming a subsidiary as well as by banks and brokerages when opening an account
with them.
Common Law
The system of law that is widely used in England, USA, and in the most of the
British Commonwealth countries. As opposed to the civil law system based on
statutes and codes, common law court decisions are derived from precedents, i.e.
past court decisions. Most Offshore Financial Centres have used common law as
the basis for their International Business Company and trust legislation.
Common Law Trust
See Trust
Company
A lawful legal entity, established and owned by one or more natural persons
and/or legal entities. A company has a subject of its activities and bears such
rights and responsibilities of a natural person as the ability to conduct
commercial operations, own shares and other securities, hold titles to property,
borrow and loan money. A company bears liabilities, but exists and acts
separately from its owners. Same as corporation.
Company limited by guarantee
A company in which members' liability is limited to the amount they have agreed
to contribute to the company's assets if it is wound up.
Company limited by shares
Such company members' liability is limited to the amount unpaid on shares they
hold.
Corporate Director (Secretary)
Some jurisdictions allow a legal entity (corporation) to be appointed to the
position of a director (secretary) of a company. It gives an opportunity to
restrict a corporate director (secretary)'s liabilities and/or increase the
anonymity features of the company. On the other hand a corporate director may
meet some bureaucratic obstacles in the jurisdictions where such representation
is unusual.
Credit Card
A plastic card with a magnetic strip on its reverse side. A credit card holder
is entitled to purchase goods or services on credit provided by the card issuer
(a bank or business) as well as make cash withdrawals via ATMs.
Daughter company
A company with some of its shares being owned by another company,
which is called a parent company.
Debit Card
A plastic card with a magnetic strip on its reverse side. A Debit Card (DC)
holder is entitled to purchase goods or services when accepted technically by a
Seller. A DC doesn't provide any credit to the holder and it's a "mirror" of the
underlying account with the DC's issuer (a bank or business). Most often DCs are
used for cash withdrawals via ATMs. Related topic: Anonymous Debit Card.
Domicile
One's residence from a legal point of view. Generally, it may not coincide with
the current physical place of residence of a person rather it's the place where
one intends to return after the purposes of his/her absence are attained.
Double Taxation Agreement
A Double Taxation Agreement (DTA) is entered into between two countries to
eliminate the possibility that the same income or gains might be fully taxed in
both. This may happen where a natural person or legal entity is resident in one
of the countries and has income or gains arising in the other. A DTA allocates
the taxing right over items of income and gains to one or other of the
countries. Where, however, certain items remain taxable in both, the DTA will
generally provide that the country of residence of the taxpayer will either
exempt the income or gains from further taxation or, alternatively, give a
credit against its tax for the tax paid in the other country.
Such sophisticated offshore tools as Cyprus IBCs or Mauritius offshore companies
are purchased by our clients to use to their benefit the exemptions of DTAs,
respectively Cyprus or Mauritius have entered into. British Private Limited Companies
and Delaware Corporations and Limited Liability Companies
use relevant DTAs as well when applicable.
Double Taxation Treaty
See Double Taxation Agreement (DTA)
European Union (EU)
An intergovernmental organization, The European Union (EU) was founded in 1951.
At the time being its members are Belgium, Germany, France, Italy, Luxembourg,
the Netherlands, Denmark, Ireland, the United Kingdom, Greece, Spain, Portugal,
Austria, Finland and Sweden. The following twelve countries have applied for the
membership in the EU: Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia.
The main objectives of the EU are to promote single economic market, assert its
identity in the international relations, and introduce European citizenship,
currency (EURO) and law.
Exchange Control
Imposed by government limitation on transactions in foreign currency.
Financial Action Task Force on Money Laundering (FATF)
The intergovernmental organization established by the G-7 Paris Summit in 1989.
The principal aim of FATF is to identify the technology of money laundering,
suggest the ways of its elimination, and monitor the anti-money laundering
actions of the concerned countries.
Financial Stability Forum (FSF)
The FSF was convened on 14 April 1999 in Washington. Its members are the G-7
countries, Australia, Singapore, Hong Kong, Netherlands, and some international
financial and regulatory institutions. It's an international watchdog
identifying the crucial flaws in the international financial system, which may
lead to regional or worldwide crises. Another tasks of the organization are to
develop financial crises prevention policy and oversee its implementation.
Forced heir ship
A provision of the law stipulating how a natural person may bequeath (pass on)
his or her assets to another persons after his/her death.
Private Foundations or Trusts
are used as lawful designs to avoid or circumvent undesirable forced heir ship
procedures.
Fortune 500
A listing of the top 500 U.S. companies, ranked by revenues, in accordance with
Fortune magazine's list.
Founder (of a Private Foundation)
The person who actually creates a Private Foundation
by transferring some property in its assets.
Foundation Council
The top administrative body in a Private Foundation
providing administration and management of the foundation's assets and their
further distribution among the beneficiaries.
G-7
A forum of the seven most economically powerful countries of the world: Canada,
France, Germany, Italy, Japan, United Kingdom, and USA.
Goodwill
An intangible (immaterial) asset representing the value of long-term clientele,
solid reputation among partners and customers, and connections.
Grantor
See Settlor.
Holding
A parent company which holds shares (interest) in another
company or other companies.
Immigration Planning
The legal steps a natural person plans and/or undertakes in view of his/her (and
family members') future immigration. IP often includes
tax planning and asset protection components.
Incorporation
The legal process of establishing a company
(corporation), which entails submitting of definite documents to the authorities
of a relevant jurisdiction, their further registration and issuing by the
authorities of proper documentary evidences of the company's (corporation) legal
existence (e.g., Certificate of Incorporation).
International Business Company (IBC)
A typical company of that type can carry on business outside
its jurisdiction of incorporation, have meetings of its Directors and/or Members
anywhere in the world, keep as many bank accounts as it desires anywhere in any
currency, issue bearer shares. An IBC is exempted from all or
the most part of taxes in jurisdiction of incorporation. As a rule such
companies have low profile owing to the lack of requirements to register their
Directors' and Shareholders' details with the local authorities.
Jurisdiction
Within the context of our site it's a country or a territory, where we provide
incorporation and other services. Each such jurisdiction adopted its peculiar
legislation which concerns incorporation/formation of offshore legal entities
and their further activities.
Jurisdiction of the incorporation/formation
A jurisdiction where the company or corporation was
incorporated/formed.
Legal Entity (Legal Person)
A legal entity (LE), e.g., an International Business Company,
Delaware Corporation or Limited Liability Company,
exists independently from its members, founders or
shareholders. Generally, the liability is limited to the assets a LE owns,
and the personal property of the members, founders or shareholders may not be
seized by the creditors. A LE has many features of a natural
person, e.g. it may hold property, suit other legal and natural persons, and
be responsible in a court for its acts and deeds.
Liability
Any current or future legal obligation, e.g. debt, duties under a contract or a
position.
Limited Liability
Within the context of our site it's limited liability of shareholders or members
in a Company Limited by Shares or Company Limited by Guarantee.
Member
A holder of an interest in a Delaware Limited Liability Company
or same as a shareholder in some other types of
legal entities.
Minor
A person who has no attained full age under the law of his domicile.
Money Laundering
The process and technology of disguising, investing, and/or hiding the proceeds
of criminal activities coupled with their "legitimisation".
Natural person
An individual as a subject of legal and/or business relations.
Nominal Director
A Director holding its position only formally, while the real powers on
administering and managing the company rest with the Beneficiary or its agent.
Nominal Shareholder (Member)
A shareholder holding the shares only nominally. At any
point, the Nominal Shareholder will transfer the shares
he/she formally holds to the person(s) listed in the appropriate instruction
from the Beneficiary.
Nominees
General term for Nominal Directors, Nominal Shareholders (Members), and other
nominal persons in an offshore legal entity.
Non-resident
In relation to a jurisdiction: a legal or natural person not having its domicile
and/or place of business in the given jurisdiction.
Non-resident alien (NRA)
The person who is neither a resident in nor a citizen of the country, esp. in
the USA.
Offshore
Managed, registered, located, conducted, or operated in a foreign country,
especially when it is arranged for the tax-planning or asset-protection
purposes.
Offshore Financial Centre (OFC)
A jurisdiction, providing some or all of the following
services: low or zero taxation; moderate or light financial regulation; banking
secrecy and anonymity.
Operating Expenses
The amount paid for assets maintenance or the day-to-day costs of running and
maintaining a business.
Organization for Economic Cooperation and Development (OECD)
At the present time there are 29 countries in the OECD. They share the
principles of the market economy, pluralist democracy and respect for human
rights. The original 20 members of the OECD are located in Western countries of
Europe and North America. Next came Japan, Australia, New Zealand and Finland.
More recently, Mexico, the Czech Republic, Hungary, Poland and Korea have
joined. The official goals of the organization are to help "member countries
promote economic growth, employment and improved standards of living through the
coordination of policy" and to encourage "the sound and harmonious development
of the world economy and improve the lot of developing countries, particularly
the poorest.
Parent Company
A company in relation to its subsidiaries, branches,
or daughter companies.
Partnership
A for-profit organization in which two or more persons (partners) furnished a
part of the capital and labour. They share agreed proportion of profit and
losses. A typical partnership does not create a legal entity separate from the
partners, and is tax transparent. On the other hand, the partners' liability is
not limited and may extend to their personal property.
Private Foundation
In the context of our services, it is a Panamanian legal entity combining the
features of a trust and an International Business company.
Similarly to a Trust, the purpose of a Private Foundation is to preserve the
assets, donated by the Founder and some third
persons, for the benefit of and distribution among the Beneficiaries. Akin to an
International Business Company, a Private Foundation has a distinctive legal
personality and tax-exempt status.
Private unlimited company
A company with unlimited liability of its members.
Protector
The Protector is "a watchdog" overseeing the proper fulfilment by the Foundation
Council of all instructions of the Founder.
Public limited company (PLC)
The shares of such company may be offered for sale to the general public and
members' liability is limited to the amount unpaid on shares held by them.
Registered Agent
A registered agent represents an International Business Company, Delaware Corporation or Limited Liability Company
in the jurisdiction of incorporation. A Registered Agent normally provides a
Registered Office address, provides liaison with local authorities and receives
all legal and tax papers and/or notices addressed to the underlying company,
corporation or foundation.
Registered Office
It is the official address of a company to which authorities, courts, and
suitors send their notices, letters and reminders. The Registered Office (RO)
can be anywhere in the jurisdiction of the incorporation. It must always be an
effective address for delivering documents to the company. The RO is provided by
a Registered Agent.
Resident
In relation to a jurisdiction: a legal or natural person having its domicile
and/or place of business in the given jurisdiction.
Securities
Shares, bonds, and other instruments, which give evidence to and assure the fulfilment
of an obligation. Securities are traded in financial markets. Having
opened an Offshore Brokerage Account you may buy and sell securities via the
Internet.
Settlor
The person who actually creates a trust by donating property to be managed and
administered by a trustee but from which all benefits and profits would go to a
beneficiary.
Share
Part ownership in a company limited by shares.
Share Certificate
A document signifying part ownership in a company. Same as a "Stock
Certificate".
Shareholder
The owner of one or more shares in a company.
Shelf Company
A company, which has been incorporated by us in an Offshore
Financial Centre. It is "pure" in a sense that it has never entered
into any commercial or other activities and/or obligations. The client him or
herself appoints the initial Director(s) of the SC and decides on issuance of
the shares.
Our affiliate always keeps in stock several Shelf Companies available for the
immediate disposal by clients.
Shipping Company
A company, which owns a ship or ships. One of the preferable jurisdictions for
registration of SC is Cyprus.
Subsidiary (Subsidiary company)
A company with a majority of its shares being owned by another company.
Tax planning
The legal steps a natural or legal person plans and/or undertakes to minimize
lawfully his/her/its tax liabilities. Such offshore tools as International Business Companies,
Delaware Corporations and Limited Liability Companies, and Trusts are
being used by our clients for the above purpose.
The Statute of Elizabeth
It was enacted in 1576 by the Queen Elizabeth I. The Statute voids a transfer to
a trust if the transfer could be interpreted as intention to hinder, delay, or
defraud creditors, including potential future creditors. Some
Offshore Financial Centres (i.e. Nevis) declared The
Statute of Elizabeth null and void in their trust legislation.
Trust
A legal design placing ownership of property in the name of one person, called a
trustee, to be held by the trustee for the use and benefit of some other person,
called a beneficiary. In some jurisdictions (i.e. Nevis) Trust Law permits
the Settlor and Beneficiary in a Trust be the same person.
Trust Company
A company properly licensed by the authorities to provide services of a Trustee.
Trustee
The person who administers and manages the property transferred in a Trust. This
person becomes a legal owner of the property. In due time, a Trustee distributes
the property and/or relevant earnings under the trust among beneficiaries.
Unlimited Company
See Private unlimited company.