Annual Fees
These are comparatively small fixed renewal fees a typical offshore company,
especially an IBC pays annually to the authorities of the jurisdiction of
incorporation/formation and to the Registered Agent. The companies may suffer
penalties and/or be struck off the Register in case of late payment or failure
to pay the fee.
Anonymous Debit Card
A Debit Card, which does not bear any personal details about its
holder/owner.
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 Private
Foundations, 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 (below)
Beneficiary
A natural person or a legal entity enjoying the right to receive benefits
through a legal design (i.e. a Trust, Private Foundation, an 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.
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.
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.
Holding company
See Holding (above).
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, Panamanian
Private Foundation, 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 "legitimization".
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. PF is an
effectual offshore asset protection tool.
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, Panamanian
Private Foundation, 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/herself appoints the initial Director(s) of the SC and decides on issuance
of the shares. We always keep in stock several Shelf Companies available for the
immediate disposal by our precious 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 haven
A jurisdiction where local legislation provides for considerable tax
exemptions for non-residents.
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 Private
Foundations, 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.