CONTENTSCONTENTS
FOREWORD_______________________
1. The development of the offshore jurisdictions
1.1. Case Study: Cyprus as an offshore centre
1.2. Basic conditions to qualify for the tax incentives
2. Legal framework
2.1. The company name
2.2. The company's share capital
2.3. Memorandum
2.4. Articles of association
2.5. Shareholders
2.6. Directors
2.7. Secretaty
2.8. Distribution of duties
2.9. Registered office
3. The legal documents of the company
3.1. The incorporation documents
3.2. The trust documents
3.3. Power of Attorney
3.4. Apostilled documents
3.5. Legalised documents
4. Advantages of offshore companies 4.1. Anonymity and confidentiality
4.1.1. Nominee shareholders
4.1.2. Nominee directors and secretary
4.2. Low or no taxation
4.3. Exchange control
4.4. Secure political and banking systems
5. Jurisdictions
5.1. Making the right choice
5.1.1. Tax havens
5.1.2. Respectability without accounts
5.1.3. Respectability and full accounting
5.1.4. Prices
5.2. Double tax treaty network
5.3. Jurisdictions
5.3.1. Cyprus
5.3.2. England
5.3.3. USA .5.3.4. Delaware, USA
5.3.5. Bahamas
5.3.6. Isle of Man
5.3.7. Gibraltar
6. Working schemes and uses
6.1. Trading
6.2. Serivces
6.3. Investment
6.4. Finance
6.5. Intellectual property
6.6. Negotiable instruments
6.7. Real estate
6.8. Insurance
6.9. Banks
6.10. Shipping
7. The company bank account and its operation
9. Questions and answers
Conclusion
"Everyone has a right to arrange his business affairs in such a way that brings
appropriate tax payments to the minimum: no one must plan his expenses and
income to the maximum convenience of the Ministry of Finance; for a citizen
there is no patriotic duty whatsoever to increase his own tax payments."
Federal Judge Hand, Helvering v. Gregory-United States Supreme Court
The Development of the offshore jurisdictions.
Throughout the last 30 years a number of small countries have implemented a
number of tax incentives to encourage foreign companies and businessmen to
incorporate Х companies in their jurisdiction with the purpose of carrying out
their commercial activities worldwide. The primary reason for doing so was to
boost the local economy in the following ways:
Х Increased state revenue from duties paid to the Company Registry Department,
and revenue stamps;
Х Increasing employment of local professionals and staff who provide services to
the offshore companies;
Х Increasing travel and tourism to the country by high income individuals and
businessmen;
Х Currency deposits to the country's banking institutions leading to higher
liquidity, profitability
and activity for the country's banking system.
Case Study - The development of Cyprus as an offshore centre____
Cyprus decided to attract offshore enterprises to boost the economy in the wake
of the disastrous Turkish invasion in 1974. Rushing the legislation through
Parliament, establishing the tax incentives and preferential treatment for
offshore companies in Cyprus, it managed to attract 83 offshore establishments
in 1976. There are now some 35,000 offshore companies in Cyprus and the Central
Bank registers approximately 350 new ones every month.
Offshore services are one of the fastest growing sectors of the Cypriot economy.
According to government figures in 1995 it brought US$ 355,3 million in foreign
exchange, around 4% of the GDP of the island.
A breakdown of new registraнtions during the past three years showed that 25 %
came from the European Union, 60 % from other European States, 7 % from the USA,
6 % from Asia and the remaining 2 % from Africa and Australia.
The vast majority of the offshore companies do not maintain physical offices or
staff in Cyprus and are managed by their lawyers or accountants on the island,
taking advantage of the local tax incentives. A survey carried out by the
Cypriot Offshore Enterprises Association revealed that 78 % said their reason
for choosing Cyprus as a base of operation was the low offshore tax (4,25 %).
The survey revealed that nine out of ten companies would choose Cyprus again if
they had to make the decision over again.
The factors and advantages that developed Cyprus into a successful offshore
centre include the following:
Х The tax and other incentives offered for offshore companies in Cyprus;
Х The network of favourable tax treaties that Cyprus maintains with other
countries;
Х The Cypriot " British modelled" legal system and corporate law;
Х A strong banking system and very strong commercial banks;
Х Abundance of Cypriot professionals and graduates, the vast majority being
educated and trained in Western Europe or the USA;
Х Continuous support, promotion and progressive legislation from the government;
Х The English language being widely known and used as the business language;
Х Modern infrastructure and telecommunications;
Х Minimal level of crime;
Х The convenient geographical location of the island.
BASIC CONDITIONS TO QUALIFY FOR THE TAX INCENTIVES
1. The offshore company must belong to non-residents of the country in which it
will be registered.
2. The company must not earn any income nor carry out any commercial activity
within the offshore jurisdiction where it has been registered.
Example 1 - The owners must be non-residents - Cypriot nationals residing in
Cyprus are not entitled to the tax incentives of Cypriot offshore companies.
Instead, their Cypriot companies will be taxed at the normal rate of 20 % on
profits. However, nationals of other countries who are not residents of Cyprus
may form a Cypriot offshore company and benefit from the offshore nominal
taxation of 4,25 %.
Example 2 Х no commercial activity in the jurisdiction - An English non resident
company's profits earned from activities outside Great Britain are not liable
for tax in the United Kingdom. The part of the income that is earned from
activities in connection with the United Kingdom will be taxed at the normal
English tax rate.
Example 3 - no commercial activity in the jurisdiction - An importer of
automobiles from the USA wished to form a Delaware company to be utilised as a
middleman for his purchases. However, this was not advisable since the client's
middleman company (an American company) would buy the cars from another American
Company and export it to a foreign country, therefore the profits would be
considered as raised in the USA and therefore taxed at the normal American tax
rates. This would defeat the initial purpose of the client to minimise taxation.
The term "offshore" is not a legal term but simply a description used for
convenience by professionals to describe corporate entities which are wholly
owned by non residents and derive their income from activities outside the
jurisdiction. From the legal point of view these companies do not differ in any
way from the companies registered and owned by the local residents of that
particular jurisdiction.
2. LEGAL FRAMEWORK
2.1. The Company Name
The right to use a certain company name is granted by the Registrar of
Companies. A proposed company name may not be approved on the following grounds:
Х The name is the same or similar to existing names, creating
confusion or false impression of association or may be perceived as misleading.
Words such as Crown, Royal etc. are not allowed.
Х Words such as International, European, National may be sensitive and may be
granted upon certain conditions.
Х Words such as Bank, Insurance, Investment, Fund require a special licensing
procedure and special capital requirements prior to being granted.
Example 1: For an Isle of Man company to include the word International in its
company name it had to prove the fact that it maintains offices in a number of
countries. The Registrar granted the name with the condition that the company is
incorporated with a minimum share capital of 100,000 Sterling Pounds.
Points to Note:
Х Some offshore jurisdictions are flexible about company names, allowing
duplicity of company names.
Х PPB INC applies and maintains a list of ready approved names by the Registry
authorities. These names, most of them generic in nature, are ready for
incorporation upon selection by the client.
Х If the client wishes to propose an individual company name we request that
three or four names are given in order of preference to maximise chances of
approval.
Х If the client wishes to use the offshore company as an independent party from
his local company then the name for the offshore company should not have any
similarity to his local one.
2.2. The Company's Share Capital
The authorised share capital is the monetary amount of shares, which the
company has the right to issue, or sell, to the shareholdнers. The authorised
share capital can be raised subject to a shareнholders meeting and approval.
The issued capital
is the amount the company actually issues and sells to the shareholders, and it
can differ from the authorised amount. For example a company may be registered
with $1000 authorised capital, and issue $600 of it. This means that it still
has the right to issue $400 more.
Note: It is a common misconcepнtion that the issued and fully paid capital of
the company should be deposited in the company bank account and stay there for
the duration of the company's life. This is not the case. The contribution of
capital may be carried out by settling one of the offshore company's first
liabilities, which are the formation fees to PPB INC. PPB INC invoices the
offshore company for its services, and the client, by settling these fees,
contributes capital to the company.
Therefore in this way the offshore company can be registered and be fully
operational without any deposits to the company's bank accounts and without any
further requirements regarding its capital.
The Company's Shares
Shares can be registered or to the bearer. The owners of the registered shares
are documented in the company records and the public records of the Companies
Registry. Bearer shares are not associated with the name of the shareholder;
physical possession of those shares indicates ownership.
Note: Most of the banks are not willing to open bank accounts for companies with
bearer shares as they can not trace the ownership at any point of time. As a
measure against money laundering the Central Bank of Cyprus instructed the
commercial banks in Cyprus not to open bank accounts for companies with bearer
shares.
2.3. Memorandum of Association
The Memorandum is a document signed by the shareholders of the company, which
sets out the activities in which the company will do business. In accordance
with the ultra vires doctrine established by English courts, companies are only
authorised to conduct such activities as are listed in the Memorandum. PPB INC
includes a number of objects that give the flexibility to the client to carry
out any normal commercial transaction.
There are some jurisdictions that allow the inclusion of a "general paragraph",
which, in essence, says that the company has the right to engage in such
activities, which, in the opinion of the directors, are beneficial to the
company.
Example of a general paragraph and only object included in the Memorandum of
Isle of Man companies:
"There are no restrictions on the exercise of rights, powers and privileges of
the company".
2.4. Articles of Association
The Articles represent a contract between the shareholders and the company. They
provide detailed guidelines as to the management of the company's affairs, and
set out the rules for the interrelation between the shareholders, the company,
and the company officers.
Example: Two owners of a new offshore company with a shareholding of 60 % and 40
% respectively were discussing the possibilities of equal decision powers, even
though one of them was the majority shareholder. PPB INC proposed for the
company to issue two groups of shares; Class A shares amounting to 60 % of the
total shares which had the right to appoint one director to the board of
directors, and Class ┬ shares amounting to 40 % of the shares that had the right
to appoint one director to the board of directors. This provision was inserted
in the Articles of the company. For the articles of the company to change, a
special resolution must be passed requiring at least 75 % of the shares voting
to do so. Therefore none of the two shareholders could withdraw or alter that
provision. In this manner the two owners of the company with different
shareholding had the same powers. Usually law offices have standard Articles of
Association, which can be changed prior to registration of a new company, or
amended in the case of an existing one. It should be taken into consideration
that the latter option above takes conнsiderably longer.
2.5. Shareholders_________
The shareholders are the legal owners of the company. The shareholders of a
company can be physical persons or corporate bodies. The minimum number varies
with jurisdictions.
Note: For jurisdictions that have a minimum of two shareholders and there is
only one owner of the company this does not create an inconvenience in the case
where the client utilises the PPB INC nominee services for anonymity. In this
case two PPB INC trustee companies (thus fulfilling the requirement of the two
minimum shareholders) will hold the shares on behalf of the one and only owner
of the company. Obviously the same two trustee companies can accommodate a
larger amount of beneficiaries if necessary.
2.6. Directors
The directors are legally responsible for all of the affairs of the company
before the shareholders, as well as the government. They are answerable for the
actions of the company in a court of law. Their number also varies according to
the jurisdiction. Some jurisdictions allow for corporate directors i.e. a
company may act as directors of the other company.
Note 1: In the case where the client utilises the PPB INC nominee services for
anonymity PPB INC appoints a minimum of two nominee directors so that at any
point of time a director is present and available if his/her services are
required by the client. The nominee directors are professional and qualified
members of PPB INC.
Note 2: For the jurisdictions where the directors should be located out of the
country of incorporation for example England and the client utilises the PPB INC
nominee services for anonymity PPB INC appoints three nominee directors located
in three different countries. The reason for this is that the company in this
manner does not have the majority of the directors in any single country and
thus is not taxable in any of the three countries the directors are located in.
Note 3: To use a Double Tax Treaty, the client should know that one of the
requirements for tax residency determination is the location of the management
and control of the company. In other words, the directors of the company should
reside in the country which is to be considered the tax residency of the
company.
2.7. Secretary
The company secretary may be a physical or a legal person, and is responsible
for the good standing of the company in relation to the Registrar and other
government bodies. The secretary keeps the statutory registers and prepares the
notices, returns and other documents, which must be delivered to the Registrar
of Companies as per the jurisdicнtion's requirements.
Note: It is unfortunate that this term coincides with the descripнtion of an
office secretary and thus may be confusing.
2.8. Distribution of duties
This is probably a good point to mention a very important aspect of English Law
on companies, and that is distribution of duties. In other words, shareholders,
directors and bank signatories have completely separate rights and duties in the
company, and are completely independent of each other. All three may be the same
persons, or they may be three different groups of persons. Mr. A can be
shareholder, Mr. ┬ the director and Mrs. ╤ -the bank signatory.
2.9. Registered office_______
In accordance with the law, the registered office of the company must be located
in the country of incorporation. The address of the registered office is
considered the address where official and legal documents may be served on the
company.
The legal Dokuments of the company
3.1. The incorporation documents
Incorporation documents are issued by the governmental body of the jurisdiction
responsible for the company registration and records. The incorporation
documents vary from jurisdiction to jurisdiction. The incorporation certificate
includes the name and date of registration of the company. Additionally
depending on the jurisdictions there may be certificates showing the company
registered directors, the company registered shareholders, registered address
and other information.
3.2. The trust documents
The trust documents are prepared and delivered to the client after receiving the
necessary informaнtion from the client. The trust documents include:
Х Confirmation letter from the Trust Company
Х Declaration of Trust
Х Instrument of Share Transfer (without date)
Х Share Certificates
Х Pre signed resignation letters from the nominee directors and secretary of the
company (without date)
3.3. Power of Attorney
There are two types of Powers of Attorney that the company can furnish the
beneficial owner in order to establish a visible conнnection with and official
authority from the company. (In addition to the ownership relationship which the
client may not want to be visible). The Power of Attorney is issued upon written
instructions from the client.
The first type is the general Power of Attorney with the company rendering all
authority to the attorney to act on behalf of the company. This Power of
Attorney is usually, but not necessarily, intended for the beneficial ownнers of
the company.
The second type is a specific Power of Attorney with limited authority to
perform specific functions on behalf of the company. A specific Power of
Attorney is usually requested for the client's associates or members of his
management and personнnel. Nominee directors usually issue the Power of Attorney
for the period that their work as directors has been paid for.
3.4. Apostilled documents
Anyone who has had to conduct legal matters in one country on behalf of a
person, legal or physical, residing in another, has probably faced the problem
of the acceptability of these documents, and questions about their authenticity.
The Hague Convention was signed on 5 October 1961 by a number of countries, in
order to unify and standardise the method of legalising documents issued in one
country, for use in another. The apostille itself is a certificate issued by a
governнment body of one of the convention member countries, confirming the
authenticity and legality of the document to which it is attached. It is used
regularly in cases where documents of a company must be presented for various
things such as opening bank accounts, buying shares, or registering a rep office
in another country. Apostilled documents are, in accordance with the rules of
the convention, fully acceptable in such cases as genuine legitimate legalised
true documents.
3.5. Legalised documents
Another way of legalising documents, in other words providing confirmation of
the authenticity of the document to the party to whom the document is presented,
is the legalisation of the documents. This is done by the Embassy of the country
where the documents are intended to be used. An original document is first
legalised at the Ministry of Foreign Affairs of the country where it is issued;
in other words the Ministry confirms its authenнticity. Then the document goes
to the Embassy, which, accepting the confirmation of the Ministry, legalises the
document also. The Embassy, in cases where documents in the language of the
recipient country are required, can also confirm the correctness of the
translation of the documents. Thus, the end result is a document, the
authenticity and legality of which is fully confirmed by the Embassy of the
recipient country, and as such will be fully acceptнable for legal transactions
within that country.
4. ADVANTAGES OF OFFSHORE COMPANIES
Anonymity and confidentiality
The vast majority of the owners of offshore companies utilise nominee directors
and nominee shareholders in order to maintain anonymity and confidentiality.
There are many reasons for doing so, including:
Х In most of the cases the
offshore company is utilised as a third independent party having "arm length"
transactions with the client's local market. In this case the two companies
should not have the same director(s),since the same person cannot sign an
agreement betweenthe two companies in his capacity of director in both
companies!
Х Most countries maintain the tax doctrine that liability for tax is determined
according to the location of the management and control of the company. If it is
evidenced that the registered directors and registered shareholders of a foreign
company are located in the local market the income of the foreign company will
be considered as the income of the local owners, for which they will be liable
for tax.
Х The clients want to maintain a low profile / anonymity for their commercial
activities / accumulated profits / investments.
Х In some countries according to the Central Bank regulations citizens are not
allowed to open accounts in foreign banks, open up companies, hold shares, etc.
The trust agreement system allows all the above actions within the legal
framework.
As described above, all of the elements of a company's legal structure, such as
shareholders, directors, secretary and legal address are clearly visible in the
documents filed in the Registrar of Companies. The Registrar is a government
Department responнsible for the registration and maintenance of companies in the
jurisdiction. It is usually under the control of the Ministry of Commerce. Files
with all statutory documentation, such as certificate of shareholders,
direcнtors, and so on are kept at the Registrar for all companies. The public
has a right to view these documents without providing any reasons whatsoevнer,
for a minimal fee. The law gives this right to the public so that people may
make informed decisions as to whether to invest in any given company or lend it
money. The reasoning is that since the shareholders have limited liability, the
public should at least be able to examine the legal structure of the company
prior to making an investment decision.
However, and fortunately for those of our clients who wish to conduct their
business in anonymity, the legislature of most offshore jurisdictions also
allows for nominee shareholders and directors to be used.
In essence, this means that it is the nominees' names that are on public
display, and not the names of the real owners. It should be taken into account
that absolute anonymity is impossible in cases where there are criminal
proceedings pending against the company. The names of the beneficial owners will
be revealed only upon a court order from the Supreme Court. Some of the reasons
for such proceedings may be dealing in narcotics, weapons, radioactive materials
or other criminal activities. As a rule, inquiries from foreign tax or customs
inspections have no jurisdiction over such companies and as such no information
is revealed.
4.1.1. Nominee shareholders
are able to hold shares on behalf of the real owners thanks to the concept of
trusts, which was origiнnally elaborated by English Common Law and goes back to
medieval times. A trust is an arrangement whereby a person (physical or legal)
called a trustee is the disclosed owner of property, but holds it on behalf of
and for the benefit of another, called a beneficiary. A written instrument
called a Declaration of Trust or a Trust Deed usually creates trusts. Any third
party, which wants to find out the identity of the owners, will only see the
names of the trustees.
For secure ownership the following documents are provided by the nominee
shareholders to the beneficial owners of the company:
1. The Declaration of Trust.
This document signed by the nomнinee shareholders certifies that they hold the
shares on behalf of the beneficial owners and lists their responsibilities in
doing so; they can not vote with the shares, they can not pay dividends, they
can not transfer or mortgage the shares, they can not increase the share capital
etc., except with the written instruction of the beneficial owners.
2. A pre-signed Instrument of Transfer is a document by which the trustees in
effect transfer the shares back to the beneficiary. This document is pre-signed
by the trustees but not dated. All the owner has to do to remove the trustees
from the legal structure of the company is to sign the Instrument as the
acceptor of the shares and inform the Registrar of Companies of the change.
3. The original share certifiнcates that also belong to the beneficial
shareholder.
Extracts from the Declaration of Trust:
" We undertake and agree not to transfer, deal with or dispose of the said
shares or any of them except as the owners from time to time direct. And further
to give full effect to the trust hereby declared we hereby deposit with the
owners the certificate for the said shares together with a transfer there of
executed by us in blank and we hereby expressly authorise and empower the owners
at any time to complete such transfer by inserting the name or names of any
transferee or transferees and the date of the transfer and to complete the same
in any other particular.
And we declare that this authority is irrevocable by us.... And we further
undertake and agree to exercise our voting power as holders of the said shares
in such a manner and for such purposes as the owner(s) may from time to time
direct or determine.
Extracts from the pre signed instrument of Transfer:
"... and we (PPB INC trustee companies) hereinafter called the transferors as
per declaration of trust dated (date) do hereby transfer to (names of client)
hereнinafter called the transferee, the shares shown in the schedule hereto held
by us in the undertakнing called (name of offshore company) to hold unto the
said transferee(s) his / their executors, administrators and assignees..."
4.1.2. Nominee directors and secretary
Similar to the trustee (nominee) shareholders, nominee directors and secretary
may also be used, in order to achieve full anonymity. These are individuals, or
legal persons, who undertake the functions of these positions, in order to
provide anonymity for the client. It is understood of course that these persons
can not possibly be as familiar with the business of each individual client as
the client himself is, and as such act only, and strictly, in accordance with
the wishes and instructions of the client.
It should be pointed out that there is no such term as nominee in the eyes of
the law. As such, directors even if acting as nominee, neverнtheless are legally
responsible for the activities of the company. Therefore, directors should
approach their posts with full awareness of the responsibilities and obligations
that go with them.
For total control of the company by the client upon their appointment, the
directors and secretary should give to the real owner resignation letters,
signed but undated. Also the nominee directors and secretary must confirm that
they are prepared to cease rendering their services upon a request from the
owners. In this way, the owner may remove them from these positions at any time
he sees fit. Thus, as we look at the nominee structure as a whole, the client is
simultaneнously provided with total anonymity on one hand, and full freedom to
effect changes in the legal structure of the company on the other. All the
documents provнing ownership and anonymity, yet enabling him to alter the
structure, are in his possession.
Extract from the undated and pre signed resignation letters:
" ... I hereby give you notice that I wish to render my resignation as a
director of your company as from today, due to other commitнments.... "
We have therefore considered the two issues that any client should normally
consider;
Х the secure ownership of the company for the client in relation to the nominee
shareholders
Х the ultimate control of the company by the client in relation to the nominee
directors
It is also important that those making use of offshore companies with nominee
directors and nominee shareholders retain an established and reputable
management company like PPB INC to provide these services.
There are two additional agreements that govern the relationship between the
management company, nominee directors and nominee shareh olders on the one side
and the beneficial owner and client on the other.
1. The first document is the engagement letter that lists all the work that the
management company will carry out for the company, like accounting, auditing and
filing the relevant tax applications if necessary, and sets out the
responsibilities of the nominee directors and nominee shareholders to act in
accordance with the clients' instructions.
Extracts from the engagement letter:
" ... in the provision of services referred to the above, we shall not be liable
for any loss to the company however we shall be responsible if those losses
arise because of any wilful and individual fraud or wrong doing by our side"
2. In the same manner that the above documents protect the client, the indemnity
letter signed by the owners of the company will protect the nominee directors
and nominee shareholders, in the event that the beneficial owners of the company
engage in illegal, criminal and fraudulent activities that will in any way
endanger the nominee officials of the company. It is quite logical for the
nominee directors not to be responsible for matters beyond their control.
All client information is securely kept at the PPB INC head offices in Nicosia,
Cyprus. All service and administration of the clients take place from the head
office, in this way guaranteeing confiнdentiality and total discretion. No
information regarding clients is kept at any office other than the central
office in Limassol.
PPB INC POLICY
Х We maintain confidentiality Ц
We recognise confidentiality as a privilege and even within the firm we only
divulge
sensitive information on a need to know basis.
4.2. Low or no taxation
The offshore jurisdictions offered by us allow our clients to run their business
in an atmosphere of very low taxation, or no taxation at all. There are many
types of taxes imposed upon businesses in high tax jurisdictions, such as income
tax, VAT, tax on turnover, tax on salaries, tax on dividends, municipal taxes,
defence taxes, road taxes, fire-fighter taxes, real estate taxes, and so on.
When we speak about no tax, we mean it. Our no tax jurisdictions, such as
Bahamas or Gibraltar do not impose any of the above taxes. A company registered
in such a jurisdiction pays no tax whatsoever of any kind.
If we look at jurisdictions with low tax, we are talking always about a tax on
the actual net income of the company. A jurisdiction with such a tax is Cyprus,
where the tax is 4.25% on net income. Net income is calculated by subtracting
from revenue all expenses incurred by the company in connection with the running
of the business. This includes cost of goods sold, salaries, travel and hotel
expenses, and entertainment of clients, professional fees, commissions and so
on. There are no limits, other than reasonableness, for these expenses. Further,
salaries themselves are not taxed at all if the company's personnel is located
outside Cyprus.
Yet other jurisdictions, the Isle of Man for example, impose a fixed tax
(STG750, or USD 1,275) on a company, regardless of its profits, or losses for
that matter.
It should be added that the company as a legal person is a legal subject of the
country in which it is registered. As such, it is subject only to the laws of
that country, notwithstanding the citizenship of its owners, its field of
activity or other factors. Moreover, it is not obliged to register with the Tax
Inspection of any country other than the one where it is registered.
No wonder that thousands of businessmen and companies utilise offshore companies
for international tax planning, including world renowned multinationals such as
Pepsi Cola, Tetra Pak, Barclays, RJR Nabisco and others.
4.3. Exchange control_______
In all of our jurisdictions without exception, offshore companies are not
subject to any exchange controls whatsoever. Say, if a company holds an account
in a Cyprus bank, it can receive funds in cash or non-cash, in any currency, and
also make payments to any person in any country, or make cash withdrawals,
without any explanations or documentation whatsoever required by the bank. Thus,
the company operates in a completely unrestricted banking environment.
4.4. Secure political and banking systems ____________
After the emergence of newly independent countries on the territory of the
former COMECON bloc there has been quite a number of bank failures, and outright
pyramid schemes, which has cost the public an immeasurable amount of lost
savings and earnings. Unfortunately the described processes have not ceased up
to the time of the present publication. In summer - autumn 1998 Russia's economy
was shattered by severe economic crisis. This depreciated rouble capitals and
led to multiple losses and bankruptcies. The clients of PPB INC in their
majority do not rely only upon their rouble accounts or state securities. It is
the offshore structures' activity that allows a company to overcome the
hardships of the crisis and stand against its consequences with greater success
than its short-sighted competitors.
Yet it is not only shaken Eastern European economies which are suggestive to
businessmen regarding the achievement of safe haven status for their capital.
Banking systems in most developed countries invariably are on the side of the
tax inspector when it comes to the information access to client records. As
such, securitization of one's business interests and assets has for years
attracted businessmen and wealthy individuals long before Eastern Europe became
a free market.
5. JURISDICTIONS
5.1. Making the right choice
When choosing a jurisdiction in which to register an offshore company, the
client should very carefully consider the various parameters of different
jurisdicнtions. One could of course collect over time volumes of materials and
publications on the subject, yet likely the most effective and reliable way to
make this decision is to consult with professionals dealing with this
information on a day-to-day basis. PPB INC experts will be glad to assist you
with this decision.
Some of the basic factors that potential clients should consider prior to the
choice of the offshore jurisdiction of their company include the following:
Х Suitability for present purpose and function of the company
Х Respectability
Х Double tax treaty network
Х Legalisation of documents with respective embassy and appostilled documents
Х Tax regime of the offshore jurisdiction
Х Set up and annual operating costs
Х Disclosure requirements as per offshore jurisdiction
Suitability for present purpose and function of the company
Will a company registered in a particular jurisdiction fulfil the requirements
of its future use? For example:
Х A client trading with
European multinationals, will probably choose a company from a prestigious
jurisdiction, such as England or Cyprus.
Х A client wanting to use a company bank account for his savings, without any
further operations whatsoever will choose one company from the easy and cheap
jurisdictions (Bahamas, USA, Gibraltar).
Х A client planning to conduct work for and on behalf of his offshore company on
the territory of his own country or others, will choose a jurisdiction with the
most favourable Double tax treaty.
Х A client planning to reinvest part of his working capital in his local market
will choose a jurisdiction with the most favourable Double tax treaty (Cyprus).
Х A client planning to use the company for reinvoicing between two European
countries and should choose a European offshore jurisdiction facilitating
the registration of its companies for VAT applicable for the European Union
(England, Isle of Man, Cyprus).
In other words, the client should make the jurisdiction match the way the
company will be used, and not the other way around.
We have had in our experience cases of clients of other firms coming to us with
their Cyprus companies, which were only used as receptacles of funds for further
transfers to personal accounts, without any commercial arms length transactions,
or documenнtation. Notwithstanding this simple working scheme they had to carry
out annual audits, which entails an additional cost. An American or Bahamas
company would have been more suitable to such clients, having no reporting
requirements.
On the other side of the spectrum were businessmen who had purchased somewhere a
Bahamas company ("good price!"), yet were completely unable to use it in their
work as broker agents of negotiable instruments on the territory of an eastern
European country. Without professional advice, it is easy to mismatch the
advantages of a jurisdiction with the way the company will be used. We always
help our clients to avoid this mistake.
Respectability
The higher the profile of the offshore company will be the more important the
respectability issue is. In the opinion of many professionals, jurisdictions are
split into three categories, or groups.
5.1.1. Tax havens
The cheapest, and easiest to define, are jurisdictions which have no taxes at
all, and no accounting requirements. Because they have no accounting
requirements, in other words, they do not expect companies registered there to
account in any way for their activities, they are considered as not having any
supervision over the affairs of their companies.
5.1.2. Respectability without accounts
The second category is considered more respectable, due to its location.
Locations such as Gibraltar (part of England), USA, Delaware, or the Isle of Man
(Great Britain) are themselves respectable, or are situated in Europe, and as
such are considered as more reputable than the first group.
Yet, they also do not require accounts, or levy taxes. As such, they are quite
easy and cost effective to operate, although they also usually do not give the
advantage of a treaty network.
5.1.3. Respectability and full accounting
It has long been held that a jurisdiction, which requires of its legal entities
to provide full accounts, in this way supervises and oversees their activities
in order to maintain them at the highest level of accountability and
respectability. As such, there are countries which require full accounts, yet
levy no or very low taxes on their offshore companies. Such an example is Cyprus
with 4.25% tax, and also England in conjuncion with an offshore company from
another jurisdiction.
5.1.4. Prices
An important, and at the same time least important factor in choosing a
jurisdiction. We know of many examples where businessmen registered companies
based on cost considerations alone, buying in effect a financial instrument of
limited use, and were then forced to purchase a company from a respectable
jurisdiction with universal capabilities.
If the reader compares the additional profits he plans to receive with the help
of the new company, and its cost, he will see that they are in a different
league.
The company should be a trustworthy, universal and respectable financial
instrument with many capabilities. And, if you agree with us, in that case there
is no need to even consider dubious offers of companies for "USD399". It is easy
to buy or sell such a company, but who needs a useless pack of documents of
questionable origin?
5.2. Double Tax Treaty Network
If one of the functions of the offshore company is to invest in Russia or other
Eastern European countries or any other country or to render services to
companies in these markets the double tax treaty network which the offshore
jurisdiction maintains is of utmost importance.
What are the double tax treaties all about?
The main purpose of a double tax treaty between two countries is the avoidance
of double taxation of income received accordingly in one of those countries by a
company registered in another country.
The treaties in most cases follow the model treaty of the Organisation for
Economic Co-operation and Development (OECD), modified where appropriate to take
into consideration the particular characteristics of each contracting state.
They deal with the issues of residency, permanent establishment, and relief from
double taxation;
dividends, interest, royalties, non-discrimination and all other issues dealt
with in modern tax treaties.
The existence of these treaties combined with the low tax paid by offshore
companies can offer tremendous possibilities for international tax planning.
Cyprus is in a unique position when compared with other offshore financial
centres because of its wide and increasнing list of countries with which it has
concluded double tax treaties. The treaties Cyprus has with Russia and a number
of Eastern European countries are of particularly favourable terms.
5.3. JURISDICTIONS
5.3. I.CYPRUS
General Information
Cyprus is an island in the southнeastern part of the Mediterranean sea with a
population of 700,000. The main language of the island is Greek with English
being the preнdominant business language. The capital of Cyprus is Nicosia,
which is located in the centre of the island.
Corporate Legislation Source
Company Law 1948, Cap 113, amended
Tax Regime
Cypriot companies totally foreign owned and which derive their income
exclusively from sources outside Cyprus pay income tax at 4,25 per cent on the
taxable profits.
Double Tax Treaty Network
Cyprus has concluded double tax treaties with the following countries:
Austria, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, France,
Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland,
Romania, Russia, Slovakia, Sweden, Syria, United Kingdom, United States and
Yugoslavia.
Reporting and Statutory Requirements
All Cyprus offshore companies have to:
Х File annual returns to the Registrar of Companies
Х Prepare, audit and file annual financial statements
Х Prepare and file provisional and final tax declaration
Х To send a notice to the Department of Internal Revenue, confirming the
non-resident status of the company.
Special Considerations
Х Bank Reference for the
Central Bank of Cyprus. The Central Bank of Cyprus requires bankers' references
for the beneficial owners of the Cyprus offshore companies. A bank reference
provided by fax to PPB INC as shown below is adequate:
"To whom it may concern, We hereby confirm that (give the names of the
beneficial owners) are well known to us and in our opinion of good financial
standing and trustworthy persons. The above information is given without any
responsibility on the bank or any of its officers"
Х There is no entrance visa requirements for the citizens of Russia
Х Working residence Permit Cyprus is the only offshore region that entitles the
owners and management of its offshore companies and branches to apply and obtain
the permit to live and work from Cyprus with their families and dependants,
subject to certain criteria and with the condition that they derive all their
income from their activiнties overseas. The applicant must be over 25 years of
age and be a director of the company.
The company must have purchased or rented office in Cyprus, and the individual
must have accommodation. Companies with fully fledged offices and permanent
staff are entitled to duty free benefits for vehicles, office equipment,
appliancies, and other items not manufactured in Cyprus.
5.3.2. ENGLAND
General Information
Independent monarchy, constitutes the United Kingdom together with Wales,
Scotland and Northern Ireland. Population is 47 million people, with English as
the official language.
Corporate Legislation Source
Section 249, Financial Act 1994
Tax Regime
Where established that the English company has its place of residence in a
country with which the UK has an appropriate double tax treaty ( e.g. Cyprus)
the English company will have no tax liability in the UK but instead will pay
taxes on its place of residency ( e.g. Cyprus at 4,25 % on taxable profits).
Double Tax Treaties
A branch of the English company is established in Cyprus which can utilise the
wide and favourable tax treaty network of Cyprus with Austria, Bulgaria, Canada,
China, Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India,
Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, Slovakia,
Sweden, Syria, United Kingdom, United States and Yugoslavia.
Reporting and Statutory Requirements in England
All UK non-resident companies have to:
Х File annual returns to the Registrar of Companies
Х Prepare, audit and file annual financial statements
Х Send a notice to the Inland Revenue establishing its non residency
Reporting and Statutory Requirements in Cyprus
Х File annual returns, tax declaration and financial statements
Special Considerations
Х Bank Reference for the
Central Bank of Cyprus. The Central Bank of Cyprus requires bankers' references
for the beneficial owners of Cyprus offshore branches, with the same content as
for Cypriot companies.
Х Respectability England is not an offshore jurisdiction. The no tax liability
in the UK is achieved through the application of the double tax treaty it
maintains with Cyprus. This facilitates the client to utilise a non-offshore
European company but at the same time pay taxes at nominal offshore rates. This
structure is very suitable for high profile activities that require utmost
respectability.
Х Nominee company The English company can also function as a nominee company in
conjunction with a pure offshore structure. The English company conducts
business for the benefit of the counterparty, on the basis of an agency nominee
agreement. In this case the English company performs this function for a certain
amount of profit, expressed in the agreeнment as a certain percentage of the
turnover. English tax of 21 % to 33 % depending on the amount is paid by the
English company. The remaining profit is transferred to the counterparty, and
the client pays tax, if any, in accordance with its jurisdiction.
5.3.3. UNITED STATES OF AMERICA
General Information
The latest developments in US corporate legislation have created a unique
opportunity in the field of international tax planning for non-US taxpayers to
use an American entity as a company totally exempt from taxation.
An LLC, or Limited Liability Company, differs from all other US corporate
entities. It is neither a corporation nor a partnership, yet it has benefits
drawn from both of these. It combines the advantage of limited liability of
corporations with the pass-through principle of taxation associated with
partnerships. The owners can be any foreign physical person or corporate entity.
Tax Regime
According to the new IRS regulaнtions, as from the first of January 1997 LLCs
automatically receive pass-through taxation treatment. Pass-through taxation
means that all profits and losses are passed on to the partners or members. In
this way, the company is not subject to taxation, because the taxes are imposed
on the owners or members.
This can prove especially advanнtageous for an LLC that meets the following
criteria:
Х it pursues no trade or business in the US
Х its members are non- resident aliens or foreign companies
Х it has no fixed place of business within the USA
If the LLC meets these requireнments, then neither the company, nor the members
of the company are subject to taxation in the USA on their profits.
Double Tax Treaties
Although the US has a wide ranging network of Double Tax Agreements,
non-resident companies which do not pay tax in the US, and do not have a tax
i.d. number, do not qualify for these treaties.
Reporting and Statutory Requirements
Generally, an LLC is subject to the bare minimum of reporting, namely a legal
return and the payment of a nominal governнment fee once a year.
Special Considerations
An American LLC is an excellent vehicle for tax planning since it attracts no
negative reaction associated with pure offshore centers. However, it can not be
used for business transactions with American entities without attracting
American tax.
Below we give an example of Delaware, one of the most popular states for company
formation.
5.3.4. DELAWARE, USA
General Information
The state of Delaware is located on the Eastern Coast of the USA 100 km from New
York. The state of Delaware implemented a zero State Tax rate in order to
encourнage American and Foreign companies to relocate or locate their offices
and activities from other American states to Delaware and thus increases
employment in their state.
Corporate Legislation Source
General Corporation Law of Delaware
Tax Regime
There are two main types of income tax collection in the US. One is at the
federal level, and all companies without exception are liable to this tax, and
the other is at the state level. The State has the power to set the level of
this state tax. Delaware has set it as zero, thus creating significant tax
advantages for American companies registered there. Companies belonging to
non-residents, and not having any activities on US territory, also do not pay
the Delaware State tax, and by virtue of being non-resident, fall outside the
scope of federal tax legislation. As such, they are not taxpayers in the US and
pay no tax.
Double Tax Treaties
Although the States have a wide treaty network, non-resident companies do not
qualify.
Reporting and Statutory Requirements
Delaware companies have to file an Annual Franchise Tax report and pay the
Franchise tax
Special Considerations
The above description of a US company with limited liability with 0% state tax
is very attracнtive to clients planning specifically to do business in or with
the USA. It is precisely this zero state tax which has attracted over 60% of the
500 largest American corpoнrations to relocate to this state. An LLC however is
perfectly suitнable for clients interested primariнly in a completely no tax US
corporate vehicle, without activiнties in the USA. Thus, Delaware may be said to
be ideal for both US and non-US activities. It is one of the cheapest and
easiest jurisdictions to operate in. Delaware companies cannot open up accounts
in American banks or have trade relations with other American companies.
5.3.5. BAHAMAS
General Information
Bahamas is an independent state within the British Commonwealth with a
population of 262,000 and is situated southeast of Florida (US). The government
is committed to continue to provide a no-tax regime with simplified
incorporation rules. The official language of Bahamas is English. A modern
Registrar building has recently been completed, at a cost of USD 1.25 million.
Corporate Legislation Source
International Business Companies Act of 1989.
Tax Regime
$US250 p.a.. State Tax. The tax is paid for each calendar year, and must be paid
by 30 April in order not to incur penalties.
Double Tax Treaties
No double tax treaty network.
Reporting and Statutory Requirements
Bahamas companies have to file annual returns to the Registrar of Companies.
Special Considerations
Bahamas companies allow the provision of bearer shares. Even if the company
issued bearer shares, the state authorities demand that a real registered
company's agent, usually an advocate, must be present on the island. He must be
aware at any moment who holds the shares of the company. In this respect, the
registered agent fulfills a function similar to that of the nominee shareholder.
He is aware of the identity of the beneficiary, although the beneficiary's
identity is not shown in public documents. The transfer of ownership of such a
company is effected by physical transfer of the bearer shares, and the
notification of the registered agent regarding the change. Certain banks avoid
dealing with bearer share companies, since the ownership cannot be ascertained
with ease at any given time.
Bahamas is a region with a very small population, a relatively small local
economy and a well-known offshore centre. Therefore a Bahamas company may not be
suitable for third party transactions and reinvoicing especially in
consideration of its distance from the European market.
5.3.6. ISLE OF MAN
General information
The Isle of Man is a self-governing island within the British Commonwealth
located between England and Ireland. The local government began promotion of the
island in the 1970's, and it is now estimated that over 35% of the national
income are from the finanнcial services sector of the economy. The legal system
is based on the English common law type, and as such the main principles of
compaнny legislation are fully applicable.
Corporate Legislation Source
Common Law - Companies Acts 1931 to 1986
Tax Regime
Isle of Man non-resident compaнnies (its directors being located overseas) pay
an annual fixed charge of STG 750. Isle of Man resident companies (its directors
being located on the island) pay an annual fixed tax charge of STG 300.
Double Tax Treaties
Isle of Man has no network of double tax treaties.
Reporting and Statutory Requirements:
Isle of Man exempt and non-resident companies have to file annual returns to the
Companies House.
Special Considerations
Isle of Man is an island with a population of around 70,000, a relatively small
local economy and a well-known offshore centre. Therefore an Isle of Man company
may not be suitable for third party transactions and reinvoicing.
At the time of going to print, certain changes in the Isle of Man legislation
are being anticipated. Non-resident companies, as desribed above, may no longer
be delivered. Instead, exempt companies with local directors still exempt from
progressive tax, but a slightly lower fixed tax, will be allowed.
GIBRALTAR
5.3.7. GIBRALTAR_________
General Information
Gibraltar has retained the Status of a British Crown Colony. it has an area of
6,5 square km, a population of 28,000 and is situated between Spain and Morocco.
The official language is English, and it has English Common Law legislation
mirrorнing the English Companies Act of 1929.
Corporate Legislation Source
UK Common Law 1929 Act, introduced locally as "The Companies Ordinance"
Tax Regime
Gibraltar tax exempt companies pay no tax, but pay a small fixed duty.
Double Tax Treaties
Gibraltar has no double tax treaty network.
Reporting and Statutory Requirements
All Gibraltar companies have to file annual returns to the Registrar of
Companies
Special Considerations
Х Although Gibraltar is a part of the European Union it is excluded from the EU
VAT legislation.
Х Gibraltar is a region with a very small population, a relatively small local
economy and is a well-known offshore centre. Therefore a Gibraltar company may
not be suitable for third party transactions and reinvoicing.
Х Gibraltar is currently
undergoing slight adjustments in its approach to offshore business. Namely, the
Gibraltar Financial Services Commission has issued a number of circulars
regarding registration rules for companies with certain sensitive names, or
clauses in their Memorandum.
Incorporation Time for All Jurisdictions
PPB INC maintains a stock of newly registered companies that are available for
the client upon request. Alternatively PPB INC will form a custom made company
for the client in two to three weeks. Clients can take delivery of the statutory
documents, bank account and stamps of the company on the same day. Legalised
documents, if applicable, take from 2 to 5 working days to dispatch.
6. WORKING SCHEMES and USES or an OFFSHORE COMPANY
We are convinced that our clients come to us already with specific plans for
their future company in mind. After all, no one knows better than the client the
intricacies of his business. We also believe that each client needs and deserves
a custom made approach to his business, so that the optimum decision may be made
as to the right set-up for him. However, certain general suggestions may be
useful at the initial stage of choosing a jurisdiction, and as such we set out
below the main business areas where offshore companies are useful.
6.1. Trading
Where ordinarily a trading transaction takes place between two companies, goods
flow directly one way, and documents and payment the other way. The country
where the profit on this particular transaction is shown imposes income taxes on
this profit, based on the difference between the purchase price of the goods,
and their eventual sales price. An offshore company can be inserted in the
middle, with the profit accumulatнing on the offshore company books, instead of
on the books of the original company. In this way, taxable profits are in effect
transнferred from a high tax jurisdiction to one with low or no taxes. The
offshore company would take orders from the customer, and the goods would
continue to go direct from the manufacturнer to the final buyer. This addition
of an offshore company in the commercial chain of entities is suitable for the
seller of the goods in this transaction, as well as for the buyer, (or exporter
and importer, in effect). The exporter can use the above scheme to transfer out
the profit, which arises as the difference between his cost of goods sold, and
the sales price. The importer can use it to avoid paying tax on the difference
between the purchase price of the goods and the eventual sales price in his home
country.
6.2. Services
Individuals who receive substanнtial income in respect of their professional
services, such as architects, performing artists, consultants or authors may
assign an offshore company the right to receive their fees. In other words, the
offshore company would contract with the ordering party for the performance of
the relevant work, and would invoice and receive payment accordingнly. As such,
again profits would be transferred to a no tax jurisdiction. The offshore
company can also invoice for various services the mother company in a high tax
jurisdicнtion, thus transferring profits out, and lowering the tax liability of
the mother company.
6.3. Investment
Most countries if not all have withholding taxes. These taxes are imposed on
income earned on or from the territory of that country by foreign persons, and
this income is taxed at source prior to repatriation. The size of these taxes
varies, but is most often between 15 and 20 percent. This, admittedly, is a
sizeable amount. Double tax treaties exist which allow for a reduction, and in
some cases, elimination of this withholding tax. For foreign investors investing
in Eastern Europe for example, it would make sense to channel their investment
through a country with such a treaty with the investment-recipient country. If
this intermediate country has low taxation, then the net result is the avoidance
of withholding taxes, as well as avoidance of the dividends being taxed upon
their receipt in the investors' country. A very good example of such an
intermediate country is Cyprus, with its network of double tax treaties with
over 25 countries,
with zero withholding rates in most cases. It is no wonder, that in accordance
with official statistics of the Russian governнment Registration Chamber, Cyprus
holds the 8th place in terms of monetary value of foreign investments into
Russia.
6.4. Finance
An offshore company is able to give a loan to a related company located in a
high tax area, with tax deductions for interest payнments. In this way, both
inward investments from a foreign entity is achieved, which may be advantageous
due to foreign investor protection laws, as well as tax savings on the deducted
interest.
6.5. Intellectual property
Intellectual property, such as copyrights, trademarks, software or titles may be
sold offshore, for later resale or lease or franнchise to the home country at a
substantially higher value. As such, the bulk of the profits arising from the
utilisation of the intellectual property are realised offshore, with minimum tax
implications.
6.6. Negotiable instruments_____ This area of offshore utilisation relates to
Cyprus specifically. Certain clauses in its double tax agreements allow for
brokerage and agency services to be conducted in other countries, without being
viewed as permanent establishments and as such not being liable to taxation.
This scheme is particularly advantageous in conjunction with goods and services,
which are not vattable, and liable only to income tax. One such example is
trading in negotiable instruments, where substantial profit may arise,
especially in developing, volatile markets. Use of a Cypriot offshore company
and its eligibility for the double tax treaty allows for the avoidance of income
tax in such cases.
6.7. Real estate
and is thoroughly familiar with the necessary requirements and procedures.
6.10. Shipping ________
Certain countries, such as Cyprus for example, allow for the registration of
shipping companies who can operate without any income tax liability.
Furthermore, such countries try to offer competitive terms as regards ship
registration, overнseas maritime services, and genнeral ship management matters.
As said before, the uses of offshore companies are multifaceted, and they
probably should not be viewed as one tool for a particular job. Rather it is
like a financial "Swiss army knife", which has many uses and applications.
Owning real estate through an offshore company allows in most cases for the
avoidance of inheritance taxes, capital gains tax in case of sale, as well as
income taxes. Most countries make no distinction between legal and physical
persons as owners of real estate, so such transactions are relatively easy to
complete.
6.8.Insurance
Certain jurisdictions allow for insurance companies to be incorporated and
conduct their business with little or no income tax liability. Such
incorporations are somewhat more complicated, however the advantages of
operating an insurance business in a no tax environment are likely worth it.
6.9.Banks
Banks may be incorporated in some jurisdictions, usually with restricted,
"in-house" licenses, and can also operate in a no tax environment. These
registrations are more expensive and complicated than the ones mentioned above.
PPB INC has experience in these registrations,
In what bank can I open an account?
Over 5000 banks are currently operating in the world, ranging significantly in
factors such as size, dependability, age and conservatism. Regarding the latter,
quite a few well known banks have chosen to follow the policy of a private club,
opening and servicing accounts only for well known companies, and rejecting to
do banking business with clients unknown to them. PPB INC is able to offer to
our clients well known banks having a ranking in the World Bankers Almanac, as
well as a security risk ranking of A- or better.
How is the bank account opened?
PPB INC will provide to the bank all the necessary documentation for the account
opening, and fill out the specimen signature cards with the client. After the
bank gets all the documentation, it provides us with an account number for the
company showing all the account particulars.
How is the account operated?
Clients operate the account from a "distance". In other words, they give
instructions to the bank over a modem or fax, in writing. As long as the bank
receives clearly readable and correct instructions, the payment or other
transaction is executed the same day.
How are my funds protected from unauthorised access?
Most of the banks introduced by PPB INC issue its clients test key codes. These
codes are unique for each client, and are designed for the purpose of preventing
unauthorised access to the account. The client receives these test key codes in
a sealed envelope directly from the bank by DHL, and must keep them in a secure
place.
How are credit cards issued, and operated?
Cards are issued by the bank against the blocking of a deposit in the amount of
USD 10,000. On top of that, the client must deposit a sum of money, which he
would like to have access to through the card. Cards are issued always with the
person's name on it. Only one person can use the card. Corporate cards can also
be issued, with the company's name appearing together with the person's name.
You can use the card to withdraw cash at cash machines all over the world, in a
bank, and also use it for payments and purchasнes at any merchant or commercial
point which accepts Visa or MasterCard.
How does the registration process take place?
PPB INC needs certain information from the client in order to form a company.
This information includes names and addresses of shareholders, their choice of
bank, who will be the signatories to the bank account, what person is authorised
by the Power of Attorney, what additional documents might be required, and
whether there are any other special instructions as regards the company. All of
this information is contained in our questionnaire and other working documents
in our registration pack, which is filled out by the client together with one of
PPB INC staff, or our representative. The documents are then sent to us by
e-mail or courier. PPB INC then does the necessary legal work to prepare
documents and open bank accounts, and dispatches the working company to the
client by DHL.
How fast can it be done?
Ready companies by definition can be received by the client upon payment. The
additional documents, such as trust documents, and bank account test key codes,
are then dispatched by DHL within 2 working days. If additional documents are
ordered, such as legalised translations, 6-8 working days should be added to the
process. If a company is custom made, with the client's choice of name, then PPB
INC completes the process within 2-3 weeks.
What documents are needнed from the shareholders?
The shareholders, or the owners in other words, must give to PPB INC the
information necessary to form the company. As regards documents, only
photocopies of their passports are required, for the opening of the bank
account. There are no other documents needed for any of the jurisdictions except
Cyprus. In the case of Cyprus, a bank reference on the beneficial shareholders
is required from their bankers. The reference should be from a bank in the city
where the owner resides. This reference should be provided to PPB INC so that we
may get the permission of the Central Bank of Cyprus for the company to operate
with an offshore status. The purpose of this reference is to prove to the
Central Bank that the owners of the company are indeed foreignнers. This
information is kept strictly confidential, and in fact its disclosure would be a
violation of banking regulations of Cyprus regarding client confidentiality.
How can I conclude contracts on behalf of the company?
PPB INC can prepare a General Power of Attorney from the company, which the
client can use to represent the interests of the company in any country. The
Power of Attorney allows one to open bank accounts, buy property, conclude
contracts, hire staff, represent the company
before government organs, and generally to do all things necesнsary to run the
companies' affairs. When the client has this Power of Attorney, he can legally
work on behalf of the company in any country in the world. If the client
requires the signaнtures of the nominee directors, this can also be arranged for
an additional fee.
Where are the stamps of the company kept?
Two stamps are made for each company. One is a rubber ink stamp, which is kept
by the client and used by him in daily work. The secretary of the company keeps
the other one, which is a pressure seal, by law. It is used for authenticating
share certificates, notes of direstors meetings, etc.
What are the annual maintenance costs for a company?
The annual maintenance costs of running the company consist of several parts.
The first part, which is fixed, is the cost of the nominee (anonymity)structure.
The second part is the cost of bookkeeping and audit, for those jurisdictions
witch require it. The third part is the fees charged on a time basis for any
extra work not mentioned above, such as consultancy, legal assistance in visa
procurement, credit applications, banking work, or any other matter.
How is the bookkeeping and audit done?
For jurisdictions, which require it, such as Cyprus and Ireland, PPB INC
prepares all the necessary financial statements tor the client, based on
documentation provided by him. The client then approves the statements and the
tax payable, if any, and the statements are then passed for audit. PPB INC
arranges for the audit to be carried out, and then submits the audited financial
statements to the relevant government authorities. As such, PPB INC undertakes
the entire bookkeeping and auditing cycle, and the client is only responsible to
supply the relevant accounting documents, and approve the accounts as well as
settle the related fees.
What documents are needed from the client by the auditors?
In order to prepare the accounts of the company, the PPB INC -accounts
department must receive from the client all documentation relating to the
movement of funds on the bank accounts of the company. Every amount going to or
coming out of the company bank account must be supported and explained by a
document. Basically, this system is not, and by its nature and purpose, can not,
be different from any other accounting system.
The documents in question might be invoices or contracts. The client should also
keep the invoices for things like airline tickets and hotels, as well as other
expenses incurred in the course of the companies' business activities. Once all
the documenнtation is supplied to PPB INC, we can prepare the accounts.
How can I sell the company?
If a client wishes to sell the comнpany, this is a relatively simple and
uncomplicated procedure. PPB INC has standard consent
forms, which must be signed by the existing shareholder, and returned to PPB INC
together with the trust documents on the existing shareholder. Based on these
documents, we will affect a transfer of the shares to the new shareholder, and
send the new trust document package directly to him. Based on his instructions,
we will also change the signatoнries to the bank accounts of the company.
How can I close the company?
Sometimes clients wish to close the company after it has served its purpose.
This can be done in a number of ways. In all cases, an audit must be performed
on the
company's activities up to the date it has ceased trading, and a declaration by
the directors that the company has no creditors or liabilities must be submitted
to the Registrar. The company is then struck off by the Registrar, in other
words it ceases to exist. The whole procedure takes about 6 months. PPB INC
assists with all aspects of the closure of the company.
