The idea of asset protection does not always come to the founders of a family business promptly. And this, as a rule, can end in ruin, loss of capital, or its complete confiscation.
For our clients to understand the need for timely wealth protection through family offices, offshore companies, and trusts, we have prepared a brief story about the history of two families, the founders of the famous rum brands. We hope that after reading our article, many business persons will begin the process of diversifying their fortunes before reaching the crisis and point of no return when it is too late to change something.
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The tale of two rums – how offshore asset protection can affect the future of business
Everyone has heard about the famous Bacardi rum, the creator of which is the Cuban Bacardi family. But few people thought about how a well-known brand of alcoholic beverages could survive the revolution in Cuba and not fall under nationalization, as happened with Havana Club.
At the same time, Bacardi’s wealth not only survived but also reached a global scale. Today, the financial profit of this brand is measured in huge numbers, and the geography of coverage includes more than 150 countries with representative offices, branches, and subsidiaries of Bacardi Limited. Nowadays, Facundo L. Bacardi, the great-great-grandson of the founder Don Facundo Bacardi Masso and a fifth-generation family member, is the head of the company’s management. He has been the chairman of the board of Bacardi Limited since 2005 and director since 1993.
But, to achieve such success, the founders of this business had to overcome many obstacles and, most importantly, diversify their business to other countries in time.
Bacardi and its way to the top
A brief history of Bacardi that will help many modern investors make the right decision and not repeat the mistakes of their predecessors:
- The history of the brand’s creation dates back to the middle of the 19th century when Cuba was under the control of Spain. In 1862, the merchant and entrepreneur Facundo Bacardi, with the Frenchman Joseph Leon Boutelier, launched rum production on an industrial scale.
- Gradually, the business began to expand and be supplemented with new collections and technologies that were kept secret. By the 1900s, the Bacardi family was doing quite well, and their rum was already world-famous.
- Simultaneously with the brand’s success, a period of dictatorship began in Cuba. It especially worried the founders of large businesses, which fell under nationalization without warning.
- An important step that the Bacardi family took at this stage of its development (ten years before the onset of a severe crisis) was to protect the company’s capital and fortune by registering new corporations in Mexico, the Bahamas, and Puerto Rico. The brand logo, rum production recipes, and the trademark were stored there.
- After the Cuban Revolution, 1960 was the last year for many alcohol companies. So, on October 14, 1960, Cuban national radio announced that the government was beginning to nationalize the sugar mills and rum factories. The latter included the producers of Bacardi, whose entire fortune was confiscated in Cuba, and the family was forced to flee to Miami.
Conclusion: Through the timely diversification of assets and the opening of new factories in offshore Puerto Rico, the Bahamas, and Mexico, Bacardi was able to maintain its business and continue to operate on a global scale.
How the Cuban rum Havana Club passed to the government
If the Bacardi family had not taken their business offshore in time, their production facilities would have become state-owned long ago. And development, quite possibly, would not have continued on the scale we can observe today. Ultimately, Bacardi could repeat the fate of another famous rum from Cuba, Havana Club.
Havana Club is a good and quite famous rum, the production of which was owned by the José Arechabala S.A. family. However, during the Cuban crisis, the owners failed to protect their fortune and lost every cent. Nowadays, Havana Club is owned by the Cuban government and a French company, and the creator of this brand does not have any profit from the business.
It is important to be proactive when it comes to international diversification, asset protection, and planning. Do not put it off until later, especially if a global crisis breeds, and you can lose your entire fortune in one day. This is precisely the situation observed worldwide today, and we advise you to start protecting your capital immediately!
It’s time to think about protecting assets offshore
There are many scenarios for protecting private and family wealth, including from government forfeiture and encroachment by creditors. One of the ways to save, transfer and increase your wealth is to open an offshore company in Belize.
Why it is beneficial and important for serious entrepreneurs targeting the global market:
- Belize LLC provides for separate ownership of capital when each shareholder is responsible only for their contribution to the common business. This also applies to the company’s debt obligations, which are separated from shareholders and their assets.
- Belize law provides a high level of protection for the personal information of beneficial owners and their capital. Its benefits include no reporting, zero taxes, and private shareholder information held by a registered agent.
- Foreign judgments are not recognized in Belize. To demand something from offshore companies and their owners, a claim must be filed with local courts. However, this is not always available to foreign applicants since they will need to pay a fee of USD 50,000 and get a favorable court decision.
- The most important points to consider when choosing Belize for asset protection: any financial and property assets of the LLC cannot be seized to pay off the debts of one of the shareholders; creditors do not have the right to interfere in the management of the LLC; there is no tax on income from abroad.
The right capital and business protection plan can make a huge difference when a crisis hits. The Bacardi family is an excellent example of this. If you are worried about your wealth and its safety, start the diversification process as soon as possible.
Offshore Pro Group specialists are ready to provide a full range of services on all issues – from choosing and opening bank accounts to company relocation and registration of an offshore trust, fund, or LLC.
