Offshore Company Incorporation and Maintenance. How Does It All Work?

Experts at the International Wealth portal offer such services as offshore company incorporation and maintenance. This article will show you what the procedures are, and why it is better to seek the help of experienced specialists. 

Our experts will help you choose the most favorable low-tax jurisdiction for your type of business, incorporate an offshore company, and open a business account with a foreign bank or a VIP payment system. 

During the consultation you will discover if a particular jurisdiction you fancy for incorporating and maintaining an offshore company suits your goals, how long it takes to set up a business there, what documents are needed, etc.

Why Would I Need an Offshore Company?

The main reasons for registering an offshore company are the following:

• online businesses (e-commerce, IT consulting, crypto etc);
• international businesses (import/export, overseas real estate investments etc);
• personal service companies for internationally-mobile workers;
• private asset protection;
• smooth transfer of inherited wealth;
• asset diversification;
• the need to optimize currency restrictions;
• the need to avoid political and economic meltdowns in your home country;
• efficient ownership of private real estate, luxury cars, yachts and ships.
• the need to attract external financing by going public (IPOs and ICOs). 

By placing your assets in different parts of the world and different offshore jurisdictions, you can minimize the risks associated with the regional economic meltdowns, pandemics and lockdowns, hostile takeovers, and the like – all the while ensuring yourr own personal data security as beneficial owner. 

How Does Offshore Company Incorporation and Maintenance Take Place?

In most countries known as tax havens, incorporation and maintenance of offshore companies is carried out by registered agents regulated and licensed by the state authorities. They are professional market participants who help foreign investors to register a company online.

Registered agents are not merely intermediaries. They usually do the following:

• act as gatekeepers to keep out undesirables from the jurisdiction;
• make the whole procedure easier for the customer;
• draft the founding documents and get them signed;
• contact the State Register to carry out the incorporation;
• appoint the first company manager after the delivery of Certificate of Incorporation;
• lease a registered office and a physical office; 
• offer a professional director service;
• handle the necessary renewal procedures.

 The customer is only left to do the following:

• consult the registered agent;
• provide the necessary documents;
• offer several versions of the company name;
• choose the organizational and legal form, and the size of authorized capital;
• express their wishes regarding the list of managers and shareholders;
• pay the duty, cover the services of the notary and the registered agent, as well as other related services. 

From the owner’s position, incorporation and maintenance of an offshore company will take place remotely thanks to the registered agent. Upon completion of the incorporation procedure, the owner will receive a set of incorporation documents either sent by courier or, as is now more popular, delivered online as digitally signed documents.

How Long Does It Take to Register an Offshore Company?

Each country has a different timeline for registering and maintaining an offshore company. For the future owner, the procedure begins with a consultation and preparation of documents. As a rule, the first stage takes a week or two. The possibility of speeding up the process depends directly on you the client, i.e. how quickly you can collect the necessary documents.

Once the KYC and due diligence formalities are taken care of, the documents prepared and the legal form selected, the registered agent submits the application for incorporation. A certificate confirming that a legal entity has been incorporated is usually issued by the Register within 1-3 days, depending again on the country. Nevis and Marshall Islands for example issue documents in 1-3 days, but Panama may take a couple of weeks.

However, of course you need to consider a business bank account. In order to maintain an offshore company, you can open an account with a foreign bank of any jurisdiction, a neobank, or an international payment system.

Due to the mandatory AML and KYC requirements, financial institutions perform customer due diligence. It takes different periods of time at each bank. 

Needless to say, if you pay for professional help it makes things smoother. We advise our clients to order the Pre-Approval Service. It means applying for the account opening pre-approval to several financial institutions at once, and this can be done even before the company is incorporated. If you launch it simultaneously with the offshore company incorporation, you can save a significant amount of time. And you will surely find the right bank to maintain the account of your offshore company.

Another advantage of this process is that we can generally share the KYC documentation with the bank, so you save a lot of time on money that would otherwise be expended on things like certified copies, translations and apostilles.

Ready Made Shelf Companies

Local legislation in many jurisdictions allows for incorporation and maintenance of an offshore company intended for sale. Such firms are called shelf companies. Established in advance, they are prepared for appointing a manager, issuing shares and transferring ownership to the new owner. Lawyers register such companies in order to sell them to a foreign client to whom it is important to become the offshore company owner as soon as possible. 

Thanks to the acquisition of a shelf company, the client can save certain time – but a number of risks still exist. The International Wealth experts are ready to inform you about them in detail.

The new owner can always change the name of a ready-made offshore company. In order to do this, a special resolution should be submitted to the registered agent by the company director. The agent will forward it to the State Register. If all legal requirements are met, the new name will be entered into the state register and the Certificate of Incorporation will be reissued.

Who Has the Right to Register and Maintain an Offshore Company?

Foreign individuals and legal entities are allowed to incorporate offshore companies in the territory of an offshore zone. A business person does not have to register an offshore company in their own name. They have the right to do it in the name of their existing company.

The client is usually allowed to become a director, but you should consider if that is the best option. Sometimes it is better to hire a professional for this role who can handle all compliance tasks, banking etc leaving you to perform a business development or ‘ambassador’ type role.

Documents Required for Incorporation 

The founders will be required to present the following documents:

• natural persons must provide their ID or passport, and a proof of address;
• legal entities must provide a set of founding documents (for example Certificate of Incorporation, the list of founders, Articles of Association).

Next, you will need reference documents:

• the official unique company name, three options at least;
• the shareholders’ structure (we can advise you on how best to structure this according to your wishes);
• the list of directors with the copies of their passports;
• description or plan explaining your future business.

Depending on the requirements of the Due Diligence check, the Register will request additional documents (Letter of Recommendation from your banker, etc.). At Offshore Pro Group, as a regulated provider we are required to request documents proving that you earned your money legitimately.

Documents You Will Receive

Once the offshore company incorporation is complete, the owner will be handed the following founding documents to maintain it:

• Certificate of Incorporation;
• Memorandum;
• Articles of Association;
• Minutes of the first meeting of shareholders on the appointment of managers;
• Company share certificates;

Directors are appointed, shares are issued, and the registered office address is approved during the first meeting of founding members.

Issue of registered shares is the norm after an offshore company is incorporated, since bearer shares are no longer allowed in most jurisdictions. The shares could however be issued in the name of trustee or other entity if the beneficial owner does not wish to own te company directly.

How Does the Offshore Company Work with a Professional Director?

As a rule, the professional director service is ordered from the registered agent. A professional director is an employee of both the new company itself (on a zero hours or part time agreement of course) 

If the company owner wishes to remain private in business transactions, it is important to use a professional director. They will be signing commercial documents, invoices, contracts. 

Sometimes it is desirable to delegate certain management functions to a representative (attorney). They represent an offshore company on the basis of a Power of Attorney signed by the director and notarized. The director can delegate them various powers. 

A general Power of Attorney is used for the transfer of all managerial powers. However, it is generally not recommended to grant general powers of attorney. Our experts will help you deal with all these subtleties.

If the director is a resident of the country where the offshore company is registered, this can give additional substance and credibility, that will make the banks and regulatory authorities more comfortable.

The Cost of Maintenance

The cost of maintaining an offshore company depends on the jurisdiction and the additional services requested if any.

Here is the list of mandatory fees that are included in the cost of maintenance:

• annual government renewal fee (often called the franchise tax);
• the cost of a registered office or registered agent for legal purposes (domiciliary fee);
• preparation of annual substance report in some jurisdictions;
• maintenance of financial records.

Optional additional services that are also requested include:

• Professional Director Service;
• use of a mailing address and telephone number (virtual office);
• preparation of the Power of Attorney for the representative.
• Certificate of Good Standing;
• Legal Opinions (often requested by banks etc)

The fee for renting a registered office address from the registered agent only covers receiving official correspondence from the state authorities or courts. If you wish to receive mail of a commercial nature at the legal address of your company, a separate mailing address or virtual office service must be ordered.

In most popular offshore zones, the cost of maintaining an offshore company usually starts from 1,000 US dollars per year. If you use additional services, the amount will increase accordingly. This amount tends to increase each year due to new compliance requirements – the annual substance report now required in BVI, Nevis, Marshall Islands etc is a good example.

You can find out more about the offshore company maintenance costs from the International Wealth experts. Please contact us today by email, WhatsApp or use our handy live chat.

Having consulted our friendly experts, you will have no trouble in incorporating and maintaining your offshore company. You will set up a business remotely and spend very little time on the annual maintenance, being sure that your company is compliant with legal requirements in the jurisdiction of incorporation.