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Offshore Company Control and Management

The management, directorship and day to day operation of an offshore company can be dealt with in two ways:


Option 1: Company controlled by the beneficial owner. As beneficial owner you can be appointed as the Director of Your International Business Company. You could also appoint any other person or company you choose as the Director of the IBC. In our experience this can be a family member, accountant, lawyer, friend or a business associate of the owner - in essence anyone you trust provided they are agreeable and aware of the appointment. The minimum required is one director although there can be more and the director can be a natural person or a company. When you appoint your own party or parties to act as directors we term this "management by the owners". In this option, the name(s) of the beneficial owner or whoever you appoint will appear in the primary incorporation documents of the company. In particular, these names will be recorded in the First Minutes in the section dealing with the appointment of directors.

Option 2: Company directed by an appointed Nominee Director. With option two the directorship of the IBC is in the hands of a professional Director. This is often known as "Nominee Director" or "Third-party Director". The Directorship service can usually be provided by the firm who set up the company.

BENEFITS AND DRAWBACKS OF DIRECT CONTROL

If the beneficial owner or someone he appoints acts as Director(s) of the IBC, there are two distincy advantages: [1] the annual maintenance costs of the IBC are lower, and [2] the control and management of the IBC is vastly more convenient and straightforward to manage.

There are however several disadvantages to direct control.

[1] The beneficial owner, who controls his offshore company, may face scrutiny or possibly negative tax consequences in his home country. Although this is unlikely because the directors do not appear on public record it is something which might have to be considered in some locations. For example, if the true owner of an IBC is an American national, and he also acts as the Director of the IBC and controls the day to day the affairs of the IBC from his own home country, he could be accused of evading taxes.

[2] One primary reason that some clients own an offshore company is to protect their confidentiality. Although his details are not on any public registers or filed with the government where the company is formed - as is the case in most offshore centres such as the BVI, Belize, Seychelles etc - the owner might be reluctant to appear on the corporate documents regardless. There may well be several reasons for this, such as personal taxation implications, protection of assets against divorce proceedings or litigation, transfer pricing arrangements or contractual relationships with an onshore company. There can of course be specific secrecy reasons.

A Company Manager (Nominee) would effectively shield the beneficial owner of the offshore company from most public scrutiny and from any obvious direct relationship to the IBC. To way up the options we recommend taking a look athttp://offshorenominees.com/

NOMINEE DIRECTORS

The main reason for using a nominee is to prevent clients, staff or suppliers from seeing a direct relationship between yourself and your offshore company (IBC). Unless there is a nominee Director, the true owner (or his nominated director) would normally to carry out all aspect of the day to day representation of the IBC which is often undesirable. At this stage there are two options which are to either use a nominee or opt for a halfway house using a professional manager. This option provides a person who will pose as the owner of the business in the event this proves necessary but not appear on the corporate documents. He will also be able to make the occasional call to your staff if needed to add substance to the illusion that he is the true owner. This service can be invaluable because it enables the true owner to say "It is no good talking to me you need to call the owner because I only work here" at this point he would say for example "the owner is Mr Jones you will have to call him his number is 1-206-888-6356" of course the individual you decide to use could be from a wide range of locations depending on which of them look ideal to clients or staff but this option can strike an ideal balance between distancing yourself from the business and maintaining control. Professional manager are skilled business people who are carefully picked for their skills in negotiation and will manipulate the caller to attempt to bring about whatever result is needed. 

Should you opt for a nominee who appears on the documents of the company their involvement may range from purely appearing on the paperwork to playing a significant day to day role.

Nominee directorships are often provided by dedicated corporations known as corporate directors who specifically act on behalf of other corporations, this works well because in most offshore jurisdictions corporate directors are permitted. IIf a nominee is appointed who is just to appear on the paperwork the beneficial owner can be appointed as the "manager" of his own IBC. This is achieved through a Resolution or via a Power of Attorney. In this situation the true owner himself would sign any agreements, contracts and invoices. The beneficial owner would also operate the company bank accounts under his own signature. The role of the Nominee Director (frontman) in this situation would be a formality and is relatively cheap at $325 / £200 / €240 per annum when compared with a full management arrangement which could involve a great deal of hands on involvement from the nominee but it is important to determine the requirements in order to strike the correct balance between too little and too much.

Should you opt for a solution where the nominee becomes part of the day-to-day operation of the IBC then the costs will be higher than those involved in using a frontman and the Director would need to be instructed as needed by the owners of the company and would bill their time accordingly. This relationship between the nominee and yourself would generally operate according to a pro agreed structure which might involve dedicated communications routes and secure email. For example if you were in Italy and the nominee is in Switzerland we would recommend an Italian phone number pointing to Switzerland to keep the Swiss number off of the phone bills unless it was desirable for the traffic between you to be visible.

NOMINEE SHAREHOLDERS

Because bearer share IBC´s now have some serious disadvantage because the majority of banks worldwide will refuse to open accounts for them some people also opt for nominee shareholders. Since 9/11 bearer-share IBC´s are often perceived very negatively and in most jurisdictions the agent is obliged to immobilise bearer shares. Nominee shareholders are very straightforward to arrange but keep in mind many jurisdictions do not file shareholders on public record so the nominees might not be needed.


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