Offshore Company Formation, What is Offshore Company Formation?

International Business Companies

An IBC is a corporation that is incorporated (formed) in a zero tax or low tax jurisdiction and is typically authorized to do business anywhere in the world except its home country (i.e., an IBC formed in St Vincent and the Grenadines may do business anywhere in the world except St. Vincent and the Grenadines). Just as with U.S. corporations, the same person may act as the shareholder, director, officer of the company. As long as the Company has only one shareholder, one person may act for the company. If the Company has more than one shareholder then a minimum of two directors is needed.

An IBC (also known as "International Business Company" or "International Business Corporation") is a legal entity, usually a Corporation or Limited Liability Company, formed outside of one's country of residence.

The dictionary.com definition of international is, "Of, relating to, or involving two or more nations." (In this instance, you live in one nation and your IBC is created in another.)

A business is, of course is, "A commercial enterprise or establishment."

A company is "A business enterprise; a firm."

Alternatively, a corporation is "A body that is granted a charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of its members."

So, when you create an IBC you are creating an entity that has been granted a charter by a foreign government to conduct a commercial enterprise. You have created a legal foreign "person" who you control. You can open a bank account in the name of your IBC in a foreign country. Your international business company can receive income. Your international business corporation can operate a business. There are a number of countries in the world that have greater financial privacy laws than the US, Canada, UK, Australia, China and other lawsuit-prone or high-tax, jurisdictions.

With the advent of the Internet, a business location is really not nearly as significant as it has been traditionally. The location may now be no more digital data that can be accessed from an Internet server located anywhere in the world.

Therefore, creating an IBC allows one to operate a business or hold existing funds securely and privately, off of the "radar screen" of your legal enemies.

We have all heard the stories of attorneys who have their own full-time private investigators. They are hired by many law firms to track down assets of people who have lost legal battles. They are also hired to uncover the assets of potential legal targets. It is said that if they know your name and a little bit about you, they can find every account in the United States on which you are the signatory. They can even find your bank balances down to the penny.

I have seen this happen and I have to say, the speed in which the investigator can find assets even amazed me.

Attorneys use this information to decide whether or not to accept a case. If assets cannot be located, it would be likely an attorney would not accept the case - especially on a contingent-fee basis.

This is where the International Business Company comes in. The IBC allows you to hold assets out of your name in a safe, secure financial centre. At the same time, the IBC also allows you to retain 100% control of your IBC's assets. When an attorney hires a private investigator to locate assets, it is extremely unlikely that they will be discovered. Keep in mind, in the offshore jurisdictions we typically utilize, there is no social security number or social insurance number required in order to open an IBC bank account. It is a crime for a banker to reveal your association with a bank account to an individual outside of the bank. Your ownership of an IBC is not recorded in any public record.

There are countries with IBC laws that take privacy very seriously. The asset protection provisions in some countries are extremely strong. Many of these countries are island nations that have become financially strong by offering a safe-haven in which to store one's money.

One of the strongest IBC asset protection laws found in on the Island of St Vincent. St Vincent is located in the Caribbean Sea and is about a 35 mins. flight East of Barbados.

The St Vincent and the Grenadines IBC laws offer substantial privacy of ownership. The St Vincent and the Grenadines Limited Liability Company (LLC) law provides an additional barrier. There are provisions in St Vincent and the Grenadines LLC law to protect LLC assets from being seized in a lawsuit if the registered office of the bank holding the assets is registered in Switzerland. Corporations have stockholders. LLC's Registered in St Vincent and the Grenadines with the Swiss Trust Bank are effectively judgment proof.

St Vincent and the Grenadines IBC law makes it extremely difficult to establish who a director or principal of a company is since the Swiss Trust Bank has to abide by the Swiss Banking code and deny the existence of the company, its directors and who its customers are. Therefore, assets such as offshore bank accounts can be protected from judgment creditors in two ways:

1. Privacy because St Vincent and the Grenadines IBC law protects the owner of the LLC from being revealed.

2. Asset protection, because St Vincent and the Grenadines IBC law protects the assets within the LLC from being associated with a member of the LLC.

Therefore, the bank account for your St Vincent and the Grenadines LLC can be protected from being taken away from you in the event of a personal lawsuit. Many people use IBCs to operate businesses such as online pharmacies, Internet gaming sites, etc., protect assets from lawsuits and provide for tax-free revenue for residents of countries that do not tax worldwide income.

The St. Vincent and the Grenadines IBC is a vehicle of choice for persons seeking a flexible and modern corporate vehicle through which to do business. The IBC is exempt from any corporate, income, withholding, capital gains or other taxes on income or assets for 25 years.

Do you want to know more about Certificates of Deposit and Offshore Company Formation? You need to call Swiss Trust Bank Now on 001-784-458-2400

for a more informal discussion.

The Author of this article David Morgan is manager of the Swiss Trust Bank Group and has over 20 yrs experience in the banking and financial world. You have permission to syndicate this article providing you the link it to http://www.swisstrustgroup.com

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How Do the Investment in Company Deposits Compare With Other Fixed Income Instruments?

A large chunk of Indian investors look out for fixed income saving instruments, which comprise of several products ranging from bank fixed deposits, postal savings, government bonds and public provident fund and income funds or liquid funds schemes of mutual funds, to name the few. Of all the fixed income instruments, bank fixed deposits perhaps account for more than 50% of Indian Savings. During the past one and half year, interest rates on bank fixed deposits (also called as term deposits) have come down drastically. Nowadays, the interest rates on bank term deposits of nationalized banks and major scheduled banks are in the range of 6 to 8% depending upon the tenure and the popular postal savings such as NSC, KVP and PPF offer 8%. It is obvious that the Investors would look out for better alternatives in the Fixed Income Products.

If you are seeking higher returns than bank deposits and postal savings and if you do not want to lock in your funds for longer durations, you might consider investments in company deposits, which offer returns in the range of 9% to 12%. Although the returns on company deposits are much better than any other fixed income instruments but you must understand various aspects such as risk, liquidity, taxation and returns before you make up your mind to invest in company deposits. Here are few salient features of investments in company deposits.

Risk: Company deposit is an unsecured loan for the company, that is, as an investor you do not have any lien on the assets of the company. In case the company is facing financial difficulties or it is likely to become bankrupt, lenders of secured assets would get the first priority and your turn comes only after all the secured loans have been repaid by the company. As compared to company deposit, bank deposit is much safer because the repayment of the deposit up to rs. 100,000 is guaranteed by DICGC (Deposit Insurance and Credit Guarantee Corporation of India). Safety of your deposit depends upon the overall financial health of the company.

Liquidity: Although the Company Deposits are issued for the tenure ranging from 1 to 5 years but the Company Deposits are neither Listed on the Stock Exchanges nor Transferable. Generally, the conditions for premature withdrawal are not favorable and therefore, Company Deposits may be termed as more illiquid as compared to Mutual Funds and Bank Deposits.

Taxability: Interest Income from Company Fixed Deposits is taxable in the hands of the Investor and the issuing companies are supposed to deduct tax before paying interest to the investors. The interest income has to be shown under the heading "Income from Other Sources" in your Income Tax Return. You must take the decision to invest in the Company Deposits based on the Tax Bracket applicable to you.

Return: Rate of Interest varies with the companies. Many companies offer the deposits with cumulative interest option with monthly, quarterly or yearly cumulative interest in which case the interest earned gets reinvested at the same interest rate and thus resulting in better yields. Options with monthly cumulative interest provide the highest effective yield. At present, the effective yields on deposits of various companies are in the range from 9% to 14%.

How to Invest: Nowadays, many Online Stock Trading Companies and Brokerage Houses such as HDFC Securities, and ICICI Direct offer online and offline investment facility in Company Deposit.

Factors to be kept in mind while investing in Company Deposits

· Know about the financial position of the company:

· Know the Promoters and their track-record.

· Look out for the profit making companies and the ones that regularly pay dividends.

· Check out the ratings given by Credit Rating Agencies such as CRISIL and CARE.

· Keep a watch about any adverse reports or news about the company.

· Ascertain about the servicing standards such as Mode of Interest Payment and Repayment of Principal Amount, and promptness in the issuance of TDS certificates.

· Learn about the penalties and other terms and conditions for premature withdrawal

· Don't park your funds with one Company. Spread the funds and invest in the Companies engaged in different sectors.

· Risk involved in investing with smaller companies is definitely more than the risk of investing with large corporates of the likes Tata Motors, HDFC etc.

The Author is a Techno-Commercial Consultant and Freelance Content Writer.

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