hyip osdavilo 2011

PROGRAMAS DE INVERSIÓN HYIP-PPP

H.Y.I.P – P.P.P

Oscar Darío Villada L.

PROGRAMAS DE INVERSIÓN HYIP-PPP 2

H.Y.I.P.

Estos comentarios están redactados solamente a Título de Información y bajo ningún aspecto, para solicitar fondos.

Los Programas de Inversión (H.Y.I.P. - P.P.P.) son múltiples y variados, pero la documentación a presentar es siempre la misma salvo instrucción expresa en contrario.

Es por ello que ante un interés legítimo y para darle mayor información, estamos a su entera disposición.

Que es un HYIP?HYIP (High Yield investment Program) significa Programa de Alto Rendimiento y es el sistema mas seguro (Riesgo Cero) para realizar inversiones bancarias mediante Operaciones y Programas Oficiales.

Quienes lo Desarrollan?Los Bancos del TOP 25 Mundial, quienes dieron origen al sistema y habiendo sido los primeros, aquellos conocidos como TOP Western European Banks a los que luego se agregaron varios mas fuera de Europa.

En que consisten y que caracteristicas tienen estos Programas?Posibilitar a todos aquellos Inversores que posean Cash o Instrumentos Bancarios de Descuento (Conocidos como BDI - Bank Discount Instruments) poder ingresar a un programa.

Ej.de BDI :

SLC - Carta de Crédito.

High Yield Investment Program - OSDAVILO IX-30-2011


CD - Certificado de Depósito.GCD - Certificado de Depósito en Oro.BG - Garantía Bancaria. SKR - Safekeeping Receipt, sobre bienes como Gemas, Pinturas, Bonos o Propiedades.

Detalles Específicos Duración

40 Semanas o 10 Meses.

VigenciaTodos los HYIP inician cada año el 01 de Febrero y culminan el 30 de Noviembre.

Documentos Aceptados

POF (Cash).BG (Garantías Bancarias).CD (Certificados de Depósito). GCD (Certificados de Depósitos en Oro.)SKR (Safekeeping Receipt sobre bienes como Bonos, Gemas, Pinturas, Propiedades).

Como Iniciar una OperaciónEnviarnos imagen JPG de su (POF) o BDI que disponga.- (Imágenes de Fax no serán

aceptadas). Carta de Intención (L.O.I.).Fotocopia Láser Color de Pasaporte.

Como Prosigue la Operaciòn



Todas las imágenes de la documentación recibida será chequeada por medios diferentes y simultáneamente por IBG Group conjuntamente con el Sr. Bank Trader.

Si todo está en orden, se le remitirá al Sr. Inversor el resto de la documentación para ser completada, firmada y notarizada, para de tal forma enviar todo el paquete al Sr. Trader a los fines que convoque a reunión personal para firmar el Contrato Bancario de Inversión.

Preguntas y Dudas mas frecuentes.



Se encuentra dividido en dos secciones, una destinada a los Sres. Inversores y otra para los Sres. Intermediarios y/o Brokers:

INVERSORES

Como es que tan pocos Inversores saben de estos Programas? Son nuevos?

Estos Programas NO SON DE CONOCIMIENTO PUBLICO MASIVO y solamente un grupo muy reducido de Inversores que posean Fondos o Instrumentos Bancarios Reales podrán acceder SOLO POR INVITACIÓN a incorporarse a un Programa de Alto Rendimiento de Fondos (HYIP).

Tampoco son nuevos sino que tienen más de 55 años de antiguedad.

Son seguros? Que respaldo tienen los Bancos que intervienen en estos tipos de operaciones?

Respaldo ORO. A diferencia de los Bancos tradicionales, en los que su respaldo esta dado por el nivel de

sus reservas en Billetes (Generalmente U$S), producto de los Depósitos de sus Clientesmas su Propio Capital los Bancos participantes en el Mercado Secundario de Capitales incrementan continuamente sus RESERVAS FÍSICAS EN METAL.

Alguno de estos Bancos puede quebrar o tener problemas económicos que perjudiquen o afecten a mis Fondos?



NO.

Las Regulaciones que les son impuestas a los Bancos para participar en el Mercado Secundario de Capitales son SEVERAS ESTRICTAS e INAPELABLES, por lo que no son afectados por corridas Bancarias, Rumores de devaluación u otros, por la sencilla razón que su patrón de depósitos es en ORO.

No se tienen noticias ni existe la posibilidad que algún Banco haya tenido algún tipo de problemas o dificultades económicas, siendo el SISTEMA MAS SEGURO EXISTENTE ya que todas las operaciones tienen RIESGO CERO referente a:

Pérdida o disminución del Capital Invertido ya que continúa bajo el dominio pleno de su dueño.

Incobrabilidad de retornos, intereses o ganancias del programa, el que está garantizado por Contrato Bancario de Inversión (No iniciamos, desarrollamos ni concluimos ninguna operación sin Contrato).

Debo entregar o transferir mis Fondos a alguien? NO. Nunca.Nadie tiene derecho a exigirle monto alguno por NINGÚN CONCEPTO.IBG Group solo solicita DOCUMENTOS.En el caso de Operaciones por Leasing de BDI, solo deberá abonar el Costo de Emisión

que Fije el Banco (como cualquier gestión que se le solicita a un Banco).

Puedo presentarme directamente en cualquiera de estos Bancos y hacer la Operación en Persona?

NO. La Ley Bancaria Internacional es muy precisa en este sentido prohíbiendo el contacto

directo entre el banco y el inversor para desarrollar un Programa, debiendo contactar a un Grupo Pre-Calificador Autorizado (IBG-Group) (Ver Ley bancaria Internacional).

Solo se le permitirá iniciar, desarrollar y finalizar este tipo de Operaciones en la forma indicada para que, luego del proceso de verificación y firma de Contratos con el Sr. Bank Trader, allí si el Sr. Inversor podrá entrar en contacto directo con el Banco.



Cuales son los Documentos que necesito para iniciar un programa? POF (Prueba de Fondos) o Imagen JPG de alguna BDI (Bank Discount Instrument) que

disponga.LOI (Carta de Intención).Fotocopia Láser Color Ampliada del Documento de Identidad o Pasaporte).

Que riesgo tengo al presentar estos documentos y porque son tan importantes? Riesgo Cero.Son importantes porque es la única forma de verificar la calidad y cantidad de Fondos o

Documentos Bancarios que disponga.La POF (Prueba de Fondos) solo es emitida por el Banco donde el Propietario de los

fondos los tiene depositados demostrando la cantidad y calidad pero no habilitan A NADIE para Moverlos de allí o disponer de ellos.

Una LOI, es precisamente la Carta por la cual una persona manifiesta su deseo de intervenir en un HYIP.

La Fotocopia de/l Documento/s es a los efectos de verificar identidades y que el Banco tomador de la Operación proceda a abrir la Cuenta PERSONAL y RESERVADA a exclusivo NOMBRE del Sr. Inversor.

Que procedimiento sigo cuando entrego estos documentos? En el término de 5 días bancarios internacionales realizamos el chequeo conjuntamente

con el Sr. Trader.Si el chequeo es positivo le enviaremos el resto de la documentación que deberá

completar, firmar y notarizar.Toda esa documentación es enviada al Sr. Bank Trader, quien lo invitará a reunión para

firmar el Contrato bancario de Inversión.



Debo firmar algún Contrato? SI. Previamente se suscribe un documento llamado Convenio de Acuerdo y Comprensión

de Proyecto el que será tomado por el Banco como parámetro para liquidar los rendimientos y participaciones mensuales.

Luego se suscribirá el Contrato definitivo entre el Banquero y el Propietario de los Fondos.

Como cobro mis intereses o ganancias? En efectivo o a través de Bank Payorders (Ordenes de Pago Bancarias) depositados en su

cuenta bancaria personal de inversión dentro del Banco que desarrolla el Programa. La otra opción es que el Sr. Inversor de instrucciones al oficial bancario para dejarlos

depositados e incrementar el Capital Invertido y con mayor rendimiento.

Cuando cobro mis intereses? En forma mensual/quincenal/semanal según sea el programa vigente en la forma indicada

anteriormente.

Puedo hacer mas depósitos en mi cuenta de Inversión? NO. Si desea hacer depósitos sucesivos debe abrir otra cuenta de Inversión diferente.



Puedo retirar parcial o totalmente la suma invertida? NO, hasta no terminar el plazo de inversión acordado y aceptado.

Luego del vencimiento del Programa anual puedo renovarlo o retirar mis fondos? SI.- Es su libre opción.

Como deben ser mis Fondos? Claros, Limpios y de Origen no delictivo. Si al momento del chequeo personal o de

fondos se nos presentan dudas solicitaremos todos los documentos adicionales necesarios para presentar toda la papelería tal como marca la Ley, por lo que no VAMOS A HACER EXCEPCIONES de ningún tipo.

Estos Fondos están afectados por alguna Tasa, Impuesto o Gravamen? NO.

Puedo tener algún problema impositivo en mi país? Re: NO.IBG Group le ofrece la posibilidad de asesorarlo sobre como armar una protección

adecuada para resguardar sus ganancias y sus Fondos.

El Banco me comunica de alguna forma mi Estado De Cuenta?



SI.Con un Resumen de Cuenta que le hace llegar mensualmente por medios seguros como

cualquier Banco.

Puedo Operar mi cuenta a través de INTERNET? SI, siempre que el Banco tomador tenga implementado este sistema.

Puedo pedir referencias de otras operaciones realizadas? NO, porque es violatorio de las Normas de Confidencialidad y del Acuerdo de No

Descubrimiento vigente por Ley. Rogamos NO INSISTIR sobre este tema ya que bajo ninguna circunstancia ni presión lo haremos.

Puedo dar referencias a terceros de alguna operación realizada?NO, porque es violatorio de las Normas de Confidencialidad y del Acuerdo de No

Descubrimiento vigente por Ley y le caben las mismas prohibiciones tanto para solicitarlas como para darlas.



INTERMEDIARIOS /BROKERS

Puedo Operar con IBG? SI.

Que necesito para ello? Presentar los mismos documentos que se le solicitan al Sr. Inversor.

Como aseguro mi porcentaje? Deberá firmar un Convenio de Protección de Comisiones el que será tomado como base

por el Sr. Banquero para calcular y depositar su Porcentaje mensual / anual preacordado en su CUENTA PERSONAL.



Deberá enviarnos fotocopia láser Color Ampliada de su documento /Pasaporte para que le sea abierta a Ud. también una cuenta personal en el mismo Banco por el Sr. Trader, a los efectos que todos los meses en forma simultánea al Propietario de los Fondos le sean depositados sus retornos, por el tiempo que dure el Programa.

El resto es igual para mi? SI. Puede operar su cuenta con su oficial Bancario, recibiendo además una tarjeta para retirar

sus Fondos (Si la hubiera solicitado a su banquero) en igual condición que el Sr. Inversor.

Puedo enviar por medio de Fax la POF y la LOI de mi cliente? NO, es necesario enviarnos en todos los casos por email imágenes JPG Color.- Luego de verificar y comprobar su autenticidad, el trámite se Desarrolla

EXCLUSIVAMENTE entre el Sr. Inversor e IBG quién validará los Originales recibidos.

Mientras tanto la relación bilateral entre I.B.G. y Ud. es respaldada por el Convenio de Protección de Comisiones, que luego es validado en el Banco tomador.

Puedo participar con mis comisiones en un Programa de Alto Rendimiento? SI.

Es ese caso cuanto serán mis retornos? Los mismos que cualquier Inversor de acuerdo al Nivel de Fondos invertidos.



Esperamos haber solucionado todas sus dudas y preguntas sobre nuestras actividades y si hubiera alguna restante le agradeceríamos nos la haga conocer.

[email protected]

Carta de Intención

CARTA DE INTENCION

(L.O.I) CÓDIGO DE

REFERENCIA:........................................................................................................................

CLIENTE INVERSOR:............................................NOMBRE(S) Y APELLIDO(S).................................................................. D.N.I./ PASAPORTE Nº:........................................................................................................DOMICILIO LEGAL:........................................................................................................ LA SUMA DE USD:............................................................................................................En letras:................................................................................................................

ESTIMADOS SEÑORES ,

EL / LOS ABAJO FIRMANTES, Sr.(res)

................................................................................................................................ CON DOMICILIO LEGAL ANTERIORMENTE DESCRIPTO Y BAJO RESPONSABILIDAD LEGAL, CONFIRMO (MAMOS) POR LA PRESENTE CARTA DE INTENCIÓN, QUE ESTAMOS DISPUESTOS Y CON LA CAPACIDAD NECESARIA DE FONDOS PROPIOS, LIMPIOS, CLAROS Y DE ORIGEN NO DELICTIVO, CON LA SUMA PRINCIPAL DE INVERSIÓN REFERIDA ARRIBA, TENIENDO EL PROPÓSITO DE PARTICIPAR EN EL PROGRAMA FINANCIERO DE INVERSIÓN DE ALTO RENDIMIENTO.



ADJUNTAMOS A LA PRESENTE NUESTRO ACTUAL ESTADO DE CUENTAS , FECHADO HOY, Y POR LOS PRÓXIMOS CINCO (5) DÍAS, DEMOSTRANDO NUESTRA CAPACIDAD FINANCIERA. (DEPOSITO O CASH).

YO / NOSOTROS, ESPECÍFICAMENTE RECONOCEMOS ................................................ COMO PARTE RESPONSABLE POR PRESENTARNOS A ESTA OPORTUNIDAD DE INVERSIÓN Y ESTAMOS DE ACUERDO EN QUE EN NINGÚN MOMENTO HAREMOS CONTACTO CON CUALQUIER BANCO O INSTITUCIÓN FINANCIERA INVOLUCRADA EN ESTA TRANSACCIÓN SIN RECIBIR EL CONSENTIMIENTO EXPRESO POR ESCRITO DEL ................................ BANK ................................Corp.,

SEGÚN LOS TÉRMINOS DE LOS DOCUMENTOS YA FIRMADOS Y ESCRITURADOS DE LAS CLÁUSULAS DE NO-CIRCUMVENTION Y EL DOCUMENTO DE NO-DESCUBRIMIENTO, LOS MISMOS SE CONSIDERARAN COMO CONDICIÓN PRECEDENTE A TODA LA NEGOCIACIÓN EN TODO MOMENTO SIN EXCEPCIÓN. NOSOTROS CONFIRMAMOS MAS ALLA A ......................., ........................SUS ASIGNADOS Y A LOS BANQUEROS APROPIADOS, LA AUTORIDAD PLENA Y EL PERMISO PARA CONVALIDAR LA ADJUNTA PRUEBA DE FONDOS (CARTA BANCARIA O RESUMEN DE CUENTA) DE UNA MANERA APROPIADA, CORRECTA Y CONFIDENCIAL.

ENTENDEMOS QUE LA DOCUMENTACIÓN ESPECIFICA Y CONTRACTUAL PERTENECIENTE A ESTA TRANSPARENTE TRANSACCIÓN ESTARÁ

DISPONIBLE PARA LA EJECUCIÓN INMEDIATA.

ATENTAMENTE

..............................................................

LUGAR Y FECHA FIRMA LEGAL



(L.O.I) (In Letterhead of the Investor)

DATE ANDPLACE:........................................................................................................ Mr./Mrs.:................................................(TITLE, COMPANY, ADDRESS, ETC.,).........

THE AMOUNT OF : US-DOLLARS............................................................................... IN WORDS : ............................................MILLIONS OF US-DOLLARS).................TRANSACTION CODE :................................................................................................DEAR GENTLEMEN, ME / US,......................... PASSPORT Nº.....................................WITH ADDRESS IN.. ...........................................................................................................................................

WE ATTACH, OUR PRESENT CURRENT PROOF OF FUNDS AND / OR COLLATERAL, DATED TODAY, AND FOR NEXT FIFTEEN DAYS (15), DEMONSTRATING OUR FINANCIAL CAPACITY.

ME / WE, SPECIFICALLY RECOGNIZE TO .......................................................Corp., AS RESPONSIBLE PART, TO PRESENT US TO THIS OPPORTUNITY AND WE AGREE IN WRITING TO THE............... ............................................ BANK OF ................, ACCORDING TO THE TERMS OF THE DOCUMENTS ALREADY SIGNED AND NOTARIZED OF THE CLAUSES OF NOT-CIRCUNVENTION AND THE DOCUMENT OF NOT - DISCOVER, THE SAME WERE CONSIDERED AS “ PRECEDENT CONDITION” TO THE WHOLE NEGOTIATION IN ALL MOMENT WITHOUT EXCEPTION.

WE CONFIRM TO .............................................. Corp., THEIR ASSIGNED AND TO THE APPROPRIATE BANKERS, THE FULL AUTHORITY AND THE PERMISSION TO AUTHENTICATE THE ENCLOSED “PROOF OF FUNDS” IN A CORRECT AND CONFIDENTIAL WAY, NOTIFYING TO US FIRST, OF THE SUCCESSFUL APPROVAL OF THE SAME.

WE UNDERSTAND THAT THE DOCUMENTATION SPECIFIES AND CONTRACTUAL BELONGING TO THIS TRANSPARENT TRANSACTION, WILL



BE AVAILABLE FOR THE IMMEDIATE LEGAL REVISION. VERY SINCERELY

NAME, TITLE ....................................................................................

SEAL OF THE COMPANY

PRUEBA DE FONDOS

(MEMBRETE BANCARIO)

PRUEBA CERTIFICADA DE FONDOS

(DIRIGIDO AL TITULAR DE LA CUENTA)

FECHA Y LUGAR:........................................................................................................

NOMBRE DEL TITULAR DE LA CUENTA :..................................................................

NÚMERO DE CUENTA :...................................................................................................

CÓDIGO DE TRANSACCIÓN :....................................................................................

ESTIMADOS SEÑORES

NOSOTROS, LOS FUNCIONARIOS BANCARIOS ABAJO FIRMANTES, CERTIFICAMOS Y GARANTIZAMOS, CON PLENA RESPONSABILIDAD BANCARIA LA AUTENTICIDAD Y VALIDEZ DE LA CUENTA CON EL NÚMERO DE REGISTRO DESIGNADO ANTERIORMENTE, NOSOTROS CONFIRMAMOS MÁS ALLÁ PARA LA PRESENTE, CON RESPONSABILIDAD LEGAL, QUE LA CANTIDAD DECLARADA EN DÓLARES ESTADOUNIDENSES: US$ ................................................................................................................................................

(En letras).............................................................FONDOS EN DINERO EFECTIVO QUE HAN SIDO IRREVOCABLE E INCONDICIONALMENTE RESERVADOS EN NUESTRO / ESTE BANCO A SU DEMANDA POR UN PERIODO DE QUINCE (15)



DÍAS A LA FECHA DE ESTA CARTA.

NOSOTROS CONFIRMAMOS MÁS ALLÁ QUE ESTOS FONDOS LEGALMENTE OBTENIDOS, SON BUENOS, LIMPIOS, CLAROS Y DE ORIGEN NO DELICTIVO Y QUE CONTINUARAN DE ESTA MANERA, POR EL PERIODO DECLARADO. LOS FONDOS ESTÁN LIBRES DE TODAS LAS CARGAS Y DERECHOS DE TERCERAS PARTES Y A SU DISPOSICIÓN SIN RESTRICCIONES.

ESTOS FONDOS, US$ ........................................, ESTÁN ESPECÍFICAMENTE RESERVADOS BAJO EL CÓDIGO DE TRANSACCIÓN IDENTIFICADO ARRIBA, CONSIDERANDO QUE LOS MISMOS DEBERÁN SER VERIFICADOS POR K.T.T. Y TRANSFERIDOS VÍA S.W.I.F.T., SOBRE LAS BASES“ BANCO A BANCO”.

ATENTAMENTE

...................................................... ........................................................ OFICAL BANCARIO Nº.: 1 OFICIAL BANCARIO Nº.: 2

NOMBRE: NOMBRE:

TÍTULO: TÍTULO:



PROOF OF FUNDS (IN BANK LETTERHEAD)

DIRECTED TO THE ACCOUNT HOLDER:

PLACE AND DATE :............................................................................................................

ACCOUNT HOLDER:............................................................................................................

ACCOUNT NUMBER:..........................................................................................................

TRANSACTIONS CODE:.....................................................................................................

DEAR GENTLEMEN

WE, THE BANK OFFICERS BELOW SIGNATORIES, CERTIFY AND GUARANTEE, WITH FULL BANK RESPONSIBILITY THE AUTHENTICITY AND VALIDITY OF THE BANK ACCOUNT WITH THE DESIGNATED REGISTRATION NUMBER ABOVE, WE FURTHER CONFIRM FOR THE PRESENT WITH LEGAL RESPONSIBILITY THAT THE DECLARED AMOUNT IN UNITED STATES DOLLARS:..................................................................... USD-............................................... ................................................................................................ (In words) FUNDS IN CASH,

WHICH HAVE BEEN IRREVOCABLE AND UNCONDITIONALLY RESERVED IN OUR / THIS BANK TO YOUR DEMAND FOR A PERIOD OF FIFTEEN (15) DAYS

AT THE DATE OF THIS LETTER OR BANK STATEMENT.



WE FURTHER CONFIRM THAT THESE LEGALLY OBTAINED FUNDS, ARE GOOD, CLEAN, CLEAR AND OF NO-CRIMINAL ORIGIN, AND THAT IT WILL REMAIN THIS WAY, FOR THE DECLARED PERIOD AND THAT SAID FUNDS ARE FREE AND CLEAR OF ALL LIENS OR RIGHT OF ANY THIRD PARTY AND AVAILABLE FOR YOUR UNRESTRICTED DISPOSITION.

THESE FUNDS ( FOR THE AMOUNT OF USD 100 MILLION OR MORE) ARE SPECIFICALLY RESERVED UNDER THE IDENTIFIED TRANSACTIONS CODE, CONSIDERING THAT THE FUNDS DON´T NEED TO BE TRANSFERRED AT ANY TIME. IF NECESSARY, ONLY IN WRITTEN WITH OWNER AUTHORISATION, VERIFIED BY K.T.T. AND TRANSFERRED VIA S.W.I.F.T., TO BASIS “BANK TO BANK”.

SINCERELY

..................................................... ........................................................ BANK OFFICER Nº.: 1 BANK OFFICER Nº.: 2

NAME: NAME:

TITLE: TITLE:



GARANTÍA BANCARIA EN MEMBRETE DEL BANCO

Instrumento: IRREVOCABLE, INCONDICIONAL, NEGOCIABLE, CONFIRMABLE , TRANSFERIBLE, ASIGNABLE, Y DIVISIBLE.Banco emisor:........................................................................................................................Referencia No. :..…………………………………………......................................................Monto:.................................................................................................................................................................Moneda:..................................................................................................................Lugar de Emisión:............................................................................................................Fecha de emisión:.........................................................................................................Vencimiento:.........................................................................................................................Beneficiario :Sr.,.............................................. .Corp,...........................................................

Para AFIANZAR LAS OBLIGACIONES del PAGO DE NUESTRO CLIENTE, SR............................. NOSOTROS, BANCO................................................ ...................................................... POR LA PRESENTE GARANTIZAMOS INCONDICIONAL e IRREVOCABLEMENTE CUALQUIER PROTESTO, o RETRASO PAGAR A LA ORDEN DE...................BANCO DE......................., EL PORTADOR OR EL POSEEDOR DE ESO, A la FECHA de Vencimiento, LA SUMA DE.................. DÓLARES (ESTADOS UNIDOS DE AMÉRICA),.................(EE.UU.$................................) EN la PRIMERA DEMANDA ESCRITA de BENEFICIARIO, PRESENTACIÓN Y RENDICIÓN DE ESTA GARANTÍA AL CONTADOR DEL BANCO del GARANTE.

TAL PAGO SE HARÁ LIBRE Y CLARO DE CUALQUIER CARGA, ESTORBOS, CARGOS, DEDUCCIONES, RESTRICCIONES, DE CUALQUIER NATURALEZA.

ESTA GARANTÍA BANCARIA ES CONFIRMABLE, NEGOCIABLE, TRANSFERIBLE, ASIGNABLE



ESTA GARANTÍA BANCARIA SE GOBERNARÁ DE ACUERDO CON LAS LAS REGLAS UNIFORMES PARA LAS GARANTÍAS Y POR LAS COSTUMBRES UNIFORMES Y PRACTICA PARA los CRÉDITOS DOCUMENTALES.-

POR EL I.C.C. PARÍS, FRANCIA, la PUBLICACIÓN Nº.: 400/500/600 ULTIMA REVISIÓN

ESTA GARANTÍA del BANCO ES UN INSTRUMENTO OPERATIVO

BANK GUARANTEE (BANK LETTERHEAD)

Bank Guarantee

No..............................................................................................................................................

Instrument: IRREVOCABLE, UNCONDITIONAL, NEGOTIABLE, CONFIRMABLE, TRANSFERABLE, ASSIGNABLE, AND DIVISIBLE BANK GUARANTEE. Issuing Bank:.....................................................................................................................

Reference No.:.......................................................................................................................Amount:................................................................................................................................Currency:............................................................................................................................Issued Place:...........................................................................................................................Issued Date:.............................................................................................................................Maturity Date:................................................................................................................... Beneficiary:Mr., .....................................Corp, ...........................................Bank, ............................................................

IN ORDER TO SECURE THE PAYMENT OBLIGATIONS OF OUR CUSTOMER, MR............................................................... WE, BANK................................................ ............................................HEREBY UNCONDITIONALLY AND IRREVOCABLY WITHOUT ANY PROTEST, DELAY OR NOTIFICATION, GUARANTEE TO PAY AGAINST THIS BANK GUARANTEE TO THE ORDER OF........................................................................... BANK OF.........

..........................................., OR THE BEARER OR THE HOLDER THEREOF, AT MATURITY DATE, THE SUM OF.............. ..................................................................

DOLLARS (UNITED STATES OF AMERICA),....................................................



(US$..............................................................................) UPON BENEFICIARY’S FIRST WRITTEN DEMAND, PRESENTATION AND SURRENDER OF THIS GUARANTEE

AT THE COUNTER OF THE GUARANTOR BANK.

SUCH PAYMENT SHALL BE MADE WITHOUT SET-OFF, FREE AND CLEAR OF ANY LIENS, ENCUMBRANCES, CHARGES, DEDUCTIONS, RESTRICTIONS, FEES OR WITHHOLDING OF ANY NATURE.

THIS BANK GUARANTEE IS CONFIRMABLE, NEGOTIABLE, TRANSFERABLE, ASSIGNABLE AND DIVISIBLE WITHOUT PRESENTATION OF IT TO US AND WITHOUT ANY FEES OR DEDUCTIONS.

THIS BANK GUARANTEE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE UNIFORM RULES FOR DEMAND GUARANTEE AND BY THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS, AS SET FORTH BY THE I.C.C. PARIS, FRANCE, PUBLICATION Nº.: 400/500/600 LATEST REVISION.

THIS BANK GUARANTEE IS AN OPERATIVE INSTRUMENT

BANK OFFICER 1. BANK OFFICER 2.

Signature. Signature.



SAFEKEEPING RECEIPT

MEMBRETE BANCARIO

NOSOTROS, (NOMBRE & DIRECCIÓN DE BANCO CUSTODIO), POR LA PRESENTE CONFIRMAMOS CON PLENA RESPONSABILIDAD BANCARIA QUE EL INSTRUMENTO (DESCRIPCIÓN DE INSTRUMENTO (S), BAJO EL CÓDIGO DE REFERENCIA ANTERIORMENTE DESCRIPTO HA SIDO AUTENTICADO Y VERIFICADO POR NOSOTROS QUIENES MAS ALLÁ GARANTIZAMOS EL VALOR TOTAL DE DÓLARES ESTADOUNIDENSES US$:.............................( EN LETRAS)

NOSOTROS, MAS ALLÁ CONFIRMAMOS QUE DICHO (S) INSTRUMENTO (S) PERMANECERÁN EN SU CUENTA DE CUSTODIA Y SEGURIDAD, CUENTA Nº___________________________ EN NUESTRO BANCO POR UN PERIODO DE UN (1) AÑO Y QUINCE (15) DÍAS. EL TÉRMINO DE ESTA CUSTODIA Y SEGURIDAD PUEDE EXTENDERSE A SU SOLA DEMANDA.

DESCRIPCIÓN DEL INSTRUMENTO

FINANCIERO:.........................................................................................................................

DEPOSITADO EN FAVOR DE: ...................................................................................................................................................

DENOMINACIÓN: DÓLARES ESTADOUNIDENSES

(U$S).........................................................................................................................................

VALOR TOTAL: U$S............................................................................................................................................



FECHA DE EMISION:

...................................................................................................................................................

FECHA DE VENCIMIENTO:

...................................................................................................................................................

REFERENCIA No.: ...................................................................................................................................................

ÉSTE ES UN COMPROMISO DE RECURSO PLENO Y PUEDE SER VERIFICADO POR LOS FUNCIONARIOS EMISORES EN NUESTRO BANCO.

(NOMBRE DE BANCO)

FUNCIONARIO AUTORIZADO FUNCIONARIO AUTORIZADONOMBRE & TITULO.......... NOMBRE & TITULO..........



SKR (SAFEKEEPING RECEIPT)- ENGLISH

ON BANK´S LETTERHEAD

Authenticated S.W.I.F.T: TO NOMINATED BANK ACCOUNT)

Date: Reference No.: To: Account No.: Safekeeping Receipt No.:

WE, (FULL NAME & ADDRESS OF CUSTODIAL BANK), HEREBY CONFIRM WITH FULL BANK RESPONSIBILITY THAT THE (DESCRIPTION OF INSTRUMENT(S), REFERENCED HEREIN, HAS BEEN AUTHENTICATED BY US AND WE HAVE VERIFIED AND GUARANTEE THE TOTAL VALUE TO BE UNITED STATES DOLLARS (AMOUNT IN WORDS) U$S_________________________________________________________________________

WE, FURTHER CONFIRM THAT THE SAID INSTRUMENT(S) SHALL BE HELD IN

YOUR SAFE CUSTODY ACCOUNT, ACCOUNT NUMBER____________________ AT OUR BANK FOR A PERIOD OF ONE (1) YEAR AND FIFTEEN (15) DAYS. THE

TERM OF THIS SAFE CUSTODY MAY BE EXTENDED AT YOUR REQUEST.

DESCRIPTION OF THE (FINANCIAL INSTRUMENT(S):

DEPOSITED IN FAVOR OF : (EXAMPLE) EXCEL GLOBAL, LTD., NEW YORK. Currency: U$S Total Value: U$S Issuing Party: Date Of Issue: Reference No.:



THIS IS A FULL RECOURSE COMMITMENT AND MAY BE VERIFIED BY THE ISSUING OFFICERS AT OUR BANK.

NAME OF BANK:

__________________________ _ _________________________

AUTHORIZED OFFICER AUTHORIZED OFFICER NAME & TITLE: NAME & TITLE:



AUTORIZACIÓN PARA VERIFICAR

EN MEMBRETE del INVERSOR

AUTORIZACIÓN para VERIFICAR & AUTENTICAR:..........................................................................................FECHA:................................................................................................................................................................. A QUIEN puede INTERESAR:.................................................................................................................................. NOMBRE de INVERSOR:.......................................................................................................................................... NOMBRE de COMPAÑÍA:........................................................................................................................................ DIRECCIÓN:........................................................................................................................................................... TELÉFONO:........................................................................................................................................................... FACSÍMIL:............................................................................................................................................................. YO ....................... (INVERSOR)................, REPRESENTADO POR..................................................... CORP.LTD ................................................ ..Y ............................................................................................................. BANCO. POR LA PRESENTE AUTORIZO CUALQUIER BANCO, O ENTIDAD COMERCIAL O SU CONSEJO DESIGNADO para AUTENTICAR Y CONFIRMAR NUESTROS DOCUMENTOS LEGALMENTE POSEÍDOS, DE ORIGEN CLARO Y LIMPIO, EN DEPÓSITO ACTUALMENTE y PROPORCIONANDO LAS COORDENADAS DE ANTEMANO. NOMBRE DEL BANCO:............................................................................................................................................. DIRECCIÓN DEL BANCO:...................................................................................................................................OFICIAL BANCARIO:....................................................................................................................................... .. NÚMERO del TELÉFONO:........................................................................................................................................NÚMERO DE FAX:.................................................................................................................................................... CODIGO SWIFT:........................................................................................................................................................ FIRMA Y PASAPORTE:............................................................................................................................................



AUTHORIZATION TO VERIFY (English)

ON INVESTOR´S LETTERHEAD

AUTHORIZATION TO VERIFY & AUTHENTICATE:................................................. DATE :....................................................................................................................................TO WHOM IT MAY CONCERN:.............................................................................................................................INVESTOR’S NAME:...................................................................................................................................

COMPANY’S NAME:..............................................................................................................................

ADDRESS:.............................................................................................................................. PHONE:...................................................................................................................................

FAX:..........................................................................................................................................

I ....................... ( INVESTOR) ................, REPRESENTED BY ............................................................CORP.LTD...........................................................and.....................................................................................BANK CORP.

HEREBY AUTHORIZE ANY TRADING BANK, THE TRADING ENTITY OR THEIR DESIGNATED COUNSEL TO AUTHENTICATE AND CONFIRM OUR LAWFULLY

OWNED, CLEAR AND CLEAN, ASSETS CURRENTLY HELD ON DEPOSIT, PROVIDING THE COORDINATES OF SUCH CONTACTING ARE GIVEN WELL IN

ADVANCE

BANK NAME:.........................................................................................................................

BANK ADDRESS:..................................................................................................................

BANK OFFICER: ..................................................................................................................

TELEPHONE NUMBER:.......................................................................................................

FACSIMILENUMBER: .........................................................................................................

SWIFT CODE:......................................................................................................................... SIGNATURE AND PASSPORT



NO: ..............................................................................................................................

Procedimientos Standard bajo la Ley Bancaria Internacional referidos a los Programas de Alto Rendimiento

Capítulo I

Conceptos Generales

Los HYIP son los mejores y mas seguros vehículos de inversión de alto rendimiento, de interés particular para individuos con fondos, tesoreros corporativos, inversores institucionales, fondos jubilatorios o de pensión etc.

Los Programas de Alto Rendimiento necesitan de una alta especialización y clase mundial de especialistas financieros (IBG Group) para ordenar y garantizar a todos los inversores, acceso directo a las mejores fuentes bancarias.-

Los HYIP están disponibles para inversores privados y corporativos, basados en nuestra expresa invitación, que disponga de grandes cantidades del Dinero en efectivo o Instrumentos Bancarios de Descuento de Banco (BDI), como Garantía Bancaria (BG), Certificado de Depósitos (CD), Certificados de Depósito en Oro (GCD), Cartas de Crédito (SLC) y Safekeeping (SKR) basados en bienes como (Pinturas, Bonos, Propiedades, Gemas, etc).

Capítulo II

Ley Bancaria Internacional (Puntos Principales)

Calidad de Fondos: Los fondos deben ser de origen limpio, no-delictivo y bajo el dominio pleno del inversor, no sujeto a cargas o otras restricciones.

Seguridad: El capital está totalmente asegurado ya que los fondos permanecen bajo el mando del propietario o inversor durante el transacción.

Capítulo III



Tareas de la Fed y el BIS

El dólar estadounidense es la base del sistema de liquidez del mundo y muchos otras monedas basan su tipo de cambio en él o contra el.

En la práctica, entre la FED actúa como un Banco Central Mundial manejando todos los dólares americanos en circulación, en EE.UU. y en el extranjero, a través del Sistema de la Reserva Federal, fundado en 1913 por un acto del Congreso de Estados Unidos.

Responsabilidades de la FED: Dirigir la política monetaria de los Estados Unidos, Dirigir y regular las instituciones bancarias y proteger el crédito. Mantener la estabilidad del sistema financiero. Proveer ciertos servicios financieros al Gobierno de Estados Unidos, al público,

instituciones financieras e instituciones oficiales extranjeras.

Las herramientas domésticas de la Fed para lograr estos objetivos, son: La responsabilidad de manejar el suministro de dinero y crédito; La política de balancear las tasas de interés; Los funcionamientos de los mercados abiertos proporcionando reservas y persuasión moral.

Estas herramientas no siempre son tan eficaces como a la Fed le gustaría siendo menos perfectas por la acción sustancial de dólares americanos en jurisdicciones extranjeras.-

Algunas de las herramientas domésticas de la Reserva Federal no pueden usarse en otros países. Un ejemplo es que la Reserva Federal no puede cambiar proporciones de las reservas extranjeras.

Además, una cantidad significante de creación del crédito ocurre en dólares americanos en países extranjeros, particularmente en el mercado del Euro-dólar. Como el banquero central del mundo, los Estados Unidos tienen la responsabilidad importante para mantener estabilidad en el sistema monetario del mundo.

El mercado Offshore ha crecido substancialmente en las últimas dos décadas por varias razones. Primero, las grandes cantidades de dólares americanos asociados con transacciones de droga alrededor del sistema monetario internacional y segundo, los individuos adinerados involucrados en impuestos altos y que, para conservar su riqueza optan por guardar sus recursos monetarios en países libres de impuesto.

Esta cantidad significante de dólares americanos no puede ser controlada eficazmente por los Estados Unidos con sus herramientas domésticas normales.

Esto significa que los especuladores con medios limitados /ilimitados pueden tomar otro camino fuera del controlado por la Reserva Federal.

Estructura institucional del Sistema y el BIS

Deben superarse varios problemas para hacer trabajar la estructura porque inevitablemente, el Mercado offshore en dólares encuentra un camino natural en el sistema



bancario internacional por vía de transferencia de los depósitos. Sin embargo, las reglas del BIS (Bank for International Settlements)), actuando como el

Banco Central de los Bancos Centrales (Basilea, Suiza), prohíbe a los bancos comprar directamente instrumentos instrumentos de deuda recientemente emitidos.

Esta prohibición existe por una razón obvia: Si se permitiera esto y algún banco débil pudiera comprar estos documentos, la probabilidad de fracaso del sistema bancario se aumentaría.

Las reglas del BIS no prohíben a bancos de poseer las obligaciones financieras de otro banco con tal de que entre ellos no se re-compren directamente permitiendo hacer esto en el Mercado Secundario de Capitales.

Por ello el sistema apoya la función un grupo de personas conocidas como Commitment Holders que mueven reservas de dinero sustanciales en efectivo a través del Mercado Secundario de Capitales.

Capítulo IV

Commitment Holders

Los Commitment Holders son pocos en número en todo el mundo. Sus tareas son habilitar, planear y desarrollar con los Managers de los Bancos TOP 25,

varios tipos diferentes de HYIP, cada año. Estas personas son esenciales para garantizar el funcionamiento, estabilidad y seguridad

del Mercado Secundario forjando sólidas relaciones con los proveedores de fondos integrados por los Traders y los PQT (Pre-Qualifycation Team)(IBG Group), quienes trabajando juntos acercan a los bancos grandes cantidades de dólares bajo Fondos de Inversores de todo el Mundo.

Bank Traders - PQ Team

El Bank Trader y el PQ Team (IBG Group) trabajan juntos, siendo ellos los únicos que pueden fijar y determinar que bancos desean aceptar las Pruebas de Fondos (POF-Cash) o BDI, verificando y confirmando todos los documentos.

El inversor debe entender que este es un negocio donde los Documentos siempre Deben ser Exhibidos Primero. (Esto significa que el Inversor debe tomar el primer paso enviando y mostrando al PQT (IBG Group) todos los documentos bancarios que disponga para la inversión, siendo este un Requisito No Negociable.

PQ Team ( IBG ) - Inversores - Intermediarios :

Éste es un negocio para ser tratado únicamente Principal a Principal y Banco a Banco. (Esto significa que IBG Group (actuando como PQT y Principal) sólo negocia con dueños, propietarios o principales, pero protegiendo a los Intermediarios, abogados, representantes o



brokers (si existieran) a quienes a partir de Septiembre del 2001 por Ley no se les permite intervenir directamente de forma alguna.

El PQT (IBG Group) rechazará a cualquier persona que no disponga de fondos y/o curiosos.

Capítulo V

Por qué los Rendimientos son Altos.

¿Si esta inversión no es riesgosa intrínsecamente, cómo se obtienen los ingresos extraordinarios a través de los HYIP? Hay varios factores que contribuyen a este fenómeno.

El mercado internacional para los fondos de Estados Unidos y Europa es sumamente competitivo.

Por ello al haber muchos países que necesitan urgentemente dólares americanos estando dispuestos a pagar por ellos rendimientos anuales de 20% a 25%, cuyos términos no exceden un año, sobre esas previsiones de fondos se emiten las llamadas Obligaciones Soberanas.

Hay dos tipos de prestatarios, siendo uno del tipo espectro de alto riesgo, mientras que en el otro extremo el riesgo es muy bajo relativo a emisiones soberanas de bonos que pueden atraer fondos en proporciones competitivas con tesorerías mundiales.

Capítulo VI

Como entrar a un HYIP

Los HYIP son áreas muy difíciles para los inversores debiendo tenerse cuidado extremo con quién se contacta.

La razón es que habiendo cantidades significantes de dinero en movimiento, esto atrae a muchos malos jugadores no-calificados para actuar en este negocio.

Capítulo VII



Silencio de los Bancos

Por regla general, todos los bancos niegan la existencia de estos programas no queriendo ni deseando discutir oportunidades de inversión públicamente, porque la Ley Bancaria Internacional prohíbe expresamente el contacto directo entre el Banco de Inversión y el Cliente (al menos, durante la etapa de verificación).

Capítulo VIII

Tareas específicas del PQ Team (IBG Group)

La única manera para entrar en el sistema es poder certificar recursos sustanciales a un Grupo de Pre-Calificación (PQT) como IBG Group.

Las reglas bancarias son muy claras, expresando que si un inversor no puede certificar en la forma de dinero en efectivo o BDI, algún monto sustancial, las oportunidades de recibir atención son muy remotas.

Los dos elementos importantes por el invertir en el Mercados Secundario son:Saber, conocer y desarrollar una relación profesional fuerte con las personas

(responsabilidad de IBG Group) verificando la disponibilidad de fondos del inversor.Que esos fondos sean limpios, claros y de origen no delictivo (Responsabilidad del

Inversor).

Reglas sobre BDI ofrecidas: Cada Equipo del Pre-Calificación (IBG Group) rechazará:

Cualquier tipo de documento bancario que no se ajuste a la Ley Bancaria Internacional. Todos los documentos Bancarios deberán ser emitidos por Bancos del TOP 25 y los que no lo hayan sido, deberán contar con la certificación de alguno de los indicados para ser validos (Rogamos no insistir ni pretender modificar algo sobre este tema).

Imágenes de documentos enviadas por fax o copiadas de facsímiles.Cualquier operación donde en lugar de intervenir el dueño, lo hace un apoderado,

abogado, broker o representante, los que serán protegidos por el PQT, pero bajo ninguna circunstancia participar en contacto directo.

Cuando el Manager del PQT tenga evidencia que los documentos, pasaportes u otros papeles no sean verídicos o reales.



Capítulo IX

Intermediarios inhábiles, Simuladores o Estafadores

Hay muchos intermediarios que conocen ciertos detalles de los HYIP; sin embargo muy pocos saben el mecanismo entero a desarrollar.

Aun peor, ellos no tienen los contactos directos importantes con Managers de Programas o Traders, pero igual simulan tenerlos para poder cobrar por anticipado engañando al Inversor debido al hecho que hay mucho dinero en juego.

Las conocidas como Cadenas de Brokers (Daisy Chain) están constituidas por una persona que conoce a alguien que conoce a alguien más que puede acceder a un HYIP, pero jamás pueden demostrar lo que afirman.

Capítulo X

Señales de advertencias para un Inversor Prudente sobre algunos puntos que pueden indicar un simulador o estafador:

El Broker solicita continuamente pago de comisiones por anticipado.Le solicita que sus fondos necesitan ser transferidos a un país offshore.No le asegura protección en todo momento para Ud. y sus fondos.Su dinero no es manejado directamente banco a banco.Los documentos que le presenta son copias de fax.Las preguntas que Ud. le hace no son respondidas a su entera satisfacción.Las respuestas a sus preguntas toman un tiempo largo y están incompletas.

Todos estos puntos indican claramente que la persona con quien usted esta tratando, no tiene un plan por proteger sus ganancias ni sus fondos o dejarlos en manos de indeseables.

Capítulo XI

El Inversor guiado por IBG Group, se asegurará rápida ayuda y excelente asistencia profesional, con una amplia gama de opciones para beneficiarlo y protegerlo.



1997- 2005 Last Revision

Ejemplo de Programas de Inversión Garantizados Trading

Inversión mínima: 10 Millones €.

Beneficios anuales: Aproximadamente entre un 250% a un 400%. Estos programas obtienen sus beneficios de la compra y venta simultanea de activos bancarios y MTN`s Americanos. (Son operaciones totalmente legales)

El principal de la inversión una vez se firma el contrato de trading, queda bloqueado en la Cuenta del Inversor, con lo que obtenemos el 100% de seguridad de que el capital de inversión NUNCA se puede perder.

El inversor es el único que tiene acceso a su Cta. Bancaria y quien Bloquea o Desdobloquea los fondos.

Pago de beneficios: Los beneficios del programa de inversión se pagan semanalmente por 40 semanas, (Un año bancario). En algunos programas se puede negociar con el Banco Trader para que nos pague mediante Órdenes Bancarias de Pago Irrevocables, que se entregan al inversor en el plazo de 15 ó 20 días bancarios despues de la firma del contrato.

Para entrar en un Programa, la cantidad mínima es de 10 Millones de €, en efectivo, de precedencia limpia y de origen no criminal, o bien en instrumentos Bancarios susceptibles de emitir una línea de crédito condicionada a programa, estos instrumentos bancarios pueden ser, Garantías Bancarias de bancos Europeos o Americanos, Bonos de EEUU o de Europa. Con otro tipo de activos se precisa realizar consulta.

Para contactar con el grupo Trader e iniciar la operativa es necesario:



*Evidencia de fondos de fecha actual (las evidencias de fondos tienen una validez de cinco días bancarios)

*Fotocopia del pasaporte del propietario, apoderado o administrador legalmente constituido.

*Carta del propietario, apoderado o administrador legalmente constituido, autorizando la verificación bancaria de dichos fondos o activos bancarios (Verificación Banco a Banco)

En caso de ser activos bancarios sustituir la evidencia bancaria por los códigos de verificación de Euroclear.

En cuando se recive la verificación de los fondos o activos bancarios, se le ofrece al inversor un programa con los beneficios que va a obtener con su inversión y si los acepta, se le envía la ficha de operación bancaria y a partir de ahí es la plataforma Trading, quien se pone en contacto para la preparación de la documentación y cuanto está preparada el Banco Trader le invita a la firma del programa. Toda la operativa de Trading esta sejeta al calendario internacional Bancario.

Rentabilidad a 40 Semanas Garantizadas y Pactadas por el Banco por Escrito

Entre 10 y 50 Millones € --------------------------------- Entre un 250% a un 400%

Entre 50 y 100 Millones € ------------------------------- Entre un 400% a un 800%

Entre 100 y 500 Millones € ------------------------------ Entre un 850% a un 1000%

Y mas de 500 Millones € -------------------------------- Entre un 1000% a un 2000%

Sirva como ejemplo una inversión de 200 Millones, al Inversor le pagaran cada semana 40.000,00 €.

Estas rentabilidades, o beneficios, son aproximados, y siempre tiene la última palabra el provider/trader, siendo en la mayoría de los casos, mayores, dependiendo del importe.

Señales de Advertencias para un Inversor Prudente sobre algunos puntos que pueden indicar un simulador o estafador

- El Bróker solicita continuamente pago de comisiones por anticipado.

- Le solicita que sus fondos necesitan ser transferidos a un país offshore.



- No le asegura protección en todo momento para Usted y sus Fondos.

- Su dinero no es manejado directamente banco a banco.

- Los documentos que le presenta son copias de fax.

- Las preguntas que Ud. le hace no son respondidas a su entera satisfacción.

- Las respuestas a sus preguntas toman un tiempo largo y están incompletas.

Nosotros Garantizamos el 100% de la Inversión.

1- Lo maneja todo el cliente, no declina en terceros.

2- El tiene el acceso total y exclusivo sobre la cuenta donde bloquea el dinero.

3- Su rendimiento se lo ingresaran semalmente.

4- En caso de que no haya rendimiento durante una o dos semanas, puede romper el contrato de trading y quedarse con el beneficio obtenido hasta el momento.

5- El Inversor en todo el momento tiene el control absoluto de su dinero.

Si durante un tiempo, el trader no da beneficios acordado, se puede romper el contrato, abviamente todo aquello queda reflejado en el contrato de trading, que pasa por la cámara de comercio de París y queda registrado según las Leyes Internacionales de Banca.

Solo queremos la Documentación bien ordenada, de el dinero del cliente, el dinero no tiene porque salir de su cuenta y deberá estar depositado en un BANCO AAA Top 10.

El cliente es quien da la orden bancaria de bloqueo.

No hay engaño que valga.

No al menos con nuestras líneas o plataformas.

MÁS GARANTÍA IMPOSIBLE.



PROCEDIMIENTO PARA ENTRAR EN UN HYIP

Paso 1

Comunicación directa con el dueño del instrumento, estar muy seguro de que el es el dueño real del instrumento bancario o el cash.

Paso 2

Envío de scanner a colores del instrumento o prueba de fondos y todas las demás documentaciones del mismo, el pasaporte a colores del cliente para verificación e investigación de la veracidad del documento y del cliente vía banco trade, y también los documentos iniciales para el inicio de la transacción, todos deben estar debidamente notariado.

Paso 3

El cliente firma y notaria los principales contratos JOIN VENTURE, NDNC, FPA, todos debidamente notariados y los envía, nosotros lo firmamos, notaríamos y lo reenviamos al cliente.

Paso 4

La Corporación busca la mejor plataforma en el mes en unos de los 5 bancos trades que tenemos, la mejor plataforma que brinda el mejor y mayor % al programa recibirá todos los documentos del cliente.

Paso 5

El cliente envía una carta con nombres y pasaportes notariados de las personas que necesitan tener cuentas abiertas en Europa u offshore.



Paso 6

El banco trade entra en comunicación directa con el cliente, donde el cliente deberá firmar los contratos bancarios de la plataforma con este banco que tendrá una duración de 40 semanas.

Paso 7

El cliente solicita a su banco el bloqueo del instrumento bancario o del cash por un periodo de 1 año y un día.

Paso 8

El cliente hace el conecte del oficial bancario de él, con el oficial bancario del banco trade.

Paso 9

Una vez que el programa empieza a correr, automáticamente se emite una lista de fechas de pagos que tiene una duración de 40 semanas seguidas, que dependiendo de la plataforma puede ser ( no es garantizado, muy pocas veces pasa ) brinca de 40 semanas a 80 semanas en el mismo programa, pudiendo llegar hasta 120 semanas seguidas de programa.

Paso 10

Al finalizar el plazo de 1 año y 1 dia el cliente tiene su instrumento o cash desbloqueado y libre.

Paso 11

Todos felices y contentos con el éxito alcanzado por todas las partes.

Nota: nuestra Corporación trabaja directamente conectada con 5 bancos trades, todos estos bancos son top 25 y son 4 trades europeos y uno americano, tenemos 2 de los mayores trades del mundo en contacto directo con nuestra Corporación.

Para cualquier consulta externa envíe al correo:

[email protected]


mailto:[email protected]


STANDARD PROCEDURES UNDER INTERNATIONAL BANK LAWS ABOUT SECURED HIGH-YIELD INVESTMENTS

(Based on Swiss Law)

CHAPTER I

General Concepts

High Yield Investment Programs are the best and most secure high-return investment vehicle, of particular interest to high-net worth individuals, corporate treasurers, institutional investors, pension funds, etc.

High Yield Investment Programs need an expertise and an extensive network of world class financial specialists (Corporacion CASM) in order to bring and guarantee all investors, direct access to the best and most trusted bank sources.

Secured High-Yield Investment Programs are available to private and corporate investors, on an invitational basis, with large Cash amounts or Bank Discount Instruments (BDI), as

" BG - Bank Guarantee.

" CD - Certificate of Deposit.

" GCD - Gold Certificates of Deposit.

" SLC - Standby Letter of Credit.

" SKR - Safekeeping Receipt over assets (Paints, Bonds, Properties, Gems).

CHAPTER II



FUNDS and SECURITY

International Bank Law - Principal points

Quality of Funds

The funds need to be of clean, non-criminal origin and under full control of the investor, not subject to liens or other restrictions.

Security

The capital is fully secured because funds remain under the investor's full signatory control during the entire transaction.

CHAPTER III

FED and BIS Rules

FED´s and BIS´s

The United States (US) dollar is the basis of the world's liquidity system and many other currencies base their exchange rate on it.

In practice, the United States acts as the world's central banker managing all US dollars in circulation, in the US and as well as abroad, through Federal Reserve System (FED), founded in 1913 by an act of the United States Congress.

Responsibilities of the Federal Reserve System (FED)

Conducting the United States' monetary policy,

Supervising and regulating banking institutions and protecting the credit rights of consumers.-

Maintaining the stability of the financial system.

Providing certain financial services to the United States Government, the public, financial institutions and foreign official institutions.



The Federal Reserve's domestic tools to achieve these targets, including the FED's central responsibility of managing the money supply and credit; the interest rate policy; the open market operations; the reserve ratio policy; and the moral persuasion.

These tools are not always as effective as the Federal Reserve would like them to be. Part of the reason for the less than perfect effectiveness is due to the substantial stock of US dollars in foreign jurisdictions.

Several of the Federal Reserve's domestic tools cannot be used in other countries. One example is that the Federal Reserve cannot change foreign reserve ratios. Furthermore, a significant amount of credit creation occurs in US dollars in foreign countries, particularly in the Eurodollar market.

As the world's central banker, the United States has the key responsibility to maintain stability in the world's monetary system.

The offshore market has grown substantially in the last two decades for a number of reasons. First, huge quantities of US dollars associated with the drug trade slosh around the international monetary system, and second, wealthy individuals concerned about high taxes and preserving their wealth opt to keep their assets in offshore tax havens.

This significant stock of US dollars cannot be effectively controlled by the United States with its normal domestic policy tools.

This means that even speculators with limited means can take the other side in a Federal Reserve move to stabilize the currency.

Since the currency does not have to be delivered as the contracts are rolled near their expiration date, it is possible to create a substantial pressure on the US dollar in either direction by trying to corner the world's silver market.

BIS and the institutional Structure of the System

A number of problems must be overcome to make the structure work so is inevitably, the offshore US dollars find their way into the international banking system by way of offshore deposits.

However, the rules of the Bank for International Settlements (BIS), the Central Banker's Bank in Basle, Switzerland, prohibit banks from buying the newly issued debt instruments from each other directly.

This prohibition exists for an obvious reason: If banks were allowed to fund each other, the probability of system-wide bank failure would be increased.



This system of funding is not intended to support weak banks; in fact, the opposite objective is the goal. Therefore, a methodology has been constructed that allows banks to buy each other's newly issued paper.

BIS rules do not prohibit banks from owning other bank's financial obligations as long as they are not purchased from another bank directly, but instead are purchased in the Secondary Market of Capitals.

The system supports a group of persons called Commitment Holders that move substantial available bank cash reserves through Secondary Market of Capitals.

These Commitment Holders works with Bank Traders and PQT (Pre- qualification Teams as IBG Group)

CHAPTER IV

COMMITMENT HOLDERS - TRADERS - PQTeams

Commitment Holders

The Commitment holders are few in number. Nine (9) have been reported worldwide being their tasks to enable, design and develop, within TOP 25 World Bank Managers, different kinds of High Yield Investment Programs (HYIP), each year.

They are essential to the smooth functioning of the process of bringing the stability and security to the market because Commitment Holders often forge relationships with other sources of funds from Bank Traders and PQ Teams (IBG Group), that working together, bring to Banks/ Commitments

Holders large amounts of dollars as Investment Funds from Investors around the World.-

Bank Traders - PQ Teams

Bank Traders and Pre-Qualification Team (Corporacion CASM) work together, and they are the only ones that can fix and determine which paperwork (from Investors), will be allowed because they know which banks wish to trade any Proof of Funds (POF-Cash) or BDI, arranging the trades, verifying and confirming the securities, and clear the trades.

The investor must understand that this is a business where "Always Documents Move First".



(This means that the Investor must take the first step sending and showing to the PQ Team (Corporacion CASM) all required Banks documents available for investment , being this an Non Negotiable Matter.

Pre-Qualification Team (Corporacion CASM) Investors - Intermediaries

This is a principal to principal (bank to bank) business only. (This mean that Corporacion CASM (acting as PQ Team and Principal) only negotiates with owners, proprietors or principals, but protecting Intermediaries, Attorneys, Representatives or Broker(if applicable), whom from September 2001, are not allowed to intervene directly in any way.

The PQ Team (Corporacion CASM) will reject to anyone without funds and/or curious.

CHAPTER V

YIELDS

Why the Yields are High

As the investment does not appear intrinsically risky, how are the extraordinary returns of High-Yield programs obtained?

There are several factors contributing to this phenomenon.

The international market for United States funds is extremely competitive.

For example: there are several countries whose desire for US dollars is so high that they will pay annual yields of 20% to 25%, make monthly interest payments in US dollars and issue debentures whose terms do not exceed one year.

These are countries whose risk profile is high even though there is no record of default on their obligations.

These borrowers set the benchmark at the high end of the yield spectrum. At the other end of the spectrum are very low risk sovereign issuers, which are able to attract funds at rates competitive with US treasuries.

CHAPTER VI

ENTERING



How to enter into High-Yield Programs (HYIP)

High-Yield programs are difficult areas for investors.

Extreme care should be taken.

The reason being that due to the significant amount of money to be made, the market attracts "many bad players" unqualified in this field.(Read below)

CHAPTER VII

BANKS

As a rule, banks routinely deny the existence of these programs. Even the ones operating them, do not publicly want to discuss private investment opportunities, because International Bank Law expressly prohibits direct contact between the Investment Bank and the Client (at first stages).-

CHAPTER VIII

RELATIONS BETWEEN PQ Team and INVESTORS

PQ Teams (Corporacion CASM)

The only way for to enter the system is to be able to certify substantial assets to a PQ Team (as Corporacion CASM) .

Bank rules are very clear, so if an investor cannot certify us in the form of cash or liquid collateral, the chances of getting attention from anyone is very remote.

The two key elements for successful investing in the High-Yield Markets are: knowing and developing a strong working relationship with the insiders (Corporacion CASM´s responsibility) and the availability of "clean" funds under full investor's control, without any attached liens (Investor's responsibility).

Rules about offered BDI´s: Each Pre-qualification Team (Corporacion CASM) will reject all kind of leased or bought BDI´s or when exist any suspect about if received documents are falsed or fax from faxes.-

CHAPTER IX



PRETENDERS

Unqualified Intermediaries - Pretenders - Swindlers

There are many intermediaries who know certain details of High-Yield Program trading; however, very few know the entire mechanism of the marketplace. Even worse, they do not have the important direct contacts with program managers, trusts and/or traders.

Because of the fact that there is significant money to be made, the High-Yield markets attract many bad players.

A broker is often a person who knows somebody who knows someone else who may be able to deliver High-Yield programs known as chain of brokers or daisy chain.-

There are far more "want-to-be" s, "hope-to-be" and "wish-they-were" than qualified intermediaries in this business.

CHAPTER X

WARNINGS

Warnings Signs for the Prudent Investor

Here are Some of the signs that may indicate a pretender, swindler or any scam:

The broker asks for up front fees.

The funds need to be transferred to an offshore location.

Your funds are not protected at all times.

Your funds are not handled on a bank-to-bank basis.

The Documents presented are copies of other faxes.

Your questions are not answered to your satisfaction.

Answers to your questions take a long time and are incomplete.

All these points clearly indicate that the person with whom you are dealing, does not have a plan for protecting your profits or keeping them out of undesirable third party hands.



CHAPTER XI

PROFESSIONAL ASSISTANCE

Any investor guided by Corporacion CASM Group, will be assured rapid and professional assistance, with a wide range of options tailored to benefit the investor, as most importantly, secure transactions for their investments.

Offshore locations


http://www.ibg-group.150m.com/Paises%20Offshore/Andorra.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Anguilla.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Aruba.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Bahamas.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Barbados.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Belize.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Bermuda.htm

http://www.ibg-group.150m.com/Paises%20Offshore/British%20Virgin%20Islands.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Cayman%20Islands.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Costa%20Rica.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Cyprus.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Dubai.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Gibraltar.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Hong%20Kong.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Ireland.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Isle%20of%20Man.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Liechtenstein.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Luxembourg.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Malta.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Mauritius.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Netherland%20Antilles.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Panama.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Switzerland.htm

http://www.ibg-group.150m.com/Paises%20Offshore/Turks%20and%20Caicos.htm


PANAMA

Jurisdiction Size Population Time Zone Language

Panama78.000 Km2

2.800.000 GMT minus 5 hours Spanish-English

Disclaimer: This General overview has been obtained from Government Sources so: Is not our responsibility if any part of Local Legislation or Rules has been changed by Authorities without advice us.-This overview is only for information and if wish to obtain more, please, consult directly to each Local Authority and/or Experts.-

General Overview

Corporation (Sociedad Anonima)

The corporation limited by shares is the most frequently used corporate form in Panama, and is the usual choice for an offshore operation.

Corporations are formed under the Law No. 32 of 1927 and the Commercial Code (Decree-Law No. 5 of 1997, Article 5). A corporation is formed by two subscribers (or nominees in the case of absent foreign subscribers) who execute the Articles of Incorporation (Statutes) before a notary and then record them at the Public Registry Office, paying a capital tax (minimum $60.20 on the usual capital of $10,000 -

There is an annual registration fee of $150.Following incorporation, only one shareholder is necessary.

Shares can be of various classes, can have par value or not, may be registered or bearer.There is no minimum capital, and no paying-up rules, except that no-par-value and bearer shares must be fully-paid when issued.

There must be at least three directors, and their names must be in the Articles as filed;



changes to directors must also be filed. Each corporation must have a resident Panamian agent (a lawyer), named in the Articles; there are no other filing requirements unless the Articles are changed or the corporation is merged or dissolved.

Foreign Corporation

A foreign company can be registered in Panama by depositing the following documents at the Public Registry Office:

A notarised Spanish translation of the Articles of Association; A Board minute authorising the Panamian registration; Copies of the most recent financial statements; A certificate from a Panamian Consul confirming that the company is organised

according to the laws of its place of incorporation; Notification of the allocation of capital to the Panamian operation.

Capital taxes on formation and annual registration fees are payable as for Panamanian corporations (see above).

A foreign company can transfer its 'seat' (meaning roughly speaking the place from where its directors control the company) to Panama, and will then be subject to Panamian laws regarding public policy, while remaining under its originating law in other respects.

A foreign company operating in Panama but not registered there may be sued in the courts of Panama but does not have the right to sue.

General Partnership

A General Partnership is permitted under the Commercial Code. The partners have unlimited liability.

Limited Partnership

Limited partnerships (sociedad de responsibilidad limitada) are governed by the Commercial Code and Law No 24 of 1966. Such a partnership may have between two and twenty partners.

There is no restriction on the nationality of the partners or their domicile. Capital must be between $2,000 and $500,000. The names of the partners must be registered in the Public Registry Office along with details of the amount of capital committed and paid in (in cash or kind) by each of them. The liability of each partner for the debts of the partnership is limited to the amount subscribed to but unpaid.

The partners can appoint an independent administrator for the partnership whose name must also be registered.

A limited partnership with up to 5 members is not obliged to hold meetings. Otherwise, the partners must meet at least once each year. There is no requirement for annual returns or



the filing of accounts.An Individual Limited Proprietorship (empresa individual de responsibilidad limitada) is

set up in the same way as a limited partnership with the exception that there is only one member.

Details must be recorded at the Public Registry.The sole proprietor transfers assets to the business for the purpose of trading.The business liability of the proprietor is then limited to the amount of the assets

committed.

Civil Partnership

The Commercial Code and Law No 24 of 1966 also govern the Civil Partnership (sociedad civil), which has legal personality, although the liability of the partners is unlimited.

This type of partnership is often selected by professionals such as lawyers and accountants.

Commandite Company

The Commercial Code and Law No 24 of 1966 also govern the Commandite Company (sociedad en commandita) which is a hybrid partnership and corporation.

At least one partner must have unlimited liability, while the liability of the limited partners is limited to the amount of capital subscribed. In one form, the Commandite Company can have shares which are transferable; but the Commandite Company is seldom used nowadays.

Foundation

The Private Foundation Law 1995 governs private foundations in Panama. Unlike the common law trust, the foundation is an autonomous legal entity with no members or shareholders.

It is generally used for the protection of assets and no business activities are permitted.The founder establishes the foundation by depositing a notarised private foundation

charter at the Public Registry; or the Charter can be executed before the Notary Public.The Charter must specify the names of the Foundation Council (who administer the

foundation on behalf of the beneficiaries), the property of the Foundation, its domicile, the name of its Panamanian agent and other details; but the names of beneficiaries and principles of operation can be contained in separate Regulations which do not need to be filed.

The minimum capital requirement is US$10,000. No accounts are necessary and an audit is not required. As with all Panamanian entities, tax is only levied on income generated within Panama. Foundations are subject to the same capital taxes (minimum $60) and annual registration fees ($150) as are Corporations.

Panamanian law specifically excludes the operation of foreign 'forced heirship' rules or



judgements against foundation assets.Panama itself has abandoned these typical civil law provisions in its own legislation.

Trusts

Panamanian trust law was updated with Law No 1 of 1984.Panamanian trusts (Fideicomiso) must be expressed in writing, so cannot be constructive.

Trusts can be stated to be revocable but otherwise are irrevocable. The settlor, trustees and beneficiaries need not be Panamanian nationals or resident in Panama.

A Panamanian lawyer must act as an agent for the trust. Trusts may be settled in respect of existing or future property; additional property may be included after the settlement either by the settlor or a third party.

There are no registration or minimum capital requirements, or fees, and trust documents can be in English or Spanish. Unlike foundations (see above), trusts are not protected by specific provisions against foreign inheritance laws, judgements or creditors. However, purpose trusts are allowed for.

If a trust earns a taxable income in Panama, then tax is levied directly on the trust and not on the trustee.

National Banking Commission of Panama regulates the transactions of entities acting as trustees;

Banking Commission does not have the authority to investigate the terms of particular trusts or the relevant parties, except where complaints are raised by beneficiaries.

At the end of 2000, Panama enacted two laws addressing money laundering and has issued Executive Decrees to effect accompanying administrative changes. As a result of these new laws, all financial institutions in Panama will come under the scrutiny of the bank superintendency, including trusts, whereas previously only banks were legally bound to report financial transactions over US$10,000 and other suspicious activities.

Offshore Business Activities

Panama probably means shipping and the canal to most people, and indeed it is the world's largest shipping registry; but it is also home to nearly 150 banks, with strong North and South American connections, as might be expected. The canal, and Panama's Colon Free Zone, have established the country as a pre-eminent trading base, and an unknown but presumably high proportion of Panama's 120,000 registered companies are involved in trade.

Panama has a captive insurance sector, and through its stock exchange is attempting to encourage mutual funds; but neither sector has reached a great size.

Banking

The Panamanian banking industry has grown over the last 30 years into a regional banking centre for Latin American and the Caribbean, due to a variety of factors including the absence of exchange controls, the rapidly increasing volume of trade being conducted



through the country (and through the Colon Free Zone in particular), liberal banking legislation and tight secrecy provisions. At the end of 1997 more than 100 banks were licensed in Panama, from more than 20 countries and with assets of about $23bn.

Banking in Panama is governed by the Banking Law 1970 (Cabinet Decree no 238) as amended in 1974. Under the Banking Law, the National Banking Commission grants banking licenses and fulfils some of the responsibilities of a central bank.

There are three types of banking license:General Licences permit trading both in and outside Panama, and can be issued to

Panamanian or foreign banks; International licences allow offshore banking to be conducted from an office in Panama; Representation Licences are issued to foreign banks and permit a local office but no local

trading.

The minimum capital of a bank with a General License in Panama is $3m, and there are a number of other prudential requirements.

International License holders must maintain $500,000 in non-interest-bearing deposits or short-term Government bonds.

Only banks with General Licenses will have any tax liability, and then only in respect of Panamanian income.

More than 80 Panamanian banks have General Licenses, 30 have International Licenses, and the rest are Representative Offices.

Offshore Taxation

The term 'offshore' is not used in Panama legislation; since taxation is on a 'territorial' basis, ie only Panama-sourced income is taxed, an entity which has its activities or assets outside Panama will automatically escape taxation.

There are more than 120,000 corporate entities in Panama, of which the majority are 'offshore'.

Forms of Offshore Operation

Offshore entities may take the following forms: Corporation (Anonimous Society) Foreign Corporation General / Limited PartnershipCivil PartnershipFoundationTrust

Licenses are required only for financial institutions.Corporations do not have to disclose beneficial ownership, and Trusts and Foundations



need not disclose the names of their beneficiaries. Limited Partnerships do however need to disclose the names of their members.

Panama's Inclusion on FATF Blacklist

In June 2000, Panama was identified by the FATF as a non-cooperative tax haven in the global fight against money-laundering.

The result of this is that Panama was one of fifteen tax jurisdictions placed on an FATF blacklist. Each offending tax haven has a year in which to correct its regulations and legislation

The FATF released an annual report in June 2001, in which the organisation revised its list of countries and territories deemed non-cooperative.

Only four were removed from the list, including Panama (the other three being the Cayman Islands, Liechtenstein and the Bahamas).

Panama was praised by the FATF for its substantial efforts to conform to forty recommendations set out by the FATF in a code of good practice governing money laundering.

Tax Treatment of Offshore Operations

Income tax is levied only on income derived from operations within Panama. A Panama business entity can direct its offshore activities from Panama without becoming liable for tax.

The Fiscal Code (Article 694) excludes the following types of income from the tax net:the profits of re-invoicing external goods or services; the profits of operations that are directed from Panama but carried out externally; the distribution of dividends derived from external income, including the above types of

income.

Interest on deposits with Panamanian banks is exempt from taxation whatever the source of the cash.

An entity with both external and Panamanian business activities is taxed only on the Panama-derived income, and is subject to withholding tax only on that income

Panama business entities with only external operations are exempt from the Dividends (Withholding) Tax, the Undistributed Profits Tax, the Business Tax, and from Stamp Duty on contracts executed in Panama to be performed elsewhere.

Companies in the Colon Free Zone, or in Export Processing Zones, are treated in the same way as companies with external operations, as described above.

Exchange Control

There are no exchange controls in Panama, which in effect uses the US dollar as its currency other than for very small transactions in the Balboa, which is at parity with the dollar. There is no Central Bank.



Offshore Activities

Offshore entities are not prohibited from carrying on business activities in Panama, other than banks with International or Representation Licenses but will be taxed on income arising from domestic trading, and will need to segregate such trading in their accounts.

Employment and Residence

The employment market is quite closely regulated: the law sets maximum percentages for the employment of foreigners in a business according to its sector. However, foreign companies are allowed to fill senior and/or sensitive positions with expatriates.

Long-stay working residents are issued with Immigrant visas if their employment is permitted. Short-stay visas are issued freely.

The Tourist-Pensioner visa is given to those who can demonstrate a monthly income of not less than $750 from interest on time-deposits in a Panamanian bank; the Investor's visa is for those who invest their own capital into local business activity.

ANDORRA


Andorra 467 Km2 66,824GMT minus 1

hourCatalan



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BANKING LAW

Banks and other financial institutions in Andorra are regulated by the Andorran National Financial Institute (INAF) under the Law Regulating the Financial System 1993.

Andorran banks are all members of the Agrupacio de Bancs Andorrans, which operated a system of self-regulation until the regulatory law was passed in 1993. The banks have very conservative policies, and high solvency ratios: depositors' funds are guaranteed under a 1997 law, but no Andorran bank has ever defaulted on its depositors.

The over-riding characteristic of Andorran banks that attracts foreign depositors and investors, apart from the absence of taxes, is secrecy. Numbered accounts, made available only to top-quality clients, are said to be known only to 'the customer, the banker and God'. General accounts, also secret under the law, are highly protected as well.

The Andorran Penal Code includes specific provisions against disclosure of details of a bank account to anyone, including the authorities. Only a court order (judge's warrant) can force disclosure.In response to international concern over money-laundering, Andorra introduced the 'Law of Protection of Banking Secrecy and of Prevention of Laundering of Money or of Assets Deriving from Crime' in 1995.

This law requires financial institutions to report any suspicious money movements to the INAF; and the INAF is then entitled to pass on such information to foreign countries if an Andorran judge orders it. However, this will only be done if there is prima facie evidence of a crime (which in Andorra definitely does not include tax avoidance or evasion), and even then is only permitted to countries which have banking secrecy laws, thus excluding, for instance, the UK and the US. In most circumstances, the effect of the law is to strengthen secrecy, not weaken it.

The Law is quite explicit about wanting to balance the attack on money-laundering on the one hand against the need to preserve banking secrecy on the other. Article One reads: 'The present law has as its object the protection of banking secrecy and the prevention of the laundering of money or assets deriving from drug trafficking and other criminal activities'.

The Law defines money-laundering (and offences against banking secrecy) in terms of the existing Penal Code: this provision clearly excludes tax matters from the ambit of the Law.

The Law imposes 'know-your-customer' rules on financial institutions and intermediaries ('fiduciaries').

The Law permits disclosure only in the context of judicial proceedings and in response to an Order from a 'Batlle' (Andorran court).

The Law doesn't just impose a passive duty on financial institutions and intermediaries; there is a positive requirement to report what appear to be suspicious transactions (preferably in advance) to the duty Batlle. The Batlle then either takes appropriate action, or authorises the transaction; the financial authorities are kept informed in either case.

The Law specifically prohibits any person who is reporting a suspect transaction from giving any information about it to the subject of the suspicions, or to any third party.

Financial institutions or intermediaries which infringe the Law are subject to penalties depending on the severity of the infringement:



Minor infractions are punished with a fine between SPA 10,000 and 50,000; Serious infractions receive up to six months' suspension and a fine between SPA 50,000

and 2m; Very serious infractions receive suspension up to 3 years, or permanent suspension, and a

fine between SPA 2m and 50m.

The Penal Code provides imprisonment up to 4 years for malicious infraction of the privacy law, and 7 years if done for gain.

FORMING CORPORATIONS

Govern Corporations formed in Andorra through Act 1983.- The term 'offshore' is not used in Andorran legislation or in describing company forms.

Indeed there is no 'offshore' sector as such, since there is no significant direct taxation of Andorran entities in any event. There are three types of company:

Societat de Responsabilitat Limitada Societat per Accions (both having shareholders with limited liability), Societat Colectiva, whose partners have unlimited liability.

Companies with commercial or profit-seeking goals must be owned at least two-thirds by Andorran citizens; this means, people born in Andorra, or Privileged Residents - those with more than 20 years' residence. In practice, the Andorran majority owner of a business (called a 'titular' in Catalan) can be an Andorran individual or professional adviser who is willing to cede operational control of the business to the foreign 'owner', and sign a share transfer in blank, in return for a fee (called 'prestanom' in Catalan). In practical terms the titular is a nominee; but not in legal terms.

Although this system is in everyday use in thousands of companies, and even though formal contracts are entered into between the parties, the inescapable legal fact remains that the titular can wield considerable power if he wants to. Presumably one is on fairly firm ground with a established, professional titular.

SOCIETAT LIMITADAD (SL)

The Societat Limitadad (SL) is commonly used for local trading and requires a minimum paid up share capital of ESP1,000,000 (Spanish Pesetas), with a minimum of two shareholders. In order to set up an SL, the first step is to obtain approval of the proposed name (some generic words are banned). The name, once approved and registered, will have local protection.

The company's Memorandum and Articles ('estatuts' and 'rao social') are then presented to the Government ('Andorra Govern') in a petition ('suplica') for incorporation. This step is straightforward when a holding company is being created for local assets, but if local trading or complex external financial situations are involved, the Government may look closely, particularly if the foreign party (who is being given 'rights' by the titular) is a newcomer or



non-resident.Once the Government's approval is given, the capital can be deposited and a notary will

formalise the incorporation, along with the 'nominee' paperwork.If there is to be actual trading or other tangible activity in Andorra, the company will need

to apply via a 'suplica' to the Commercial Register in the appropriate commune for a trading license, or 'Registre de Comerc' permission. Finally, the Commune has to approve the premises proposed to be used, which requires further paperwork . . .

Once everything is in place, the Government becomes involved once more (another suplica) to approve the formal opening of the business.

It can be imagined that this whole process will take some months even if everything goes smoothly; if not, it can take a year or more. However, for a straightforwad holding company, it may be only two or three months.

The Government's annual fee (tax) for the registration of an SL is ESP100,000, and if a Registre de Comerc is needed, a further ESP100,000 is due annually. It can be imagined that professional fees will add substantially to these costs due to the formality and complexity of the process.

SOCIETAT ANONIMA (SA)

The Societat Anonima (SA) is usually created for larger types of company, or those with many shareholders, and must have a minimum paid up share capital of ESP5,000,000.

The formation procedures for an SA are the same as for a Societat Limitada (see above) except that Governmental checks will be more stringent; and the annual fee (tax) for registration is ESP150,000.

SOCIETAT COLECTIVA

The Societat Colectiva is a company whose capital is shared between partners with unlimited responsibility. Its formation procedures are similar to those of the SA and SL.

PARTNERSHIP

There are no limited partnerships in Andorra. Civil companies can be created by two or more persons to incorporate a partnership with unlimited liability by private contract or deed. In order to trade, it will need a Registre de Comerc permission from its local commune, at a cost of SPA100,000 annually.

This is a form that can be used by a foreigner wanting to set up in business locally, say as a restaurant; the usual rules about 67% local ownership will apply, and the Andorran titular will need to sign contracts giving the foreigner day-to-day management rights, and control over finances. It suffers from the obvious difficulty that the unlimited liability of a partner



under the law cannot be signed away so easily.

SOLE PROPRIETORSHIP

A citizen or an individual who has exceeded ten years residency is permitted to establish a business as a sole trader, however he will need a trading license from his local Registre de Comerc, at an annual fee of SPA100,000.

This form also could be the basis of a foreign/Andorran business relationship; the Andorran in this case owning 100% of the business, but signing away operating and cash-flow rights to the foreigner. The difficulties are obvious; the advantage is that the Government doesn't have to become involved.

BRANCH

Only insurance companies can established branch offices in Andorra.

FORMS OF OFFSHORE OPERATIONS

Taxation of Foreign Employees of Offshore OperationsThere are in fact no personal taxes as such in Andorra and there is no distinction between the employees of resident or non-resident operations, because all employers have to be Andorran and resident.

Exchange Control

There are no exchange controls in Andorra; indeed there is no national currency. Most of the important world currencies are accepted freely.

Offshore Activities in Andorra

Since there is no offshore sector as such in Andorra, and all trading or business activity has to be carried on by entities which are majority-owned by Andorran nationals or long-stay residents. Other than the rules concerning ownership, there is very little legislation to restrain business activity, which takes place in a liberal environment. However, the Penal Code and the Law of Protection of Banking Secrecy and of Prevention of Laundering of Money and Assets Deriving from Crime 1995 contain severe penalties for criminal activity; and the Government is very watchful in this respect. (Tax avoidance and evasion do not count as crimes.)




All foreigners wanting to work in Andorra need work permits. These are obtained by employers, whether Andorran individuals or companies, on behalf of employees. Self-employment is not allowed until after 10 years' residence.or trade in Andorra.

Annual quotas are established for new issues of renewable work permits. In 1998 the quota for EU and EFTA was for 900 semi-skilled workers and 150 highly-qualified workers. The quota for other nationals was 25.

There are separate types of non-renewable work permit for temporary and seasonal workers, to which the quotas don't apply. The holder of such a work permit must leave the country within one month of expiry of the permit.Renewable work permits are issued first for 6 months, extensible for a further year; then a temporary residence card is issued valid for a renewable 2 years; then, a 5-year ordinary residence card is issued; and finally a 10-year privileged residence card is issued. Fees are modest, except that the employer must pay SPA25,000 when first applying for a permit.Tourist visas are issued freely, but for longer-term stay it is necessary to have either a work permit (which will ensure issue of a residence permit) or a Passive Residence Permit (PRP). Permanent residence means a stay of more than 183 days in the year.

The Law on Passive Residence Permits 1996 allows 200 new residence permits per year. Passive residents do not work or carry out professional activity in the principality.

New entrants must:show minimum annual income of 4 m pesetas (24,000 euros) for the head of the family

and 1 m pesetas for each dependent family member; prove good conduct in their previous domicile; produce health insurance and a pension plan; own or rent a house or apartment in the principality; pay a non-interest-bearing deposit of 4 m pesetas (plus 1 m for each dependant) to the

Government, which is refundable on departure.



ARUBA


Aruba 193 Km2 87.000GMT minus 4

hoursDutch-Spanish-

English


Forming Companies

Limited Liability CompanyThe NV is a limited liability company which is available to residents and non-residents

alike. An NV operated by non-residents and trading outside Aruba is an offshore NV, whereas an NV controlled by residents and trading inside Aruba is an onshore NV. A more favorable fiscal regime applies to an offshore NV than to an onshore NV.

The NV is subject to a much more complicated regulatory regime than the AEC (see below) which is the normal form of choice for offshore operations. The following are the main rules applying to an NV:

The minimum authorized share capital is 50,000 Aruba Florins of which 20% must be issued, and a minimum of two subscribers are required;

An NV must both file accounts and have those accounts audited; The NV's incorporation document must be published in the official gazette, and corporate



details including the director's name need to be entered in the Commercial Register; In order to trade, an NV must apply for a business license to the Minister of Economic

Affairrs; If the director of an NV is a foreigner then an application for a director's license must be

made to the Minister of Economic Affairs; Stamp duty is payable on incorporation; In order to open a bank account a certificate from the chamber of commerce must be

lodged and the identity of the beneficial owners disclosed; Shareholders' meetings must be held in Aruba and must be minuted.

Companies involved in the provision of financial service activities must by law use an NV as a corporate vehicle.

Fees payable on incorporation and annually depend on capital; for the minimum level of Af 50,000 the fee will be Af 75.

Other fees for clearance of the name from the Ministry of Justice, for entry into the Commercial Register, and for registration of directors, will amount to a few hundred florins. Professional fees will be extra.

Aruba Exempt Corporation

Legislation establishing the Aruba Exempt Corporation (AEC) or Aruba Vrijgestelde Vennootschap was passed in 1988. It is considered a more attractive corporate vehicle than the NV since it is subject to fewer formalities and regulatory restrictions. It is a limited liability company whose shareholders' liability for the company's debts is limited to the amount of unpaid share capital.

The AEC is known as the "zero tax corporation" since no tax is payable so long as all business income arises outside of Aruba and so long as the company is not controlled directly or indirectly by Aruban residentsThe following are the key characteristics of the AEC:

The minimum authorized share capital is 10,000 Aruba florins of which a minimum of one share of one Aruba Florin must be issued;

Capital can be expressed in any currency; A single subscriber is permitted for incorporation and there is no need to publish

incorporation details in the Official Gazette; No stamp duty is payable on incorporation; Shares can be voting or non-voting, limited voting, preference or cumulative preference.

Bearer and no par value shares are permited. If the director of an AEC is a natural person then that person must be a non- resident, but

if the director is a company then resident corporate directors are allowed; Directors' and business licences are not needed; An AEC must have a registered office and a locally licensed legal representative;



There is no requirement to prepare or file financial accounts unless the company has an authorized capital of more than 50,000 Aruba Florins in bearer shares

An AEC cannot conduct business activities in Aruba other than activities in connection with the maintenance of its office there;

AECs are not subject to foreign exchange restrictions; Shareholders' meetings can be held anywhere in the world and need not be minuted.

The annual registration fee payable to Government is US$285, and a further $40 is payable to the Commercial Register. Fees will also need to be paid to the resident agent.

The incorporation time schedule is reasonable. Registration of a company takes only a few days which by the standards of civil law jurisdictions is very quick.

General Partnership

Partnerships are recognised under the Aruban Commercial Code. In the General Partnership (vennootschap onder firma) each partner is liable for all the debts of the partnership, as in common law partnerships. There are no filing requirements, and no auditing requirements. Partnerships are fiscally transparent.

Details of partnerships and of the partners must be entered in the Commercial Register at the Chamber of Commerce.

Limited Partnership

The limited partnership (commanditaire vennootschap) is similar to the general partnership except that it has one or more general partners with unlimited liability, who manage the partnership, and one or more limited partners each of whose liability is limited to the amount of his contribution.

The identity of the limited partners does not have to be disclosed or entered in the Commercial Register.

Legal Regime of Corporations

To qualify for offshore status, an Aruban entity must be wholly owned by non-residents, and its income must arise outside the jurisdiction; non-financial offshore operations usually take the Aruban Exempt Corporation form.

However, various business sectors have specially favourable taxation regimes which reflect their international nature. These special regimes are described in this section along with the tax treatment of offshore corporations as such.

Legislation is intended to avert inclusion on the OECD's threatened 'black-list' of errant offshore jurisdictions. If the NFF follows the model of the equivalent changes in the Netherlands Antilles, it will probably involve the abolition of the distinction between offshore and onshore companies, at least for new formations, the introduction of a new



company form named which would be tax-exempt but which would not benefit from tax treaties, the introduction of a 10% withholding tax on dividends, and the reduction of the profits tax rate to 30%.

The details given below relating to the offshore regime might therefore only apply to existing companies as from 1st January 2000.

Legal Regime for Offshore Companies

Most offshore operations in Aruba take the form of an Aruban Exempt Corporation (Aruba Vrijgestelde Vennootschap).Offshore financial institutions are obliged to use the NV form (Naamloze Vennootschap).

In both cases there must not be direct or indirect ownership by Aruban residents if offshore status is to be maintained.

The formation process for an Aruban Exempt Corporation (AEC) is more straightforward than for an NV, and confidentiality is better.

AECs do not have to prepare or file accounts.

Tax Treatment of Offshore Companies

General principles of Aruban corporate taxation, which apply to offshore and other tax-privileged entities only to the extent that they are required to pay tax.

The taxation of Aruban companies is governed by the National Ordinance on Profit Tax; special taxation regimes apply to various different types of activity or company, as follows, providing all income is derived from external operations (exemption for the AEC is statutory - in other cases advance rulings need to be obtained from the tax inspectorate)

Aruban Exempt Corporations

An AEC owned by non-residents whose income is derived from external activities is exempt from all taxation.

Investment and Holding companies

Income is taxed at 2.4% on the first Af 100,000 of net income and 3% on the balance. Capital gains are not taxed; but capital losses are not deductible.

Mutual Funds

These are exempt from profits tax if they have either minimum net assets of $50m, at least fifty shareholders, and four local employees, or if they have minimum net assets of $300m



and two local employees; otherwise the fund will be taxed on its net assets, giving a minimum charge to tax of $1,000 rising to a maximum charge of $10,000.

Trading Companies

The normal applicable rates of tax are 24% on the first Af 100,000 of net income and 30% thereafter; however it is usually possible to obtain a ruling from the Inspector of Taxes exempting 90% of income, which has the effect of reducing the rates to the usual offshore levels of 2.4% and 3%.

Banks

Investment and interest income is taxed on the usual offshore basis at 2.4% and 3%; commission and fee income will suffer 24% and 30% unless a tax ruling can be obtained (normally possible).

Intellectual Property Holding Companies

If a tax ruling can be obtained, the effective tax rate for income from royalties, licenses, patents, copyrights, trademarks etc will be from 2.4% to 3%.

Insurance companies

Foreign-owned captive and reinsurance companies not in receipt of treaty-related income benefit from a concession that deems their income to be Af 100,000, giving them a fixed tax rate of Af 2,400 annually.

Real Estate Holding companies

These companies are not taxed on income derived from real estate (or subsidiaries wholly or predominantly engaged in owning real estate) outside Aruba.

Ocean Shipping and Aviation companies

Substantial tax concessions are available depending on circumstances.



Domestic Low-tax Regimes

Companies targeted by a specific fiscal incentive regime with a view to either broadening the economic base of Aruba or stimulating exports are either exempt from corporate income tax or pay negligible rates for a predetermined period.

Construction of Hotels - Development of Fallow Land

These companies are exempt from corporate income tax where the initial investment is not less than 1 million Aruba florins. In the case of hotels the exemption can be granted for a maximum period of 10 years whereas in the case of a developer of fallow land the period is at the discretion of the Government, and the following additional benefits apply:

exemption from income tax on dividends paid out to shareholders, provided the dividends are paid within two years after the year in which the profit has been made;

exemption from import duties on building and construction supplies for hotels, roads and infrastructure;

exemption from corporate tax on profits derived from the sale of improved land and premises;

exemption from real estate tax.

Non Traditional Manufacturing

These companies are exempt from corporate income tax for a period of 10 years provided that the initial investment is not less than 100,000 Aruba florins, and the following additional benefits apply:

exemption from income tax on dividends paid out to shareholders, provided the dividends are paid within two years after the year the profit has been made;

exemption from import duties on building supplies for premises; exemption from import duties on packing materials, machinery and equipment, raw

materials, semimanufactured products and components, to be used in the production process;

exemption from real estate tax.

Companies Located in the Free Zones

The Free Zone was created to boost exports and increase foreign exchange earnings. Characteristics of the Free Zone are as follows:

The major attraction of operating in the Free Zone is the regime of special fiscal incentives which are granted for a maximum period of 10 years to companies operating within the zone and which include a corporate income tax rate of 2% on profits generated



from all export sales and a waiver of import duties on all goods imported into Aruba for use in a manufacturing process which will result in a finished product for export

The regime of special fiscal incentives is heavily biased towards exports with the consequence that although a company operating within the Free Zone can sell a maximum of 25% of its goods in Aruba, goods sold locally attract normal corporate income tax rates as well as import duty;

There are a number of international agreements in place which increase the attractiveness of the Free Zone as a location in which to site a manufacturing operation. Under the Generalised System of Preferences primary, semi-manufactured and manufactured goods originating in Aruba gain either full free entry or entry at reduced import rates to the USA, EU, Australia, Canada, Japan, New Zealand and Norway;

Since Holland is a member of the EU and Aruba is a part of Holland goods originating in Aruba which have been substantially transformed from imported materials and components can be exported free of any import duties and quotas to the single market. The European Union offers greater possibilities than those available under the Generalised System of Preferences;

Aruba has been designated a beneficiary territory of the Caribbean Basin Economic Recovery Act 1983 the centerpiece of which program is duty free entry into the USA of a wide range of products grown, manufactured and directly imported from a beneficiary territory provided that at least 35% of the article's customs value is attributable to the beneficiary territory. Where the components originate in the USA the 35% criteria is even easier to satisfy and has led to a situation where goods which were once excluded (e.g. footwear, handbags and luggage) are now included.

Taxation of Foreign Employees of Offshore Operations

This section refers to the taxation of foreign employees of offshore operations, general principles of individual taxation in Aruba, which also apply to the resident employees of offshore entities.

Residence (and not nationality) is the criteria for determining when and how much personal income tax is to be levied.

Although there is no difference in the rates of personal income tax payable by residents and non-residents alike, there is a substantial difference in the categories of income which are assessed to personal income tax with non-residents receiving considerably more favorable treatment.

Thus although residents pay personal income tax on employment income received from



an Aruba entity irrespective of whether the employment income relates to work done in Aruba or abroad, non-residents only pay personal income tax on that portion of the employment income which relates to work done in Aruba (unless by way of exception the employer is an Aruba public company).

Residents are assessed on all dividends received irrespective of their source whereas non-residents are only assessed to personal income tax on dividends received from Aruba onshore companies.

Exchange Control

There are no foreign exchange controls as such in Aruba, however foreign exchange transactions are reported to the Central Bank, and there a number of regulations concerning transfers of foreign exchange, plus a tax of 1.3% on many transfers.

Offshore NVs, Aruba Exempt Corporations, and Free Zone companies are all exempt from these regulations and the tax.

Offshore Activities in Aruba

The AEC and the offshore NV, which are the sole corporate vehicles through which "offshore activities" can be conducted, are not allowed to trade in Aruba and must be wholly owned by non-residents if they are to qualify for the regime of special offshore tax incentives.

The prohibition on trading in Aruba does not mean that these entities cannot have their center of operations in the island or direct activities from there but it does mean that they can neither trade with locally based companies (except with other offshore entities) or individuals nor own real estate in Aruba.


A non-citizen who wishes to work in Aruba must obtain a work permit from the Minister of Justice, which will only be granted if no suitable local applicant is available.

Applications must be filed by the potential employer who will bear the costs. The principal documents to be attached to the application include an official certificate from the police authorities in the country of origin certifying that the applicant has no serious criminal convictions, a medical certificate certifying that the applicant carries no contagious disease and has no mental illness, copies of job advertisements placed in local newspapers to which no suitable local applicants replied, certificates verifying the employee's qualifications and the contract of employment which must be in accordance with Aruba labor laws.

An application for a residence permit will normally be submitted at the same time as an application for a work permit and includes many of the same requirements. However where the applicant wants a residence permit without a work permit the chief requirement will be to prove that he will not become a burden to the state and that he has sufficient funds to



support his stay. In order to satisfy this criteria the applicant will be required to provide satisfactory bank

references.

Anguilla


Anguilla 91 Km2 9.660GMT minus 4

hoursEnglish

Disclaimer: This General overview has been obtained from Government Sources so: Is not our responsibility if any part of Local Legislation or Rules has been changed by Authorities without advice us.-This overview is only for information and if wish to obtain more, please, consult



directly to each Local Authority and/or Experts.-

Economic, Legal System & Infrastructure

StatusAnguilla is one of Britain's Overseas Territories in the Caribbean and as such it enjoys a

high degree of political stability. All political parties are strongly committed to the growth of Anguilla as a quality financial services centre.Although the country is essentially self governing, its legislature is the democratically elected House of Assembly.

The Constitution gives the British appointed Governor certain fundamental reserve powers. All legislation must be assented to by the Governor as H.M. The Queen's representative.

UK Overseas Territory Well-regulated financial services industry Common law legal system based on English law Well developed professional infrastructure Same day company incorporation service World standard telecommunications system Easy air access to North America and Europe Neutral tax jurisdiction No foreign exchange restrictions Multi-year work permits available for professionals within the financial services

industry.-

Economic

The significant growth in Government revenues earned from the financial services sector over the last few years is a testament to the success of the policies to date. Anguilla is well positioned as a major player in the international arena.

Legal

Anguilla is a common law jurisdiction. Its judicial system is administered by the Eastern Caribbean Supreme Court the appeal process culminates with the Privy Council. The Court system is serviced by a number of firms of fully qualified and experienced lawyers.

Infrastructure

The professional infrastructure is well developed, with major accounting firms represented



on the island. The telecommunications system is of a world standard providing direct access worldwide.Legislation:

The Proceeds of Criminal Conduct Act 2000 The Money Laundering Reporting Authority Act 2000 The Company Management Act 2000 The Trust Companies and Offshore Banking Act 2000 International Business Companies Act 2000 The Companies Act 2000 The Limited Liability Company Act 2000 The Limited Partnership Act 2000

Taxation & Exchange Control

TaxationUnlike many financial services centres, Anguilla is truly a neutral tax jurisdiction. There are no income, capital gains, estate, profit or other forms of direct taxation on either

individuals or corporations, whether resident in Anguilla or not. This makes Anguilla a very attractive location for financial services professionals to base themselves.

The Government recognises the desirability of expanding Anguilla's professional infrastructure and has very recently established a new programme allowing for multi-year work permits of up to four years duration and relaxed residency rules.

Exchange Control

There are no exchange controls in Anguilla. Although the official currency is the Eastern Caribbean Dollar the United States Dollar is commonly used.

Corporate Structures

Anguilla has three types of companies:The Ordinary Company The International Business Company The Limited Liability Company

Companies must be incorporated through a local agent all of whom, are licensed under the new Company Management Ordinance and regulated by the Inspector of Company Managers. The Government and private sector are working closely together to establish best practice guidelines for company managers. These will be designed to ensure that through the



application of due diligence procedures and the adoption of high standards of practice, Anguilla attracts the best business and that its reputation is maintained.

The relevant IBC, LLC, Limited Partnership and Trust Ordinances all provide a statutory exemption from all forms of corporate, income withholding or other like taxes in respect of international Anguilla Companies business.

The Ordinary Company

The ordinary company, which can be used both within Anguilla and as an offshore vehicle, is governed by the new Companies Ordinance.

The Ordinance contains many attractive features:Companies may be incorporated by one incorporator and have one director. Companies may be limited by shares, by guarantee or by both shares and guarantee. The Ordinance abolishes the doctrine of ultra vires. Companies may acquire, purchase or own their own shares. Filing formalities have been streamlined. Companies may continue in or out of Anguilla. A special class of Specific Private Companies that are exempted from some record

keeping and accounting requirements.-

International Business Company

The International Business Company is based on the traditional model and provides for the easy incorporation and subsequent administration of a flexible and cost effective corporation.

Companies incorporated in any other jurisdiction may be continued in Anguilla as an IBC. An Anguilla IBC can, where the laws of another jurisdiction permit, redomicile to such jurisdiction.

Limited Liability Company

Anguilla is one of the few jurisdictions to have an Act or Ordinance dealing specifically with limited liability companies. Although the LLC Ordinance has its roots in the original Wyoming legislation, Anguillian LLCs have developed the concept much further.

An Anguillian LLC can readily be structured so that it possesses less than three of the four corporate characteristics recognized by the U.S. Internal Revenue Service, namely (a) continuity of life, (b) limited liability, (c) centralized management and (d) free transferability of interests. In such case the LLC will be treated as a partnership. Properly structured, therefore, an Anguillian LLC will provide its members with limited liability, but provide the advantages of income and losses passing through to the members.

The Anguillian LLC Ordinance has many features not found in the original Wyoming legislation, including a provision that its term can be perpetual or as otherwise provided for



in the LLC agreement.

Trusts

The new Trusts Act is the culmination of an exhaustive study of the trusts legislation of many other jurisdictions. The decision was taken to repeal the existing trusts legislation and replace it with a completely new Ordinance, rather than attempt to amend it.

The Trusts Ordinance, which has its roots in English trust law, provides a framework so flexible that the only limitation to its use is the imagination of the trust practitioner. Specifically, the Ordinance permits commercial or charitable purpose trusts, unit trusts, spendthrift trusts, asset protection trusts and what are termed variant trusts. The provision for variant trusts permits a settlor to create a trust (in whatever form and by whatever name) of a type recognized by the law or rules of his religion or nationality or which is customarily used by his community.

The Ordinance provides for a protector of the trust (who may be the trustee). The protector may be provided with the power to remove the trustee and to appoint new or additional trustees.The Rule Against Perpetuities has been abolished and accumulation of income throughout the full term of a trust is possible.

The Fraudulent Dispositions Ordinance provides that a fraudulent disposition is voidable by a creditor provided that the settlor was insolvent at the time of the disposition or became so as a result thereof and provided that the creditor commences his action within three years of the date that the assets were settled into trust. The burden of proving that the settlor was or became insolvent as a result of the transfer is on the creditor.

In relation to asset (or creditor) protection trusts, therefore, Anguilla has deliberately taken a more conservative approach than some jurisdictions.

Where a trust is created under the laws of Anguilla, the Court shall not vary it, set it aside or recognize the validity of any claim against the trust property pursuant to the law of another jurisdiction or the Order of another Court in respect of:

marriage or its termination; succession rights; the claims of creditors in an insolvency; the imposition of any foreign tax or duty.

Other characteristics of an Anguilla trust include choice of governing law and flight provisions.

Partnerships & Limited Partnerships

The Partnership Ordinance 1994 sets out:The definition of partnership The rules for determining the existence of a partnership



The power of partners to bind the firm The nature of partnership property The interests and duties of partners The types of dissolution The rights of third parties against apparent members of the firm The rights and duties of partners on dissolution The distribution rules on final settlement of accounts Confidentiality

The Limited Partnership Ordinance 1994 sets out: The essential elements of a limited partnership Registration and record keeping Returns of Contributions Transactions by partners with the limited partnership Dissolution Proceedings Tax Exemptions

The Limited Partnership Ordinance provides an attractive investment vehicle, particularly for the raising of venture capital, permitting the limited partners to be insulated from liability.

Finance & Banking

The Government of Anguilla has positioned the Territory as a well regulated financial services centre attracting only quality business.

There are no "brass plate" banks and none will be accepted. Generally, only banks which are subsidiaries or branches of banks with an established track record which are subject to the effective consolidated supervision of their home authority will be licensed as offshore banks in Anguilla.

Banking- Regulations & Secure

Today, no financial services jurisdiction can hope to succeed unless it is well regulated. Anguilla is no exception.

The financial services sector in Anguilla is the responsibility of the Governor, although day to day regulation is delegated to the Department of Financial Services. In carrying out its functions and in considering applications by organisations wishing to establish businesses within the sector, the Department aims to adopt a firm but flexible regulatory approach.

It is of paramount concern to the Government that Anguilla's reputation is not tainted by the use of the jurisdiction for money laundering or other illegal purposes.

For this reason, all licensed institutions are expected to carry out proper due diligence and "know your customer" checks so that they are satisfied as to the identity of their clients and



the legitimate origin of their clients' funds.Although commercial confidentiality is ensured by legislation, the authorities in Anguilla

will co-operate fully with law enforcement agencies and regulators in other jurisdictions in the case of illegality. In common with other reputable jurisdictions, the Department of Financial Services is, subject to safeguards to protect legitimate business, able to share regulatory information with overseas regulatory authorities.

Anguilla already has a well established professional infrastructure. The Government recognizes that, as a relatively new jurisdiction, an expansion of the sector would benefit the economy.

Applications from suitable professionals and organisations within the industry are, therefore, welcome. Any organisation wishing to establish within the sector will be required to demonstrate that it is prepared to establish a real business on-island and a multi-year work permit program has been introduced to facilitate this.

Alternatively, in the case of a licensed institution, an administered or managed basis for the issue of a license will be considered. This would entail the full management and administration of the licensee's business by an equivalent licensed institution on island.



BAHAMAS


Bahamas 13.940 Km2

287.000GMT minus 5

hoursEnglish


Forms of Offshore Operation and Tax Treatment of Offshore Operations

The term 'offshore' is not used in Bahamian legislation or in describing company forms. Abstaining from local trading activity is the key factor which allows use of the various

'offshore' corporate forms, and ensures long term exemption from taxation and some or all of stamp duty, exchange controls and business licensing requirements. Since there are no general corporate taxes other than stamp duty, there is no separate 'offshore' sector as such in taxation terms.

In the Bahamas there is no income or corporation tax, no capital gains tax, no VAT or sales tax, and no withholding tax. Companies and partnerships pay annual fees to the Government depending on their nature and capitalisation. There is stamp duty and there are some property taxes. Exempted Limited Partnerships are exempt from both, as are Trusts provided that their beneficiaries are non-resident. Banks and Trust Companies (ie administrators of trusts) are also exempt provided that they have non-resident licenses (this is a matter of practice - a license is issued as resident or non-resident depending on circumstances).

All of the offshore entities, and non-resident domestic companies, are exempt from exchange controls. Mutual Funds are exempt from taxes and exchange controls if they have an appropriate corporate form; in practice therefore they are exempt.

Fees Payable by Financial Institutions

Financial institutions licensed under the Banks and Trust Companies Law 1965 pay fees



on registration and annual fees as follows:

Authorised Agents and Authorised Dealers $ 160,000

Authorised Dealers $ 100,000

Authorised Agents $ 60,000

Other Public Institutions $ 25,000

Restricted Bank and Trust $ 5,000

Restricted Bank $ 5,000

Restricted Trust $ 3,000

Non-Active Bank and Trust $ 1,800 Other Public Institutions' includes banks and trust administration companies; 'Restricted'

banks and trusts are those that deal only with a list of customers included in their license and which cannot be altered without permission.

Captives are licensed under the External Insurance Act 1983, and pay a fee of $2,500 on registration and annually thereafter. In addition, $650 is paid annually for each underwriting manager employed by a captive insurer.

On registration, a captive insurer gains exemption from taxes for 15 years.Resident insurance companies pay a registration fee of $1,000 and the same annually

thereafter, plus 2% of gross premiums collected each quarter.Insurance companies are not permitted to use the International Business Coimpany or

LDC corporate forms, but must establish a Bahamian domestic limited company or must register as foreign companies. Captives registered under the External Insurance Act are exempt from exchange controls.

New insurance legislation is in the pipeline which will update the somewhat outdated Bahamian insurance acts.

Mutual funds and their administrators are licensed under the Mutual Fund Law 1995 and pay fees on registrationn and annually thereafter as follows:

Unrestricted mutual fund administrator: $5,000; Restricted mutual fund administrator: $2,000; Self-administered or single-fund administrator: $500; Unlicensed mutual fund: $200.


There are in fact no personal taxes as such in the Bahamas, and there is no distinction between the employees of resident or non-resident operations.

Exchange Control



The Bahamas have exchange controls, under the Exchange Control Act and Regulations 1956, applying to resident individuals and companies, who need consent from the Central Bank to conduct operations in foreign currencies.

Likewise, non-resident or offshore companies, who are free to deal in foreign currencies, require Central Bank consent to deal in Bahamian dollars.

Residents comprise: Bahamian nationals, companies beneficially owned in the Bahamas, and companies whether Bahamanian or foreign-owned operating within the Bahamas. Foreign nationals with work permits who live in the Bahamas are also normally considered to be resident.

Non-residents comprise: foreign nationals living abroad, or, if living in the Bahamas, without the right to work there; and foreign companies and foreign-owned Bahamian companies trading exclusively outside the Bahamas.

Residents who want to make external investments in foreign currencies will usually be allowed to do so, but have to buy the foreign currency at a premium; non-residents who want to invest into the Bahamas may do so, but the opportunities for portfolio investment are very limited.

Offshore Activities in the Bahamas

The International Business Company and its cousin, the Limited Duration Company, are not allowed to do business with Bahamian residents, but are allowed the following activities in the Bahamas:

To maintain bank accounts; To make and maintain contact with professional firms; To maintain books and records; To hold meetings of directors or members; To lease real estate for use as an office.

It is possible to obtain a license from the Minister of Finance to carry out other types of business activity on the island, if he considers it is in the interests of Bermuda.

Other offshore and non-resident entities operate under broadly similar regimes to the International Business Company.


Work permits are necessary for non-Bahamians to be employed: key (senior or specially-skilled) people are issued permits; in other cases it is wise to discuss the possibility of a permit with the Bahamas Investment Authority in advance.

Anyone wishing to reside in the Bahamas must obtain a residence permit from the Immigration Department.

Home-owners can obtain an annually-renewable Home Owner's Residence Card which acts as a visa for entry and residence during its validity.

Major international investors and existing owners of properties worth more than $500,000



benefit from accelerated treatment of residence applicationsThe International Persons Landholding Act 1993 reversed a previously deterrent stance

and actively encourages the purchase of local residential property by foreigners. Acquisition of a single family dwelling or up to 5 acres of vacant land for construction of a dwelling no longer needs an advance permit, but can be registered after purchase. Rule for inheritors of Bahamian properties have been similarly relaxed. Fees for the (compulsory) registration of real estate and residence permits are as follows:

Application for registration: $25 Application for permit: $25 On issue of certificate of registration or issue of permit: Homeowner resident card: $500

Value of property, $ Fee, $

Up to 50,000 50

Under 101,000 75

101,000 and over 100

BARBADOS


Barbados 13.940 Km2

287.000GMT minus 5

hoursEnglish

Disclaimer: This General overview has been obtained from Government Sources so: Is not our



responsibility if any part of Local Legislation or Rules has been changed by Authorities without advice us.-This overview is only for information and if wish to obtain more, please, consult directly to each Local Authority and/or Experts.-

Forming Companies

The Companies Act 1982 legislates companies in Barbados. It was modelled on the Canadian Business Corporation Act. Company forms available under the Act are limited liability companies, companies without share capital (for non-profit purposes) and mutual insurance companies.

Most offshore operations in Barbados make use of the limited liability company form, and then take offshore status under one of the enabling pieces of legislation, including the International Business Companies Act 1991, the Foreign Sales Corporations Act 1984, and the various specialised financial company forms.

Companies are formed under the Companies Act by submitting Articles of Incorporation, Notices of Directors and Registered Address and Request for Name to the Registrar of Companies. The Registrar issues a Certificate of Incorporation, and the company exists as from the date of the Certificate. Incorporation usually takes two or three days; shelf companies are not available.

The Companies Regulations 1984 establish registration fees for companies formed under the Companies Act. A fee of BDS$750 is payable to the Government on incoporation and an annual fee of BDS$200 thereafter.

Barbadian companies need to have a registered office, and must keep various documents there, including minutes of directors' and shareholders' meetings, registers of shareholders and debenture holders, and accounting records. There needs to be a company secretary. Annual returns are not required; neither are audits unless total assets exceed BDS$1m, and they do not have to be filed.


There needs to be only one shareholder and one director, who may be corporate; public companies must have at least three directors.

Any company which is not a public company is a private company. The Companies Act does not set any minimum level of capital. Different classes of share

are possible; bearer shares are not provided for in the Act; shares of no par value are allowed.

Company Without Share Capital

A company without share capital (non-profit company) must limit its activities to purposes that are religious, philanthropic, educational etc etc. There must be at least three director



External Company

External companies are defined by the Companies Act as incorporated or un-incorporated bodies formed under the laws of a country other than Barbados.

An external company must register in order to do business in Barbados. Registration involves submission of basic corporate information to the Registrar and payment of a fee of BDS$3,000.

After registration, an annual return must be submitted to the Registrar. Registration validates prior acts of the company under Barbadian law.


The International Business Company is the most widely used vehicle for offshore operations in Barbados.

IBC status is given to companies that are carrying on the business of international manufacturing or international trade or commerce. Broadly speaking, these activities have to be carried out in Barbados, with exports or the provision of services being to countries outside the Caricom area or to other IBCs, exempt insurance companies or Foreign Sales Corporations (ie other offshore entities).

The Act limits the issue of an IBC license to companies that fulfill the following criteria:a company should be resident in Barbados (resident means incorporated in or managed

and controlled from Barbados; registered foreign - 'external' - companies are deemed to be resident);

no more than 10% of the assets of a company would accrue on a liquidation to holders of its shares and loan capital resident in the Caricom area;

no more than 10% of the interest and dividend payments made by a company should go to individuals resident in the Caricom region.

Offshore banks , exempt insurance companies (likewise) and foreign sales corporations are not eligible for IBC status.

IBC Licenses are issued by the Minister of Finance and are valid for one year, renewable annually for a fee of BDS$200.

The Minister will issue an assurance to an applicant that the benefits of the Act will be available for 15 years.-

An IBC pays tax at a low rate and is entitled to various other benefits.-

General Partnership

Partnerships fall under the Partnerships Act Cap 313 as amended, which is basically similar to the English Partnership Act 1890. No registration of partnerships is necessary, and there does not have to be a written partnership agreement.



Partners are liable for the whole debts of the partnership. Partnerships are fiscally transparent, and the partnership tax assessment will fall on the partners individually. Apart from the need to file a tax return, there are no filing requirements for partnerships.

Limited Partnership

Barbados Limited Partnerships are governed by the Limited Partnerships Act Cap 312 as amended. The maximum number of partners is 20 (but only 10 if the business of the partnership is banking).

There are one or more general partners, with unlimited liability, and a number of limited partners.

A Limited Partnership must be registered with the Registration Office; otherwise it will be deemed to be a general partnership.

Exempted Limited Partnership

Barbados legislation for Exempted Limited Partnerships is about to be implemented. They will be equivalent to International Business Companies in many respects, including the restrictions on local trading and their tax treatment.

Societies with Restricted Liability

The Society with Restricted Liability (SRL) is similar to the Limited Liability Company in a number of other jurisdictions -

It is designed to allow US taxpayers to claim individual tax treatment on their participation in an entity which is treated as a corporation in its own jurisdiction.

SRLs are formed under the Societies with Restricted Liability Act 1995, and have the following characteristics:

a maximum duration of 50 years; limited liability for the members; legal personality in Barbados; restrictions on the transferability of shares (called quotas);

SRLs do not need to have any physical presence in Barbados, but must maintain a local registered agent and registered office; they are classed as exempt or non-exempt.

Exempt SRLs are subject to the same limitations on ownership and trading as International Business Companies (see above) and receive the same tax treatment.

Non-exempt SRLs can trade within Caricom and Barbados, and are not subject to the ownership limitations that apply to IBCs. They can take advantage of tax treaties (not open to IBCs or exempt SRL´s.)



Trusts

Trusts in Barbados are governed by English common law and by the Trustees Act Cap 250 as amended, which deals with the powers of trustees. Appeal is to the Privy Council.

There is no registration requirement or stamp duty; trustees can be non-resident as long as one is resident. A resident corporation acting as trustee must be licensed under the Offshore Banking Act. Exchange controls apply to local trusts.

The Hague Convention has not been implemented; the maximum perpetuity period is 100 years.

Local (domestic) trusts are taxed as separate entities.-

International Trusts

The International Trusts Act 1995 introduced purpose trusts and asset protection trusts, as well as strengthened protection against forced heirship provisions, non-recognition of foreign judgements, and protection against creditors.

The rule against perpetuities does not apply, and accumulation of income is permitted for up to 100 years.International trusts have considerable tax advantages and are exempt from exchange control; the following conditions must be fulfilled:

the settlor must be non-resident when the trust is created; trust property must not include Barbadian real estate.

Original Barbados legislation for the financial services sector dates from the Sixties, and the Government has pursued the creation of an international offshore financial centre with increasing vigour in the last 20 years. In 1989 the Government formed an Advisory Committee on International Business bringing the public and private sectors together, and the Committee has been effective in maintaining up-to-date legislation in a number of sectors including banking, insurance, shipping and trusts.

At the end of 1997 in Barbados there were about 2,500 International Business Companies and 2,000 Foreign Sales Corporations. In 1997 the Government undertook a review of existing legislation in all offshore sectors, and this has led to a programme of legislative reform in a number of sectors.

In July 2000, Barbados pledged to make changes to its financial supervisory regime in order to remove its name from an OECD blacklist.


Offshore entities are usually formed as LLC (Limited Liability Companies or External Companies and then take appropriate form depending on their purpose

Other forms used are :Exempted Limited PartnershipInternational Trust



Shipping management CompanySociety with Restricted Liability


International Business Companies pay corporation tax as follows:

Taxable Profits, BDS$ '000 Rate of Tax, %

Up to 10,000 2.5

Between 10,000 and 20,000 2.0

Between 20,000 and 30,000 1.5

Over 30,000 1.0 The Minister may agree a different rate at his discretion, but it may not be less than 1%.

Foreign tax credits are deductible, but only in so far as the tax paid stays above 1%.An external IBC (incorporated outside Barbados) pays tax only on its local revenues. IBC

´s are exempt from stamp duty on transfers to other IBCs or non-resident persons; they are exempt from exchange control regulations; they are exempt from customs duties on goods and materials imported for their international business, and they are exempt from withholding taxes on payments of all types made to other IBCs or to non-resident persons.

The Minister may grant exemption from income tax on a proportion (usually one third) of the earnings of those IBC employees or sub-contractors who are essential to its business but are difficult to attract or retain.

Offshore Banks

They are exempt from withholding tax on payments to nonresidents or other offshore entities, from customs duties on goods and materials imported for their offshore business, from estate duties on any of their shares, securities or assets owned by a non-resident, and from property transfer tax on the transfer of shares, securities or other assets. Their offshore transactions are exempt from exchange control, and they are exempt from ad valorem stamp duty.

A stamp duty of BDS$10 is payable on documents, agreements, assignments, bills of exchange, bonds, covenants, debentures and deeds.

The Minister may grant exemption from income tax on a proportion (usually one third) of the earnings of those offshore bank employees or subcontractors who are essential to its business but are difficult to attract or retain.

Exempted Limited Partnership:

Nonresident partners will be exempt from income tax, capital gains tax, withholding tax and all other direct taxes on partnership income attributable to them.



An Exempted Limited Partnership may import duty- and tax-free all types of goods and materials that are exclusively for the use of the partnership.

International Trusts:

Trusts are taxed as persons in Barbados, but an International Trust with nonresident settler and beneficiaries, and without Barbadian real estate assets, will at worst be taxed only on income remitted to Barbados; this is easily avoided, of course. If other Barbadian offshore entities are trust beneficiaries, they are treated as nonresident.-

Societies with Restricted Liability:

Exempt SRLs (ie those without Barbadian resident shareholders, without Barbadian investment assets, and not trading with residents) are taxed on the same basis as IBC´s indeed a Barbados-incorporated IBC can convert itself into an SRL by special resolution, and a foreign (registered) IBC can do so by applying to the Registrar for a Certificate of Continuance as an SRL.

Exchange Control

There is exchange control under the Exchange Control Act 1967, applying to inward investment, local borrowing by foreigners, and remittance of funds abroad. Transactions involving foreign investment are normally approved readily.

Most types of offshore or nonresident entity and transaction are exempt from exchange controls, as described individually above.

Non-national residents of Barbados are allowed to maintain external accounts with authorised dealers, and may credit their (after tax) salaries to these accounts; 25% of these net amounts may be transferred overseas without specific approval.

Offshore Activities

The prohibitions on local activity applying to the different types of offshore entity are described in this brief summary:

International Business Companies may manufacture for export and may trade in external goods and services; they can deal in Barbados freely with other IBCs; they may not deal with resident domestic banks;

Offshore banks can raise money externally but not domestically; Exempt Insurance Companies cannot write domestic business; Foreign Sales Corporations may not trade with resident persons;



Exempted Limited Partnerships and Societies with Restricted Liability can deal freely with other offshore entities, but may not do business with resident persons.


The employees of offshore entities in Barbados require 'Temporary Work and Residence (TRE) Permits', which are issued by the Central Bank.

For this purpose, employees are categorized either as Executives or Non-Executives.In effect, Executives are defined as senior management, and three only of them are

permitted unless the Central Bank can be persuaded otherwise. The minimum age for an Executive is 24, and the minimum salary is CY£12,000 pa.Non-Executives are those foreigners employed in managerial, professional,

administrative, technical and clerical positions. The employer must make an effort to recruit suitable local personnel. Permits are issued

by the Ministry of Labour.In both cases, a fair amount of documentation is required by the authorities.

Permits are normally issued for 2 years, renewable for a further three years.



BELIZE


Belize 13.940 Km2

287.000GMT minus 5

hoursEnglish



Offshore entities may take the following forms:IBC´s TrustOffshore Bank

Licenses are required only for financial institutions. Corporations do not have to disclose beneficial ownership, and Trusts need not disclose the names of their beneficiaries.

International Business Companies

Under the International Business Company Act of 1990, IBC's are exempt from most types of taxation. Exemptions include:

All income of an IBC; All dividends paid by an IBC to persons resident in Belize or elsewhere;All interests, rent, royalties, compensations and other amounts paid by an IBC to persons

who are not residents in Belize.-Capital gains realized on any shares, debt obligations or other securities of an IBC by

persons who are not residents in Belize

IBC's are exempt from the payment of stamp duty on:All instruments relating to transfer of any property to or by an IBC; All instruments relating to transactions in respect of the shares, debt obligations or other

securities of an IBC;All instruments relating in any way to the assets or activities of an IBC.



Trusts

Provided that the settlor is not resident in Belize during a tax year, that none of the beneficiaries are resident in Belize during that year, and that the trust property does not include any land situated in Belize, exemptions include:

The income of the trust for that year from all provisions of the Income Tax Act; No estate, inheritance, succession or gift tax or duty is payable with respect to the trust

property by reason of any death occurring during that year; andNo stamp duty is payable on all instruments executed in that year and relating to the trust

property or to transactions carried out by the trustee on behalf of the trust.For the purposes of the Exchange Control Regulations, 1976, with regard to the trust

property and to all transactions carried out by the trustee on behalf of the trust, a trustee of an exempt trust is considered non-resident.

Offshore Banks

A Belize Offshore Bank is exempt from all forms of taxation on its profits or gains, or upon any interest or dividends earned in respect of banking business carried on from within Belize; also there is no stamp duty on Bills of Exchange or promissory notes or any other document, instrument or certificate executed by or in connection with an offshore banking business.

The annual license fee for a Class A (Unrestricted) Banking License is $20,000; the annual license fee for a Class B (Restricted) Banking License is $15,000.


This section refers to the taxation of foreign employees of offshore operations, see Domestic Personal Taxes for the general principles of individual taxation in Belize, which also apply to the resident employees of offshore entities.

There is no distinction between foreign and Belizean employees, whether or not the business is 'offshore'. Tax is deducted under the 'PAYE' system, and there are compulsory social insurance contributions.

Exchange Control

Under the Exchange Control Regulations, Chapter 43 of the Laws of Belize (1980) only



the Central Bank, authorized dealers and authorized depositories may deal in foreign currency, and a foreign exchange permit must be obtained from an authorized dealer or the Central Bank.

The permission of the Central Bank is also required in order to secure a loan from outside Belize which involves a foreign currency, and also to service repayment of foreign debt.

The necessary approvals, however, can be easily secured in the case of genuine, approved enterprises. Foreign investors are required to register any investments made in Belize with the Central Bank to facilitate the repatriation of profits, dividends, etc.

Offshore Activities

The IBC act prohibits an IBC from:Carrying on business with persons resident in Belize;Owning an interest in real property situated in Belize, except lease property for office

purposes;Carrying on banking business;Carrying on insurance or reinsurance business;Carrying on the business of providing registered agents/offices for companies.Belize IBC may engage in any activity that is not unlawful in Belize.

A Belize Offshore Bank can carry on the following activities within Belize:Establish, maintain, and operate a business office in Belize; Transact offshore banking business through its business office in Belize without

restrictions;Transact offshore banking business with a local entity in Belize licenced under the Banks

and Financial Institutions Act, 1995

Offshore Laws

The introduction in the early 1990's of International Business Company legislation, together with a range of other offshore enabling laws, led to growth of interest in Belize as a low-tax jurisdiction.

From 1990 to 1997 roughly 3,000 offshore companies were registered in Belize. Growth then accelerated: by March 2000, the total number of offshore companies reached 14,000.

Offshore jurisdiction ratings issued by Swiss company Guaranty Trust Ltd put Belize at the head of its list, judged according to a variety of criteria including banking secrecy, legal system, communications and tax regime.In addition to an IBC law, Belize now has legislation in place for Ship Registration, Trusts, Offshore Banking, Computer Wagering, Limited Life Companies, Limited Liability



Partnerships, Mutual Funds, International Insurance, Protected Cell Companies, and a Financial Services Commission to regulate and monitor the industry.

Banking

Offshore banking in Belize began when the outdated 1977 Banking Act, which did not adequately provide for a sound regulatory and supervisory authority, was repealed and replaced by the enactment of the Banks and Financial Institutions Act, 1995, and the introduction of the Offshore Banking Act, 1996, and the Money Laundering (Prevention) Act, 1996, which incorporated the best features of offshore banking legislation in Panama, Cayman and the British Virgin Islands.

A Belize Offshore Bank can carry on the following activities within Belize:establish, maintain, and operate a business office in Belize; transact offshore banking business through its business office in Belize without

restrictions; transact offshore banking business with a local entity in Belize licenced under the Banks

and Financial Institutions Act, 1995.

The major local banks offer a full range of international banking services including foreign currency savings and checking accounts earning tax-free interest and operated for the purpose of exchange control on a non-resident basis. Such accounts are offered to IBCs, individuals and trustees. Credit card services are also available.

Belize Offshore Banks are not subject to exchange control regulations.The Central Bank of Belize, the financial sector's regulatory and supervisory body, says

that although many applications for offshore banking licences have been received since the introduction of the new legislation, only two have successfully met its requirements.

Two categories of Belize Offshore Banks are currently available"A" Class Unrestricted and "B" Class - Restricted. A "B" Class bank is restricted to carrying on such business as is specified in

its license.

Both types of bank need to have local offices, but a "B" Class bank is not allowed to solicit deposits from local residents.

Banking Law

Offshore banking in Belize began when the outdated 1977 Banking Act, which did not adequately provide for a sound regulatory and supervisory authority, was repealed and replaced by the enactment of the Banks and Financial Institutions Act, 1995, and the introduction of the Offshore Banking Act, 1996, and the Money Laundering (Prevention) Act, 1996, which incorporated the best features of offshore banking legislation in Panama, Cayman and the British Virgin Islands.

A Belize Offshore Bank can carry on the following activities within Belize:



Establish, maintain, and operate a business office in Belize; Transact offshore banking business through its business office in Belize without

restrictions; Transact offshore banking business with a local entity in Belize licenced under the Banks

and Financial Institutions Act, 1995.

The major local banks offer a full range of international banking services including foreign currency savings and checking accounts earning tax-free interest and operated for the purpose of exchange control on a non-resident basis.

Such accounts are offered to IBCs, individuals and trustees. Credit card services are also available.Belize Offshore Banks are not subject to exchange control regulations.

The Central Bank of Belize, the financial sector's regulatory and supervisory body, says that although many applications for offshore banking licences have been received since the introduction of the new legislation, only two have successfully met its requirements.

The holder of an "A" Class offshore banking licence needs to establish, maintain, and operate a business office (physical presence) in Belize. This type of Belize Offshore Bank is permitted to transact offshore banking business through its business office in Belize without restrictions on that business.Authorised and paid up capital of not less than US $500,000 must be maintained if the licence is for a local company, or US $25,000,000 in the case of a foreign bank.

"B" Class - RestrictedThe holder of a "B" Class offshore banking licence also needs to establish, maintain, and operate a business office (physical presence) in Belize, but they are limited to transacting only such offshore banking business as is specified in its licence. A "B" Class Belize Offshore Bank is prohibited from soliciting or accepting monetary deposits or any other valuable property from the general public, as well as from issuing cheque books or providing any current deposits or chequing account facilities to depositors.Authorised and paid up capital of not less than US $200,000 must be maintained if the licence is for a local company, or US $15,000,000 in the case of a foreign bank.

Belize's Offshore Banking legislation stipulates that an entity is eligible to apply for an offshore banking licence if:

It is incorporated or registered under the Companies Act or the International Business Companies Act as a company limited by shares, or if it is a foreign bank;

Its shares are in registered form and not in bearer form;its memorandum and articles of association are acceptable to the Central Bank.-

Its authorized and paid up capital are in compliance with statutory requirements (see above).

Upon application, eligible companies must furnish the following documentation, along with a non-refundable fee of US $500:

name and address of directors and principal shareholders;

The ultimate beneficial ownership of the company or proposed company where shareholders



of record are, or are to be, corporations, trusts or other legal entities or organizations, or where the shareholders of record are acting as nominees for or under the direction of any other person;

The shareholding structure, management, and financial standing of the company; Detailed business and financial plans; Particulars of referees, guarantors and other third parties; Details of any subsidiary or affiliated company; Details of any overseas office which the company has or proposes to open; Names and addresses of the external auditors including the experience of the auditors in

auditing banks; If a foreign bank, a written statement confirming that there is no objection to the

application from banking supervisory authorities in its country of incorporation and in the country where its principal office is located;

Signed application by the directors of the eligible company; and Any other information that the Central Bank may require.

The Central Bank of Belize submits its recommendation to the Minister of Finance within sixty days of receiving a completed application. After which, a decision is rendered within four weeks by the Minister.

Establishing an Approved Enterprise

The Government considers several factors before granting development concessions to companies. These include: the company's local value addition, its profitability on investment, the potential for foreign exchange earnings or foreign exchange savings, the creation of employment, the transfer of new technology, the location of industry, the destination of the final products - export/domestic market, and the level of investment.

The following is required in order to obtain the status of an approved enterprise:Establishment of a Chapter 206 Corporation; Formal letter of application addressed to the Permanent Secretary in the Ministry of

Economic Development; Three copies of the project proposal, providing as much information about the project as

possible;

The prescribed non-refundable fee, which varies depending on the size of investment as follows:

US $125,000 - $250,000, fee US $2,500; US $250,000 - $375,000, fee US $3,000; Over US $375,000, fee US $3,500.00

A "Belizean Company" with an investment of less than US $125,000 may apply without the payment of any fee. A "Belizean Company" is one which Belizean nationals own 51% or more of the share capital.

A number of other supporting documents are also needed.



Trust Law

Belize established a modern Belize Trust Act in 1992 which incorporated the best features of similar laws prevailing in other major offshore jurisdictions such as Cayman, Panama and Bermuda.

Trusts can be established either by oral declaration or by written instrument. However, unit trusts must be formal written documents and trusts over property in Belize are unenforceable unless they are written.

Non-charitable Belize Trusts have a maximum life of 120 years. Charitable trusts may be established with unlimited duration.Trusts formed under Belize law are highly secure since a Belizean court cannot set aside

or vary a Belizean trust. No Belize Trust has ever been compromised. A Belize court cannot entertain any claim against the trust property emanating from the

order of a foreign court regarding marriage or divorce, or succession or claims by creditors in an insolvency.

The law provides for the creation of spendthrift trusts and allows a settlor to be the beneficiary of a spendthrift trust.

Settlors and beneficiaries may give to trustees memoranda of wishes to guide the trustees.The law allows for a protector who may also be a settlor, trustee or beneficiary. In

carrying out his duties, a protector has a fiduciary obligation to the beneficiaries of the trust. However, he or she is not considered a trustee.

A trust can have a minimum number of one or a maximum number of four trustees (except for charitable trusts).

A trustee may also be a beneficiary and a settlor. Liberal powers are given to trustees to advance moneys for maintenance and education of

children and beneficiaries.Individuals serving as Trustees are personally liable at law for any losses as a consequence of a breach of trust. However, in the case of a corporate trustee the directors are not personally liable.

Trusts may be registered with the Belize Registrar at the option of the settlor for a fee of US$100.

The Registrar is required to issue a certificate of registration. An entry in the register of trusts cannot be opened for inspection without the written

consent of the trustee.



BERMUDA


Bermuda 58.8 Km2 62.000GMT minus 4

hoursEnglish




Banking and Financial Services

Due to the exclusion of foreign banks, classical banking services in Bermuda are provided primarily by the three established Bermudian banks.

These banks now have adequate international correspondent networks, and some overseas branches. Foreign involvement has been allowed in more sophisticated financial services such as securities issuance and custody, and such services are increasingly available through the Internet, reducing reliance on the local financial infrastructure.

Foreign-controlled firms can nowadays freely provide financial services (other than deposit-taking) internationally, but the Bermuda Government is protectionist as regards local activities, requiring 60% local ownership unless special permission is given. There are currently eight trading members of the stock exchange, most being locally-owned firms, and seven of them can sponsor listing. A number of foreign firms are providing electronic brokerage, dealing and trading services internationally, alongside the Stock Exchange, and in some cases with its involvement.

Bermuda's new anti-money laundering legislation came into effect via the Proceeds of Crime Amendment Act 2000, from 1 June, 2001, which applies to all banking and financial institutions. With the Act in place, fiscal offences are now consistent with international anti-money laundering standards and all forms of tax evasion are now a criminal offence in Bermuda.

In July, 2002, the Bermuda Monetary Authority suggested that the jurisdiction's banking sector could be opened up to to a greater extent to foreign ventures.

In its annual report, released last week, the Monetary Authority revealed that it has not ruled out the possibility, and that several banking licence applications from foreign operators were currently being considered.

Exempt Company

The Companies Act 1981 (as amended) provides exemption from the 60% local ownership requirement to a company which is does not engage in any activity on the island except with other exempt entities.

Managing other exempt entities is also permitted, and, for mutual companies, so is the local distribution of their shares. Other activities may be permitted to exempt companies if a licence is granted by the Minister of Finance.

An exempt company must have two individuals resident in Bermuda, either as directors, or one as secretary and one as director, or one as secretary and one as 'permanent



representative'.Exempt companies pay annual fees based on their 'assessable' capital (authorised capital

plus share premium account; or for a mutual company its authorised capital - a share premium account is not required) as follows:

$12,000 $1,780

$12,001 - $120,000 $3,635

$120,001 - $1,200,000 $5,610

$1,200,001 - $12,000,000 $7,465

$12,000,001 - $100,000,000 $9,345

$100,000,001 - $500,000,000 $16,695

$500,000,001 or more $27,825

An exempt company may apply to the Minister of Finance for a certificate exempting it from future profits taxation, should there be any, for a period ending not later than the 28th March, 2016.

Local Company Limited by Shares

Bermudan companies are usually formed by registration under the Companies Act 1981 as amended, taking between two and five days depending on whether the Minister's approval is required, An application for registration is made to the Bermuda Monetary Authority, giving details of the proposed beneficial ownership and the proposed name is reserved with the Registrar of Companies; some sensitive words are not permitted, including 'bank'. When business requirements are unusual a company can be formed by Act of Parliament, which takes about two months.

Local companies must be 60% owned by a Bermudian and they can trade within the domestic economy. Two directors are required who cannot be corporate but need not be Bermudian; a secretary is required, does not have to be local, and can be corporate. At least one shareholder is required and nil-value shares are not permitted. The minimum capital is $12,000 and there is an annual fee related to the authorised capital, which does not have to be issued.

Accounts must be kept at a local registered office along with the share register and minutes of shareholders' and directors' meetings although the accounts are not open to inspection.

The share register, register of directors and officers, certificate of incorporation and memorandum and articles of association are all publicly accessible. Shelf companies are not obtainable but old companies are available on occasion.



Permit Company

If a company incorporated outside Bermuda intends to open a branch or actively trade within Bermuda, it must first obtain a permit issued by the Minister of Finance.

Whether an overseas company requires a permit is frequently a question of fact to be determined in the light of those activities which are intended to be carried on by or on behalf of the company in or from Bermuda. An overseas company is not normally considered to be trading within Bermuda unless it occupies premises there.

The application procedure takes up to 10 days and involves an application to the Minister accompanied by fairly extensive information about the company, its owners, and the proposed trade.

A permit company usually carries on its business in the same way and is subject to the same rules as an exempt company. Bermuda representatives must be appointed and the Registrar must be notified of the relevant particulars. A permit company must keep adequate records although they do not need to be filed except in the case of a permit company which is registered as an insurer.

A permit company pays an annual fee of $1,780 or, for insurance and finance companies, $3,635. Companies who manage unit trust schemes pay an additional fee of $2,595 for each scheme managed. If a permit is issued after the 31st October in any year, the fee payable for that year is reduced by 50 per cent.

Like an exempt company, a permit company may apply for exemption from future taxation for a period ending not later than the 28th March, 2016.

Exempt Partnership

Partnerships are recognised in Bermudan law under the Partnership Act 1902 as amended, which is modelled on equivalent English law.

They can become exempt from local ownership requirements and exchange controls under the Exempted Partnerships Act 1992, through an application process similar to that for Exempt Companies (see above). An exempted partnership must maintain an office in Bermuda and must appoint a resident representative.

Exempt partnerships pay the Government an annual fee of $$2,100.

Limited Partnership

Limited partnerships are governed by the Limited Partnership Act 1883 as amended. As is usual, a limited partnership must have at least one general partner with full liability and one or more limited partners whose liability is limited to their contributions and who do not take part in the management of the partnership.

A limited partnership can become exempt under the Exempted Partnerships Act 1992 in the same way as a general partnership, and is subject to the same terms.



The Limited Partnership Act provides for limited partnership interests to be traded on overseas stock exchanges by permitting branch registers of limited partners to be maintained outside Bermuda.

An exempt limited partnership pays an annual fee of $2,100.

Overseas Partnership

An overseas partnership is defined as a partnership formed under a law other than the law of Bermuda. An application must be made to the Minister of Finance giving the reasons why an exempted partnership should not be formed instead (for instance, that it is more tax-efficient). In other respects, the application process is similar to that for an exempted partnership.

The Minister issues a permit, analogous to that for a permit company, and the Registrar keeps a register of overseas partnerships. An overseas partnership may not participate in the domestic economy.

An overseas partnership must maintain a registered office in Bermuda and must keep sufficient records there to show the nature of its business and its financial situation, updated at least every three months.

An overseas partnership pays an annual fee of $2,100. It is deemed to be non-resident and is exempt from exchange controls.

Trusts

Bermudan trusts are governed by The Trustee Act 1975 which is largely based on the English Trustee Act 1925.

The Trusts (Special Provisions) Act 1989, another significant statute, introduced the concept of the "purpose trust" and brought Bermudan law still closer to English law. The Perpetuities and Accumulations Act 1989 increased the perpetuity period to 100 years.

Foreign inheritance laws are specifically excluded, and there is provision for the non-recognition of foreign judgements. Bermuda has adopted the Hague Convention; the Trusts (Special Provisions) Act 1989 made some consequent adjustments to the law. Appeal is to the English Privy Council.

In general, trustees need not be resident in Bermuda; but one must be. The trust fund may comprise cash, land, securities, interests in property or other trusts. Non resident trusts are not permitted to hold Bermuda currency, shares or security in local companies, or an interest in land in Bermuda without the prior consent of the Bermuda Monetary Authority.Bermudan trusts need not be registered, and there is no stamp duty.

Segregated Accounts Companies

The Segregated Accounts Companies Act 2000 came into force in November 2000. It allows for the registration of segregated accounts companies by standardised procedures - previously, segregated accounts companies were being brought into existence by the Private



Act route. This can still be used when necessary; but most new formations are likely to be under the new Act.

Segregated accounts companies are mostly used in the insurance sector (where they are often called protected cell companies), for umbrella mutual funds, and in the e-commerce sector where each individual user of a set of trading systems can occupy a segregated space rather than having to register separately. Server farms would be a good example.

The Act specifies that any asset linked to a particular segregated account is held in a separate fund for the beneficial interest of the account holder, and does not form part of the general funds of the segregated account company in the event of liquidation or sale. The concept is not totally unlike that of the trust, with the segregated account company playing the part of the trust manager.

Registered insurers may make use of segregated accounts companies without permission; other types of company need to obtain permission from the Minister of Finance.

Trust Law

Bermudian trusts are governed by The Trustee Act 1975 which is largely based on the English Trustee Act 1925. The Trusts (Special Provisions) Act 1989, another significant statute, introduced the concept of the "purpose trust" and brought Bermudian law still closer to English law.

The Perpetuities and Accumulations Act 1989 increased the perpetuity period to 100 years. Foreign inheritance laws are specifically excluded, and there is provision for the non-recognition of foreign judgements. Bermuda has adopted the Hague Convention; the Trusts (Special Provisions) Act 1989 made some consequent adjustments to the law. Appeal is to the English Privy Council.

The legislation allows for the appointment of a Protector, who can be given power to replace trustee(s), add or remove beneficiaries, and transfer the trust to another jurisdiction.In general, trustees need not be resident in Bermuda; but one must be. A Bermudian trustee is subject to the jurisdiction of the Supreme Court of Bermuda.

The trust fund may comprise cash, land, securities, interests in property or other trusts. Non resident trusts are not permitted to hold Bermuda currency, shares or security in local companies, or an interest in land in Bermuda without the prior consent of the Bermuda Monetary Authority.Bermuda trusts need not be registered, and following the Stamp Duty Amendment Act 1993 the only Bermuda trusts still subject to stamp duty are those established by residents in favour of their families.

The Trust Companies Act 1991 provided for the licensing and regulation of trust formation and management companies; private individuals or partnerships managing one or a group of named trusts do not need to register under the Act.Bermuda, like many other offshore jurisdictions, is tightening up its regulatory regime in response to pressure from the OECD and FATF. As part of this, the government passed the Trusts (Regulation of Trust Business) Act 2001.

Much of the Act is based on the recommendations made by the November 2000 KPMG



report on financial services regulation in the Overseas Territories, which was commissioned by the UK government.

Fund Management Law

The Bermuda Monetary Authority (Collective Investment Scheme Classification) Regulations 1998 (known as the CISC Regulations) gathers together existing statutory and voluntary rules for fund management in Bermuda.The Regulations divide funds into three classes:

Bermuda Recognised Schemes The UK Financial Services Act 1986 (UK) includes Bermuda as a "designated territory". Mutual funds which have been certified as UK-class schemes by the Minister of Finance in Bermuda can apply to the Securities and Investments Board in the United Kingdom for classification as "recognised schemes". The funds can then be promoted to the public in the United Kingdom in a similar way to UK authorised unit trusts. The enabling legislation in Bermuda dating from 1991 has now been subsumed into the CISC Regulations; it was based on the was based on the EU UCITS Directive.

Bermuda Standard Schemes Non-UK Class schemes were previously supervised under a voluntary Code of Conduct, which has now been brought into the CISC Regulations. Such schemes can usually be distributed to certain types of investor in the UK and some other countries, depending on the local regulatory structure.

Institutional Schemes Whereas the previous two categories covered open-ended, essentially public schemes, this category is for schemes appealing to professional investors, and which may often be closed-end schemes run by limited partnerships. A minimum initial investment of $100,000 is required, and an initial offering of at least $50m. A lower level of supervision is applied to such schemes.

The Bermuda Monetary Authority (BMA) regulates the collective investment industry and vets new applicants to determine their qualifications and experience. A draft prospectus is required as well as evidence of the investment experience of the fund manager and details of the promoters' background.

The BMA does not necessarily expect promoters to be internationally-recognised investment houses, and will normally give permission fairly readily if it thinks that a fund will be honestly and competently managed.

The promoters can either form their own management company for the scheme or select an existing Bermudan management company. A Bermuda bank must be appointed as custodian although sub-custodians are permitted. Similar regulations apply to the functions of registrar and transfer agent.

The minimum capital requirement for a mutual fund is $12,000, which can be subscribed as founder shares by the promoters.



BRITISH VIRGIN ISLANDS


British Virgin Islands 153 Km2 19,615GMT minus 4

hoursEnglish


Forming Companies

The vast majority of companies formed in the BVI for offshore purposes are incorporated under the International Business Companies Act 1984.

However this law did not supersede the existing Companies Law 1963, also known as Cap. 285, which is based on English law and is used to form various types of company used by businesses trading in the BVI, and also for certain other special purposes.

Companies formed under the Companies Act 1963 are often referred to as 'CAC', 'CapCo', or 'Cap. 285' companies.



They can be:

Private companies limited by shares, by guarantee, or hybrid; or they can be unlimited, but that is rare.

Public companies can also be formed under the Act.

All these types of company needs:

Memorandum and Articles of Association must be filed at the Companies Registry, along with the registration fee.

For companies limited by shares the Articles of Association can follow the Memorandum -

Foreing Companies

Foreign companies can re-establish themselves in the BVI without the necessity for reciprocal arrangements in the original country of incorporation. An IBC wishing to leave the BVI may do so.

Responding to international pressure, the BVI Government enacted the International Business Companies (Amendment) Act 2003, limiting the use of bearer shares and introducing other measures to increase transparency. The Government also plans to amalgamate the regimes for IBC's and Cap 285 companies. In future, bearer shares must be held in the custody of either an "Authorised Custodian" or a "Recognised Custodian". If bearer shares are not in the hands of an appropriate custodian after the end of 2004, the shares will be disabled and there is a risk that the company may be wound up.

An Authorised Custodian is a person who holds a valid licence issued under the Banks and Trust Companies Act 1990 ("BTCA"), and whose licence specifically includes an authorisation permitting the holder to act as a custodian. Recognised Custodians are persons not licensed under the BTCA and not resident in the British Virgin Islands but who are specifically approved by the Financial Services Commission as Recognised Custodians..

A company issuing bearer shares must provide the Custodian with:The full name of the beneficial owner of the shares; and The full name of any other person having an interest in that share or a statement to the

effect that no other person has any interest in the share.

Ordinary Resident Company

An ordinary resident company limited by shares is usually formed for the purposes of



carrying on local business. It must:Have two or more members Restrict the transfer of its shares; Not invite the public to subscribe for its shares; and Must not have more than 50 members. Residence depends on the location of management and control; usually, if more than half

of the directors are resident in the BVI, then so is the company. If a resident company carries on business in the BVI it must obtain a Trade License, and will pay a license fee depending on whether the shareholders are residents or foreigners.

The fee due on incorporation is $200 plus $15 for each $10,000 of nominal capital in excess of $10,000. Annual registration fees are from $25 to $10,000 depending on the gross value of the company's external (non-BVI) assets.

Ordinary Non-Resident Company

An ordinary non-resident company limited by shares is subject to the same rules as a resident company; and Fees on incorporation are as for resident companies; the annual registration fee is $250.

Company Limited by Guarantee

Under the Companies Act, a company limited by guarantee must have a minimum of two members; the Memorandum of Association contains a statement of the amount up to which the members guarantee the company's debts. The Articles can provide for the members to have differing 'shares' of the assets and liabilities.

The Company Limited by Guarantee has certain advantages, including that there is no list of members on the annual return, and that control over assets can be achieved without the use of shares; in some jurisdictions, profits realised from such companies are classified as capital gains rather than as income. Specialist advice is required by anyone considering the use of a company limited by guarantee.

Companies limited by guarantee can be resident or non-resident, as for those limited by shares. The fee payable on incorporation is $100, and annual registration fees are as for companies limited by shares.



Hybrid Company

A hybrid company under the Companies Act usually has a group of shareholding members which is distinct from the group of guarantors. The shareholders can have 100% of the voting power, and can execute a trust deed in respect of their shareholdings; under the BVI's trust legislation a trust Protector can be appointed to oversee the trustees' actions. The result, if the company is set up correctly (specialist advice needed!), is to separate control and membership of the company from beneficial interest, which is sometimes desirable.

Hybrid companies can be resident or non-resident, as for companies limited by shares. The fee payable on incorporation and the annual registration fees are as for companies limited by shares.

Public Company

A public company formed under the Companies Act is similar to a private company limited by shares except that it must have 5 or more members, and the restrictions listed above do not apply.


The International Business Company is the most widely used vehicle for offshore operations in the BVI; it normally takes the form of a private company limited by shares.

The governing legislation is the International Business Companies Act 1984, updated by the International Business Companies (Amendment) Act 1990 and the International Business Companies (Amendment) Act 2003, which restricts bearer shares (see above) and imposes record-keeping requirements on professional intermediaries.

Under the International Business Companies (Amendment) Act 2003, from December 31, 2004, all international business companies (IBCs) located in BVI will be required to establish and maintain a Register of Directors, and must appoint their first director within 30 days of the IBC's incorporation. Other statutory requirements however remain minimal, and flexible:

Only one director and one shareholder are required; Shareholders, directors and officers need not be resident in the BVI and there is no

stipulation as to their nationality; There is no minimum capital requirement; shares may be either registered or bearer and

may be issued in any currency (bearer shares now have to be deposited with an authorised intermediary, who must record the identity of the beneficial owner);

Accounts need not be kept; however, if they are kept there is no requirement for an audit; No returns are needed of shareholders, directors or officers;



Shareholders' and directors' meetings need not be held in the BVI and can be held by telephone;

The Memorandum and Articles of Association are the only documents to be held on the public record.

IBC status and conditions

No business may be transacted with residents in the BVI; No ownership interest in real property in the BVI is permitted; property may be leased for

office use only; Banking or trust business may be carried on only if an appropriate license is issued; Likewise, a licence is required to carry on insurance or re-insurance business; Engaging in the business of company management or providing registered facilities for

BVI incorporated companies is not permitted. IBCs are permitted to own shares in other BVI companies, maintain bank accounts in the

jurisdiction and employ the services of local professionals. IBCs are exempt from BVI taxes by statute.

It is usual to use a registered agent in the BVI to incorporate an IBC (eventually it is obligatory to appoint one anyway; there are about 70 of them, licensed by the Government). Fees for incorporation of an IBC are based on the company's authorised share capital. Normally, the incorporation process takes no more than one day; however, for banks, trust companies and insurers the process is lengthier.

Statutory incorporation fees are $300 for capital up to $50,000 and $1,000 thereafter. The annual license fee is:

Authorised Capital Fee

Up to $50,000 $300

Over $50,000 $1,000

No authorised capital $350

Below $50,000 and some or all of the shares have no par value

$350

Limited Partnership

BVI Limited Partnerships are governed by the Limited Partnerships Act 1996; as regards general partnerships this act reproduces almost exactly the common law provisions of the



English Partnership Act 1980, but the clauses dealing with limited partnerships follow modern US Delaware precedent.

Formation of a limited partnership is normally carried out by a registered agent (it is obligatory to nominate one on formation in any event). The agent files the Memorandum and Articles of Association with the Registrar of Limited Partnerships, who issues a Certificate of Limited Partnership; the partnership then exists; but if there is no certificate, the partnership will be deemed to be a general partnership. The fee payable on registration if $500 and there is an annual license fee, also $500.

The rights and limitations of limited partnerships under the Act mirror those of the International Business Company (see above); however the Act distinguishes between local and international partnerships - local partnerships may transact local business but are not tax-exempt, while international partnerships are tax-exempt but barred from local business.

The BVI limited partnership legislation was designed to facilitate the use of such vehicles in investment and mutual funds. As is usual in limited partnerships, there are one or more general partners with unlimited liability and management responsibility, while limited partners are liable only to the extent of their capital contributions, and their identity does not need to be disclosed. It is possible for the same person to be both a general and a limited partner in the same partnership. A limited partner's interest in the partnership is assignable.

There are no minimum capital requirements or prescribed debt:equity ratios.

Trusts

The trust law of the British Virgin Islands is based on English trust law. The Trustee Amendment Act 1993 (the "Amendment Act") updated the original British Virgin Islands Trustee Act (itself largely based on the English Trustee Act 1925).

The Amendment Act introduced a fixed perpetuity period not exceeding 100 years, and has modern 'wait-and-see' provisions to deal with interests that might vest outside the perpetuity period. The Amendment Act also introduced purpose trusts..

BVI trusts are exempt from registration under the Registration and Records Act, and trustees are exempt from any need to file annual returns and from any other reporting requirements.

The majority of BVI trusts are exempt from all taxes provided there are no beneficiaries resident in the BVI, and that the trust does not conduct any business in the BVI or own any land in the jurisdiction. A trust duty of $50 is imposed on each trust instrument subject to BVI proper law.

The Amendment Act provided for the appointment of a 'protector of trust', effectively a supervisor of the trustee(s), and also managing and custodian trustees. A company offering trust services must obtain a licence under the Banks and Trust Companies Act 1990 and conform to various conditions.

Offshore Law



The British Virgin Islands seem to have got as close to being a perfect 'private' offshore international financial centre as can be imagined. For 25 years the Government has welcomed offshore business, and has created a world-standard regulatory structure to avoid money-laundering and other criminal activity. Like Bermuda, the BVI decided not to encourage the gracowth of offshore banking, but the BVI International Business Company must be the world's most successful offshore entity, and is used extensively in financial holding and investment structures, as well as in trust management.

The BVI have also been successful in developing mutual funds and captives, although not being the leading jurisdiction in either case. Finally, the BVI have a strong position in yachting both as a registry and as an operating base.This section of the lowtax.net site describes the most important types of offshore business activity carried out from the British Virgin Islands.

In common with many other offshore jurisdictions, the British Virgin Islands is responding to pressure from the OECD and FATF by tightening up its regulatory regime. The BVI Government established an independent regulatory body - the Financial Services Commission (FSC) - on 1 January 2002. Then, in October, 2002, the BVI Finance Centre was established under the FSC as a dedicated financial services marketing unit designed to promote the BVI as a premier international centre for financial services.

The Finance Centre is responsible for providing information on the BVI and its activities, co-ordinating BVI participation at industry conferences and events, liaising with the media and producing marketing material including advertising, brochures and a new web-site.

Government plans for improved legislation in 2003 include a new Money Services Bill aimed at policing the perimeter of regulated activities, Protected

Cell legislation to embrace both insurance companies and mutual funds, a new investment business legislation aimed at regulating investment intermediaries, a long-awaited Insolvency Bill, and an amendment Bill in respect of all current financial services related legislation to update and modernize current practices.

Financial Holding and Investment

The phenomenal growth of the BVI International Business Company (IBC), with more than 300,000 IBCs incorporated by 1998, has been fed by political instability in Latin and Central America, and more recently the handover of Hong Kong to mainland China.

It is difficult to be sure why the BVI became the jurisdiction of choice for these markets: of course, the IBC is highly flexible; secrecy is good; the BVI's reputation is good; there is common law; and so on. But other jurisdictions could make similar claims.

At all events, it happened, and the IBC's success has a knock-on effect in terms of the diversity and professionalism of supporting services in the BVI.

The authorities are keen to expand into new markets, and will no doubt legislate further to open up new possibilities.The great majority of existing IBCs have been formed as asset protection vehicles, sometimes in association with trusts, either to hold shares or other types of asset.



IBCs are allowed to issue bearer shares, but in response to international pressure, the BVI Government enacted the International Business Companies (Amendment) Act 2003, limiting the use of bearer shares and introducing other measures to increase transparency. The Government also plans to amalgamate the regimes for IBC's and Cap 285 companies. In future, bearer shares must be held in the custody of either an "Authorised Custodian" or a "Recognised Custodian". If bearer shares are not in the hands of an appropriate custodian after the end of 2004, the shares will be disabled and there is a risk that the company may be wound up.

An Authorised Custodian is a person who holds a valid licence issued under the Banks and Trust Companies Act 1990 ("BTCA"), and whose licence specifically includes an authorisation permitting the holder to act as a custodian. Recognised Custodians are persons not licensed under the BTCA and not resident in the British Virgin Islands but who are specifically approved by the Financial Services Commission as Recognised Custodians. There are 80 such custodians.

Over 500,000 international business companies have been registered under the Act, with over 380,000 IBCs believed to be currently active.

Banking

When the BVI began their development as an IOFC, the authorities decided not to encourage offshore banks to establish themselves in large numbers, as a defence against money-laundering. Unlike Bermuda, however, which created local banks to the exclusion of external banks, the BVI authorities allowed in a small number of international banks. There are in fact a total of 7 banks in the BVI, including Barclays Bank and Chase Manhattan.

Lately there has been pressure on the Government from the business community to allow in larger numbers of respectable offshore banks; professional firms in particular feel that the BVI's legislative and regulatory apparatus is well up to global standards and well able to defend the BVI and its good reputation against scams, criminals and drug money. By now it's likely that the Government would not refuse new applications from top banking institutions.

Banks are regulated under the Banks and Trust Companies Act 1990, and supervised by the Inspector of Banks, Trusts and Company Managers.

Trust Management

Trust Management has been a major activity in the British Virgin Islands for 30 years or more. Originally the trust was used primarily by wealthy individuals from the major common law countries, but it is now accepted as a major technique of asset protection in all parts of the world. Trusts in the BVI have a basis in common law, and are formed under the Trustee Ordinance 1961. The Trustee (Amendment) Act 1993 considerably modernised and updated the legislation, allowing for purpose trusts among other things. The new legislation,



together with the highly flexible BVI International Business Company, has opened up wider markets for the BVI trust, in which clients are not necessarily interested so much just in tax avoidance, but also in the efficient management of wealth in a more general sense.

There is a large and sophisticated community of professional advisers on trust matters in the BVI. Companies offering trust services must be licensed under the Banks and Trust Companies Act 1990, and supervised by the Inspector of Banks, Trusts and Company Managers.


The main forms useful for offshore operations in the British Virgin Islands are the International Business Company, the various types of non-resident Cap. 285 company, the International Limited Partnership, and the Trust.

Offshore operations may take place within the following forms:Non Resident Private Company Limited by Shares.- Non Resident Private Company Limited by Guarantee.- Non Resident Hybrid Company IBC´s (International Business Company) International Limited Partnership Trust


Offshore BVI companies are taxed as follows:Non-resident limited liability companies (whether limited by shares, by guarantee or both,

ie hybrid) are exempt from income tax on foreign-derived income, but pay BVI income tax at 15% on any chargeable income derived locally or remitted to the BVI.

Resident limited liability companies which obtain not less than 90% of their net profit from trading outside the BVI (known as offshore trading companies) pay 1% income tax on their chargeable profits.

International Business Companies are exempt from income tax and from stanp duty. International Limited Partnerships are exempt from income tax and from stamp duty.



Trusts without BVI beneficiaries, local land holdings or business activities are exempt from income tax and stamp duty.

Almost all captive insurance companies, mutual funds and foreign investors use the International Business Company, Limited Partnership or Trust formats; thus, they are

exempt from local taxation. License fees are payable as follows in addition to registration and incorporation fees

Exchange Control

The British Virgin Islands have no exchange controls.

Offshore Activities

International Business Companies (and International Limited Partnerships) are permitted certain local activities:

Make and maintain deposits with banks; Professional contacts with solicitors, barristers, accountants, book-keepers, trust

companies, administration companies, investment advisers etc Prepare or maintain books or records; Hold meetings of directors or members; Hold a lease of property to use as an office for other permitted purposes; Hold shares, or other securities, in another IBC; Hold shares, or other securities, in a company owned by a BVI resident or a BVI-

incorporated company. Non-resident Companies Act (Cap. 285) Companies may do business locally but will pay

income tax on the profits.



CAYMAN ISLANDS


Cayman Islands 259 Km2 30.000GMT minus 5

hoursEnglish

Disclaimer:

This General overview has been obtained from Government Sources so: Is not our responsibility if any part of Local Legislation or Rules has been changed by Authorities without advice us.-This overview is only for information and if wish to obtain more, please, consult directly to each Local Authority and/or Experts.-



Forming Companies

The Companies Law 1961 (as amended, chiefly in 1990 and 1995) is based on English law and is the main law governing companies in Cayman. There are four company types which are commonly registered in Cayman under the Companies Law: Ordinary Resident Company, Ordinary Non-Resident Company, Exempted Company and Exempted Limited Duration Company.

The Companies Law, true to its English origins, permits companies limited by shares, companies limited by guarantee, and unlimited companies; but in practice only companies limited by shares are used. Incorporation and registration of limited companies takes a day, and it can be less. Shelf companies are available but are unusual.

There is a Registrar of Companies, and registration involves submission of the Memorandum of Association; for companies limited by shares the Articles of Association can follow - 'Table A' applies if no Articles are registered.

There needs to be one shareholder of record (of any nationality); there are no rules regarding minimum capital, par value etc.

There is no statutory requirement for audit or for annual filing of accounts. All companies must maintain registered offices in Cayman.


An ordinary resident company is usually formed for the purposes of carrying on local business. In addition to the Companies Law, it is subject to the terms of the Local Companies (Control) Law 1995 which requires licensing, and the annual submission of a list of shareholders. Only registered, and not bearer, shares are allowed.

An annual general meeting must be held, and a register of members must be kept at the registered office, open to public inspection. The name of the company must end in Ltd or Limited.

The list of shareholders of the company must be filed with the Registrar of Companies in January each year; the Immigration Board should also receive a similar list showing those shares beneficially owned by Caymanians. Registration fees are payable on incorporation and annually: CI$150 for capital not exceeding CI$42,000, CI$250 otherwise.

Ordinary Non-Resident Company

An ordinary non-resident company is subject to the same rules as a resident company, but under the terms of the Local Companies (Control) Law 1995, must not conduct any business within the islands.

This form or that of the exempt company is the usual choice for offshore operations. The Financial Secretary will grant a certificate of non-residence if he is satisfied that the company does not and does not intend to trade onshore. The company is then relieved of the licensing requirement and the need to provide lists of shareholders to the Immigration



Department. An annual list must still be provided to the Registrar, but it is quite usual to appoint proxies.

The normal minimum capital requirement is CI$40,000, and the minimum capital duty levied on incorporation of a nonresident company and annually thereafter is CI$400. There are no restrictions on the location of general meetings or of directors or the secretary, if there is one, except that one shareholders' meeting must be held in Cayman each year.

Records of members, directors, mortgages and charges must be kept. Financial records must be maintained although no audit is necessary and there are no filing requirements.

Ordinary non-resident companies can apply to convert to exempted companies.

Exempt Company

The differences between a non-resident company and an exempted company are as follows:

An exempted Caymans company does not have to use Ltd or Limited in its name; it may issue bearer shares in addition to registered shares; it has to hold one directors' meeting a year in Cayman (but may use proxies); it does not

have to hold a shareholders' meeting in Cayman; it need not file a list of shareholders annually, and does not even have to keep such a list; it may obtain a Certificate of Tax Exemption (ie against any future Cayman taxation)

An exempted company (or limited duration exempted company) is the normal form of choice for collective investment vehicles. Incorporation fees depend on capital as follows:

CI$410 for capital less than CI$42,000 CI$574 for capital up to CI$1.7m CI$1,435 thereafter

Limited Duration Exempt Company

Limited duration exempted companies are like exempted companies except that:the Memorandum of Association must limit the life of the company to 30 years or less; certain events are specified which automatically precipitate its voluntary winding-up and

dissolution; it must at all times have not fewer than two members; the Articles may provide that no shares may be transferred without the agreement of all

shareholders; management may be carried out by the shareholders or may be delegated to a board of



directors. Fees are as for exempted companies, plus $200.

Foreign Company

Foreign companies are companies incorporated outside the Cayman Islands which establish a place of business, or carry on business in Cayman (which includes the sale by or on behalf of the company of its shares or debentures).

Under the Companies Law a foreign company must register, providing the following information:

a copy of its incoporation documentation in English; the names and addresses of its directors; and the name of a person in Cayman who can accept service on the company's behalf. There is a fee of CI$850 on registration, and CI$500 annually thereafter.

A company can also transfer its domicile to the Cayman Islands 'by way of continuance' which obviates the need to incorporate afresh. The reverse process is also possible.

Limited Partnership

Cayman Islands partnership law is based on English law, with recent amendments. Limited Partnerships are formed under the Partnership Law 1995.

One or more general partners have unlimited liability and are responsible for management; limited partners are liable only to the extent of their contributions.

To form a limited partnership a declaration must be filed with the Registrar of Limited Partnerships which describes all the partners and gives other information; this declaration is also published in the Cayman Gazette.


A limited partnership may become an exempted limited partnership, or one can be formed de novo, by filing a statement with the Registrar.

Unlike the Limited Partnership declaration, this does not need to include the names of the limited partners or the amounts of their contributions.

An exempted limited partnership must not do business with the public in Cayman. An exempted limited partnership may obtain a 50-year Certificate of Tax Exemption (ie against any future Caymans taxation).



Trusts

Trust law in the Cayman Islands is based on English trust law, with some recent modifications in the Trusts Law 1996. Other recent changes include the Perpetuities Law 1985 which increased the perpetuity period to 150 years, the Special Trusts (Alternative Regimes) Law which introduced purpose trusts, the Trust (Foreign Element) Law 1987 which provided inter alia for the importation and exportation of trusts, and the Fraudulent Dispositions Law 1989 which includes specific asset protection provisions.

Trusts do not have to be registered; a company offering trust services must obtain a licence under the Banks and Trust Companies Law 1995; individuals do not have to do so.

Trusts can be exempt, like companies and limited partnerships, but must then be registered with the Registrar of Trusts, and pay a fee of CI$400 (CI$100 annually thereafter). The Governor gives a 50-year undertaking to the Trustees that no taxation will be imposed on the trust.

The Hague Convention has not been implemented in Cayman. Specific provisions exist for the non-recognition of foreign judgements and the exclusion of forced heirship.

Cayman is well-developed as an international financial centre. For 25 years the Government has welcomed offshore business, and has created a world-standard regulatory structure to avoid money-laundering and other criminal activity.

The Cayman Islands has the world's largest offshore banking sector, and is second only to Bermuda as a captive insurance centre. Mutual funds have been a more recent success story, assisted by the establishment of a stock exchange. Trust management has always been a significant activity. The islands also offer a shipping registry.

Banking

Cayman banks must be licensed under the Banks and Trust Companies Law 1995. The astonishing Cayman Islands banking industry has 600 such licensed banks, of which about 30 hold Class A licenses permitting local and offshore business activity, while the remainder hold Class B licenses, permitting only offshore business - a local office is allowed, but only very limited transactions can be carried out with Cayman Islands residents.

Banks do not need to be incorporated locally: a foreign bank can register as a foreign company and then obtain a license. For further details of licensing requirements and procedures and fees payable.

The assets of Cayman banks exceed US$500 bn. A very wide range of services is offered: the 30,000 offshore companies registered in Cayman include many treasury management or investment management subsidiaries of multinationals taking advantage of the excellent banking environment and absence of taxation.



Evidently, private banking is a major component of the industry: asset protection rather than tax avoidance as such is the driving force, so that the stability of Cayman alongside stringent banking secrecy and its sophisticated investment environment are very attractive to wealthy individuals, particularly those from the US where Cayman has a very good reputation.

Cayman Islands' banks are supervised by the Cayman Islands Monetary Authority (CIMA), which concentrates on 110 banks for which Cayman is the home-country supervisor. CIMA recently extended its bank inspection programme to on-shore subsidiaries of Cayman banks.

Cayman signed a Memorandum of Understanding on cross-border banking supervision with Brazil in 1999, and intends to create a network of such agreements with all the countries whose banking supervisors evince interest in Cayman's banking sector.

Cayman Islands' banks are supervised by the Cayman Islands Monetary Authority (CIMA), which concentrates on 110 banks for which Cayman is the home-country supervisor. CIMA recently extended its bank inspection programme to on-shore subsidiaries of Cayman banks.

The Cayman Islands ceased issuing licences for shell banks in 1992 but there are still a number of banks in existence which have no offices and employees to speak of and do not offer accounts locally.

CIMA ruled in February 2001 that such banks have just nine months from that date to open physical offices, employ staff and give Cayman financial regulators regular access to their operations - otherwise CIMA will revoke their licences.

Trust Management

Trust Management has been a major activity in the Cayman Islands for 30 years or more, and trust assets in Cayman now equal or exceed banking assets. Originally the trust was used primarily by wealthy individuals from the major common law countries, but it is now accepted as a major technique of asset protection in all parts of the world. Over the last 25 years the Cayman Islands, perhaps more than some other jurisdictions, have extended and adapted their trust laws to accommodate this wider market, which is not necessarily interested so much just in tax avoidance, but also in the efficient management of wealth in a more general sense.

There is a large and sophisticated community of professional advisers on trust matters in Cayman. Individuals can provide trust services in the Cayman Islands without registration, but companies offering trust services must be licensed under the Banks and Trust Companies Law 1995.

Foreign or Cayman-resident companies may obtain licenses. These are issued by the Governor, after the Monetary Authority has accepted an application giving comprehensive information about the applicant.

A licensed trust company may be 'restricted' or 'unrestricted'. 'Restricted' companies require less capital, but are more strictly controlled.

Private trustee companies have recently become popular. In this arrangement, the trust



itself remains uncluttered by control arrangements, which are exercised by the private trustee company, which in turn can be administered by a licensed trust company. This form is particularly suited to the larger type of family trusts with multiple beneficiaries and objects.

Ship Management and Operations

The Cayman Islands operates Registers of Shipping and Civil Aircraft. George Town is a Port of British Registry. Over the years, Cayman has been included in most English merchant shipping acts, with the result that it is a Category 1 registry, entitled to register all classes of vessel.

The Cayman Islands Shipping Registry administers Cayman registration, and has a full professional staff for this purpose. The Registration of Merchant Ships Law 1991 governs Cayman registration and lays down fee levels according to tonnage.Aircraft are registered under the (English) Aircraft Navigation (Overseas Territories) Order 1989. The Civil Aviation Authority of the Cayman Islands maintains the register. The UK Civil Aviation Authority has discretion over Cayman registration, and in practical terms limits it to private aircraft.

The Cayman Islands Government has constructed a regulatory regime that is highly favourable to offshore operations, especially since there is no taxation in Cayman other than stamp duty and import duties.-There are about 30,000 companies registered in Cayman, along with 600 banks and 450 insurance companies.

In June 2000, the Cayman Islands was identified by the FATF as non-cooperative in the fight against global money laundering. The result of this is that the Cayman Islands was one of fifteen tax jurisdictions placed on a blacklist. Each offending tax haven had a year in which to correct its tax regulations and legislation.

The FATF released its next annual report in June 2001, in which the organisation revised its list of countries and territories deemed non-cooperative. Only four were removed from the list, including the Cayman Islands (the other three being the Bahamas, Liechtenstein and Panama).

The Cayman Islands was praised by the FATF for its substantial efforts to conform to forty recommendations set out by the FATF in a code of good practice governing money laundering.


Offshore entities may take the following forms (click on a form for a description of the legal regime under which it is constituted):Banks, insurance companies, mutual funds, trust management companies and other financial institutions use an appropriate corporate form from the above list; in addition they are subject to registration or licensing.-



Fees Payable by Financial Institutions

Banks and Trust Companies (ie companies providing trust services) are licensed under the Banks and Trust Companies

Law 1995 and pay annual fees as follows:Class A License (unrestricted domestic and offshore banking): CI$42,000 Class B License (offshore banking; and trust companies): CI$12,600 Class B Restricted Banking License (business dealings restricted to a list of specified

persons): CI$6,000 Class B Restricted Trust Company License (ditto): CI$1,640

Insurance companies are licensed under the Insurance Law 1979 as amended and pay annual fees as follows:

Class A License (Domestic insurance business): CI$5,000 Class B License (Offshore insurance and reinsurance): CI$4,500 Class B Restricted License (Captives): CI$4,500

Mutual funds and their administrators are licensed under the Mutual Fund Law 1996 and pay annual fees as follows:

A licensed mutual fund administrator pays CI$5,000 plus CI$500 for each mutual fund actually administered;

A restricted mutual fund administrator (limited to a small number of funds) pays CI$2,000 plus CI$500 for each fund actually administered;

A self-administered or single-fund administrator pays CI$200.

The fees for listing on the Cayman Islands Stock Exchange are as follows:On application for listing and annually thereafter: CI$1,640 Umbrella funds with more than 8 sub-funds: CI$8,200 (there is a sliding scale for

umbrella funds with fewer than 8 sub-funds). Secondary listings pay a fee on application and annually thereafter: CI$820

Fees charged by listing agents are a separate matter; the above fees are simply set annual dues. The charges of a listing agent are likely to be in the CI$5,000 neighbourhood.



COSTA RICA


Costa Rica51.060 Km2

3.710.558GMT minus 6

hoursSpanish - English


Forming Companies

The stock corporation is the most commonly used corporate entity and the sole proprietorship is an interesting concept if only because it is so far removed from the sole proprietorship of a common law jurisdiction.

Even though Costa Rica is a civil law jurisdiction trusts are permitted. The tax laws do not discriminate between onshore and offshore operators and as such the concept of a tax exempt company does not exist

The international regulatory authorities which seek to curtail the activities of offshore centers consider a non discriminatory taxation system as one of the factors that defines a reputable and well regulated tax haven. Article 227 of the Commercial Code makes provision for the migration of a foreign company to Costa Rica and for the re-domiciliation of a Costa Rica company to a foreign country upon the presentation of a shareholders' resolution.

Migration does not entail the dissolution of the corporation in its country of origin or the incorporation of a new company in Costa Rica. The law of the foreign corporation must permit its re-domiciliation.

Note that all corporate filings must be in Spanish.

Limited Liability Corporation

The limited liability company (sociedad limitada) limits the liability of the members to the value of the unpaid capital. It is governed by section 104(a) of the Commercial Code.



Although at incorporation the company must have 2 subscribers a sole shareholder is subsequently permitted.

Corporate shareholders are not permitted.The principal difference between a limited liability company and a stock corporation lies

in the level of administration. Instead of being run by the directors the limited liability corporation can be managed by a manager with broad powers of attorney and so in this respect resembles a common law partnership. By contrast the administration of a stock corporation is subject to very detailed rules (see below).

Limited liability companies are however not very popular.

Stock Corporation

The stock corporation (sociedad anonima) is the most popular form of business organization and has the following characteristics:

It must have 2 subscribers at the time of incorporation; thereafter a single shareholder is permitted; corporate shareholders are permitted;

Shareholder meetings must be held annually and can be held anywhere in the world provided that provision is made for this in the articles;

There is no minimum share capital requirement, however at least 25% of the issued capital must be paid up on incorporation;

Shares of no par value are not permitted; preference and deference shares are permitted; The stock corporation must have a registered office, a fiscal agent, a resident agent (who

is a local lawyer) and a minimum of 3 directors (resident or non-resident) one of whom (the President) has power to manage the company; directors' meetings can take place anywhere if the articles pemit it.

The President is assisted by a secretary and a treasurer and unlike a common law jurisdiction his authority to act on behalf of the company comes through the issue by the shareholders of a power of attorney in his favor which defines what he can and what he cannot do .The fiscal agent is basically an accountant and his duties are to keep an eye on the board of directors and to report directly to the shareholders .The fiscal agent and his immediate relatives cannot be the directors.

These requirements are burdensome by the standards of offshore common law jurisdictions and have the effect of pushing up the administrative costs of a stock corporation. Three sets of minute books and accountancy records must be maintained. One set is for the use of the directors, one is for the shareholders and the third must be kept in the registered office.

Reporting requirements are minimal. The company must file a tax return irrespective of whether it is liable to pay tax on its income.

Incorporation is relatively quick for a civil law jurisdiction taking some 4 weeks in all. Since stamp duty is payable on issued share capital the practice is to keep the value of issued share capital low thereby keeping the costs of incorporation to a minimum.



Public Limited Liability Company

A Public Limited Liability Company is a stock corporation whose shares can (unlike private companies) be openly and freely traded on the stock exchange. Law 7201 of 1990 was passed to allow for the creation of these corporate entities.

The minimum share capital of a Public Limited Liability Company is 50 million colons and it must have at least 10 shareholders. A Public Limited Liability Company remains under the permanent supervision of the Central Bank

Collective Corporation

The shareholders of a collective corporation have unlimited liability. Consequently this type of corporate entity is for all intents and purposes no longer used. It is comparable to the general partnership of the common law countries without some of the advantages.

Foreign Corporation

Foreign corporations can operate in Costa Rica either through a branch or a subsidiary. A branch must register under article 226 of the Commercial Code by presentation to the

companies registry of a shareholders' resolution whose authenticity has been verified by the Costa Rican consul in the foreign corporation's domicile.

No such procedure applies when a foreign parent wishes to incorporate a subsidiary (ie as a stock corporation, see above). Subsidiaries receive more favorable tax treatment than branches, which suffer withholding tax on all remittances to their parent.

If a foreign company uses the re-domiciliation procedure rather than creating a new local subsidiary, it will remain subject to the laws of its original domicile as regards its articles, although Costa Rican law will apply in various respects, including of course taxation.

Sole Proprietorship

In Costa Rica the sole proprietorship ("empresa individual de responsabilidad limitada") is a far cry from the sole proprietorship of a common law jurisdiction. It could be said to have the characteristics of both a limited liability company and a limited partnership and the English translation of its name would seem to suggest that it is a limited liability company.

The concept originated in Liechtenstein but has been adopted by very few countries.Under the Commercial Code of Costa Rican law a sole proprietorship is an enterprise with

one owner whose liability is limited to the value of his share capital in the business. By way of exception where the sole proprietorship has been involved in fraud the personal assets of the owner can be seized to satisfy any judgment entered against the business where the assets of the latter are not sufficient to meet the creditors' claim.

The profits of a sole proprietorship can only be distributed by way of dividend where a trading profit has been made in that year. A sole proprietorship is run by a manager who has been granted broad powers of attorney and so is much simpler and cheaper than the running of a company. The owner of a sole proprietorship must be an individual and cannot be a



legal entity such as a limited company.

Limited Partnership

A limited partnership has a minimum of one general partner whose liability for the debts of the partnership is unlimited and a minimum of one limited partner whose liability for the debts of the limited partnership is limited to the amount of his unpaid capital.

Where there is more than one general partner all are jointly and severally liable for the debts of the limited partnership. By way of exception if a limited partner actively participates in the management of the limited partnership he will have unlimited liability for the debts of the limited partnership.

General Partnership

In a general partnership all the partners have unlimited liability and are jointly and severally liable for the debts of the partnership. Profits are distributed according to the percentage of equity held.

Trusts

Although a civil law jurisdiction trusts can be created under Costa Rican law. Trusts are covered by articles 633-662 of the Commercial Code which deals with the proper law governing the trust, the jurisdiction and the situs of its administration.

Tax Regime

Although Costa Rica is not an offshore financial center in the traditional sense its favorable tax regime means that it could have been classified as a tax haven some decades ago. However it was not until fairly recently that the Government became aware of its tax haven potential and began actively to both legislate for and market this sector of economic activity.

Costa Rica has many characteristics which give it a distinct advantage over other offshore jurisdictions including (as with Hong Kong) a perceived onshore jurisdictional status, very low taxes and a fiscal policy which does not discriminate between residents and non-residents for tax purposes.

Offshore activity is now flourishing in Costa Rica and a number of well known companies have set up operations there, but the industry is as yet only in its infancy.A significant offshore banking industry does not as yet exist principally because the industry was only released from the shackles of state control in 1996. The lively domestic banking industry is described below.

There is no offshore insurance industry since the insurance sector remains under state control with significant political resistance being mounted against its privatization



The country's biggest low-tax sector is grouped around the Free Zones and other export incentive programmes.

Banking

The state banking monopoly ended in 1995 and there are now some 25 private commercial banks and 3 public banks in Costa Rica. Banking matters are governed by law No 1644 of 1953 as amended by law No 7558 of 1995 (known as the Organic Law of the National Banking System).

Financial institutions in Costa Rica are regulated by the Central Bank, through the General Superintendant of Financial Entities (SUGEF). The revised legislation reduced the reserve liquidity requirements to 15% of the value of the balance sheet, prohibits loans to an individual customer which exceed 20% of a bank's capital and specifies that a bank's capital cannot be less than 9% of its loans.

Finance and credit companies that take deposits from the general public require a license from the central bank and must have a minimum capital of 300 million colons.

Costa Rica has strict banking secrecy laws. The banks do not share any banking information with the tax department or with any other Government departments other than the central bank.This general rule is qualified by an exchange of information agreement signed between the United States and Costa Rica.

A combination of strict secrecy laws, the country's offshore status and legislative changes aimed at increasing competition and efficiency will probably result in major growth in the banking sector in the near future.


There are no special forms for offshore or low-tax operation in Costa RicaCosta Rica does not distinguish between onshore and offshore businesses as such. The

basis of taxation is territorial, with both residents and non-residents paying tax on Costa Rican income, and not on foreign-source income.

However, the Government has increasingly sought to make a virtue out of the country's low-tax regime, and there are a number of special regimes offering tax privileges to particular sectors, which are described in this section.


Businesses in (Free Zones) have a number of tax privileges. Originally these concessions were offered only to industrial or agricultural companies, but they have now been extended to a wide range of processing and service activities. The main incentives are:

full exemption from income tax on profits for a period of 8 to 12 years from the commencement of trading, and 50% exemption for a further period of 4 to 6 years;



exemption for the same period from customs duties on raw materials, machinery and equipment;

exemption for the same period from VAT and other sales taxes including selective consumption tax;

exemption from withholding tax on payments to non-residents; new legislation passed at the end of 1999 offers a 4-year extension of the 12-year 100%

tax exemption to companies that have operated in a free zone for more than 4 years and that have reinvested profits in Costa Rica.

There are a number of related schemes offering tax privileges to exporters which stop short of giving the full range of benefits outlined above. These include the Drawback regime, Export Contracts, and the Temporary Admission scheme.

A number of sectors involved in the tourist business receive tax incentives under the Incentives to Tourist Development Law 1985:

All business entities engaged in the running or construction of hotels are exempted from import duties on goods imported for the purposes of their trade, purchase (sales) taxes on supplies (excluding those payable on the purchase of vehicles and fuels) and the .25% annual rates tax. They also benefit from accelerated depreciation allowances.

All business entities engaged in the air transportation of tourists are exempted from import duties on goods imported for the purposes of their trade and purchase taxes on supplies required for the operation of airplanes. Furthermore they can purchase their fuel at favorable prices and are entitled to accelerated depreciation allowances.

Businesses engaged in maritime transportation of tourists are exempted from import duties and purchase taxes on goods imported for the purposes of the construction of marinas, bathing resorts and aquariums. Furthermore they are entitled to accelerated depreciation allowances and are exempted from all taxes relating to the purchase of a boat with the exception of import duty.

All business entities engaged in car rentals are entitled to a 50% reduction in all taxes relating to vehicles imported for rental.

For an agreed period forest development businesses are exempted from income tax on business profits and the annual rates tax of .25% of the value of the land.

Exchange Contro l

Although there are no exchange controls as such in Costa Rica, currency received by resident corporations or individuals has to be sold through a Costa Rican bank; and capital imported for investment purposes needs to be 'registered' in order to ensure eventual problem-free repatriation.

Enterprises taking advantage of one or other of the investment incentive regimes described above are free of these restrictions to a greater or lesser extent.



Offshore Activities

Since there is no offshore sector as such in Costa Rica, there are no limitations on the types of activity that can be carried on by companies taking advantage of Costa Rica's low-tax regime.

Restrictions are placed on foreign investment in the state-owned monopolies of telecommunications, alcohol distilleries, insurance, newspapers, radio, television broadcasting, electricity and petroleum refining in all of which industries foreign participation is either forbidden or alternatively required to be part of a joint venture with a Costa Rican majority shareholding partner .

Beachfront development concessions also require local participation with the requirement that 50% of the capital must come from nationals and that foreigners wishing to be joint partners must have resided in Costa Rica for at least 5 years.

The advantages of the Export Processing Zones are of course limited to their physical extent, although there has been some 'spread' of these Zones into adjacent Industrial Parks, particularly for processing and service companies.

CYPRUS


Cyprus 9.251 Km2 755.000GMT plus 2

hoursGreek-Turkish-

English

Disclaimer:


Forming Companies

Private Company Limited by Shares



The relevant legislation is Cyprus Companies Law, Cap. 113, which is virtually a copy of the English 1948 Companies Act.

A private company is one which by its articles:Restricts the right to transfer its shares Limits the number of its members to 50 Prohibits any public subscription to shares or debentures

When 100% foreign-owned, a private company is referred to as an offshore company, although recently the expression International Business Company has come into favour. However, as from 1st January, 2003, an offshore company (IBC) no longer has a separate taxation status, and will be taxed according to the same principles as a regular company. In future, IBCs will be allowed to trade inside Cyprus.

However, an existing IBC which makes an irrevocable commitment not to trade inside Cyprus until 2006 will be able to claim the existing low tax rate for the three years 2003, 2004 and 2005.In order to form a foreign-owned company, a bank reference and copy of the owner's passport is required for the registration. The bank reference must be issued by a bank included on the Central Bank of Cyprus's list of qualifying banks.

The following information will be required for the formation of a standard Cyprus offshore company:

Name of the company with two alternatives;Objects of the company (description of principal activities of a Cypriot off-shore

company);Capital: a minimum of CYP 1000 for a company with no offices in Cyprus, or CYP 10

000 for a company with offices in Cyprus. Payment of the capital can be extended in time.Full personal details of shareholders (minimum two) will be necessary.Full personal details of directors (minimum two) will be necessary

Registration of a standard Cyprus offshore company takes three weeks typically.In Cyprus, a company's formation documents and its annual return must be filed in Greek;

the same applies to accounts when these need to be filed.A private company limited by shares is exempt if:No body corporate other than another exempt company holds any of its shares or

debentures The number of debenture holders is not more than 50 no body corporate is a director of the company.

The main advantages of an exempt private company are:It need not file accounts with its Annual Return It is not subject to the statutory restrictions on loans to directors



Public Company Limited by Shares

Any company registered under the Act whose Articles do not contain the restrictions applicable to private companies is a public company.

A public company may obtain a listing on the Cyprus Stock Exchange.


As in England, companies limited by guarantee are normally used only for charitable or non-profit-making purposes. Apart from their share structure, they are similar to other types of private company and also fall under the Cyprus Companies Law.

General Partnership

Partnerships fall under the Partnerships and Business Names Law Cap 116, basically similar to the equivalent English legislation.

They must be registered with the Registrar of Partnerships within one month of formation, giving name, purposes, place of business, full particulars of the partners etc. Foreigners may belong, but need exchange control consent.

A general partnership may have between 2 and 20 individual members (up to 10 only, if it intends to conduct banking business).

Partnerships do not need to file accounts or to be audited.

Limited Partnership

These are similar to general partnerships except that they have one or more general partners with unlimited liability and one or more limited partners (whose liability is limited to the amount declared in the partnership return filed with the Registrar).

Sole Proprietorship

A Sole Proprietorship falls under the Partnership and Business Names Law Cap 116, being essentially similar to the English sole partnership. It is subject to broadly the same rules as a General Partnership.

A sole proprietor has unlimited liability for his debts, and any business name (other than his own) must be registered with the Registrar of Partnerships.

Trusts-Local Trusts

A 'local trust' is governed by the Cyprus Trustees Law Cap 193, which closely follows the English Trustee Act 1925.



The settlor and beneficiaries are normally residents of Cyprus, and the trust and its property are subject to exchange controls.-

Offshore Trusts

Offshore Trusts are the same as local trusts, but their beneficiaries must be non-resident, and all the trust´s activities must be outside Cyprus.

International Trusts

The International Trusts Law of 1992 brought Cyprus trust law into line with that of other major international trust jurisdictions. Both settlor and beneficiaries must be non-resident, although one Trustee must be Cypriot. International trusts may have many tax and legal advantages.

In 1975 the Cyprus Government began to create a welcoming regime for offshore companies, and more than 54,000 offshore enterprises have been registered. Currently about 14,000 IBCs are in business, including 1,200 with fully-staffed offices; the remainder are administered by local professional firms. Due to Cyprus's particularly favourable tax treaties with Russia, the CIS and the countries of eastern Europe, the island is chosen by a high proportion of firms needing to set up an offshore base as a holding or investment company, or trading subsidiary, for those regions. Among emerging markets there are also favourable tax treaties with China, India, South Africa and a number of Middle Eastern countries.

In July, 2002, as part of the Income Tax Act No. 118(I) of 2002, Parliament approved a uniform 10% corporate tax rate, to apply to both onshore and offshore companies, plus a 2% levy on wage bills (meant to subsidise pensioners), and a 'Special Contribution' related to defence which in effect applies the 10% corporate tax rate to inter-company dividend and interest payments. However, the rules are complex.

The 10% corporate tax gives Cyprus the lowest rate in the EU, after Ireland (12.5%), with the (very new) exception of the Isle of Man, which has just announced a nil rate - but the IOM isn't really in the EU anyway for most purposes.

The new regime introduces a 'residence'-based system of taxation, and is in operation from 1st January 2003.

The remainder of this section describes the most important types of offshore business activity carried out from the island. As far as the taxation of offshore companies is concerned, it is now of mainly historical interest; but in other respects the sectors described are ongoing.

Offshore Banking Unit

An Offshore Banking Unit is a Cypriot limited liability company, or a branch of a foreign bank, which has obtained a banking license from the Central Bank. It has all the advantages of any other offshore entity.

In Cyprus, non-Cypriot banks are offered the status of Offshore Banking Units (OBUs) which are restricted to banking operations with non-residents in foreign currencies, and with



Cyprus-registered offshore companies and their expatriate staff. The Central Bank issues OBU licenses and normally requires fully-staffed operation.

OBUs are taxed as offshore enterprises, normally at 4.5% of profits (now 10%), although certain types of profit resulting from domestic operations (if permitted) may attract higher rates. If the OBU is controlled from abroad, there will be no profits tax.

The following forms are permitted

Branches of foreign banksThe Central Bank favours this arrangement; there are no liquidity or risk ratio

requirements, and there is no reserve requirement. The annual supervision fee is $15,000.

Subsidiaries of foreign banksThese are supervised more closely, and liquidity and risk ratios may be imposed. The annual supervision fee is $15,000.

Representative OfficesRepresentative Offices may be formed under the Companies Law, but may not conduct banking business except with clients of their parent bank; the annual supervisory fee is $5,000.

Administrative Banking Units (ABUs)These units carry out their banking business through local Cyprus banks but are otherwise similar to branches or subsidiaries. The annual supervisory fee is $10,000.In addition to the Central Bank, the Cypriot banking system consists of 9 local commercial banks, 30 IBUs, 2 administered banking units, 3 specialised financial institutions and a number of leasing companies. Commercial banking arrangements and practices follow the British model.

Offshore Financial Services Company

An Offshore Financial Services Company (OFC) is an offshore company which engages in any of the following:

dealing, buying, selling, subscribing to or underwriting investments managing investments belonging to other persons giving investment advice to actual or potential investors establishing collective investment schemes

The usual Central Bank vetting process for offshore companies also ensures that prospective OFCs are linked to existing investment or financial services companies in well-regulated (meaning in practice, high-tax) countries, although exceptions are made for the internal financial services of respectable companies. The Central Bank imposes additional conditions on OFCs, and usually requires a 'Letter of Comfort' from the foreign parent or



associate.In 2001, as part of preparations to join the EU, Cyprus began to construct a modernised

regime for mutual fund operation. The Cyprus Mutual Fund Law came into force in March, 2003, allowing both native and foreign firms to offer mutual funds to Cypriot residents.

Cypriot Securities and Exchange Commission (SEC) chairman Marios Clerides said that the law would be further amended in August, 2003, to bring it into line with EU harmonisation rules which come into force in February, 2004.However, as a result of the slump in the banking sector internationally as well as in Cyprus, the SEC expects few applications from native banking and financial institutions. A minimum start-up capital of CYP 1 million will further hold back Cypriot applications.

Most of the applications are expected to come from foreign-based firms offering mutual funds to Cypriot residents. The new rules require a company to deposit its prospectus with the SEC which will then investigate whether the fund is regulated by an approved body. This process is significantly accelerated if the fund is regulated by a body within the EU.

The new law, the International Collective Investment Schemes Law No. 47, offers many benefits to international mutual funds.

It has been decided by the SEC that prospectuses can be written in English, though rules will require that a potential purchaser of the fund has a sufficient enough grasp of the language to understand the implications of buying into the fund.

The major objective of the new law is to provide transparency in the market place. All funds will have to publicise their bid/offer rates and make clear commissions and costs in their promotional literature.

Forms of Offshore Operations

Limited Liability Company Branch General or Limited Partnershuip Offshore Banking Unit Offshore Financial Services Company Offshore Captive Insurance Company Shipping Company (Ship)

In addition to the usual requirements for these forms, Central Bank permission is required under the Exchange Control Law.

This is normally given readily, but checks are made to exclude undesirable operations, and conditions are usually imposed:

The entity must be entirely foreign-owned The objects of the business and sources of income must be outside Cyprus No local borrowing is permitted Audited annual accounts must be filed with the Central Bank Local payments must be recorded and reported



Anonymity may be achieved by using nominee shareholders; the beneficial owners must be made known to the Central Bank, which is then statute-bound to non-disclosure. NB There is no provision under the law for migration or re-domiciliation.

The expression 'International Business Company' (IBC) simply refers to a duly authorised offshore Limited Liability Company. There are no formal requirements in addition to those in standard Cyprus company law, but the Central Bank recommends a minimum authorised share capital of CY£10,000. This does not have to be paid up, unless the company concerned wants to make use of the import duty concessions.-


All offshore companies are taxed at 4.25% of profits; offshore branches of foreign companies with management and control in Cyprus are also taxed at 4.25%; branches with management and control outside Cyprus are exempt from tax on profits derived from sources outside Cyprus.

Offshore partnerships are not taxed on profits originating outside Cyprus.There is no withholding tax on dividends paid by offshore companies; but no tax credit

either on any tax paid.Interest or royalties paid by an offshore company to another person or company outside Cyprus are not subject to withholding tax.

Estate duty is not charged on inheritance of shares in offshore companies, and the sale of or transfer of their assets (other than Cyprus real estate) is exempt from capital gains and other taxes.Offshore entities (and their expatriate staff) may import various goods duty-free:

Motor vehicles (not buses, motor-bicycles, coaches or caravans) Office equipment (not air conditioners and consumables) Household effects (not furniture and air conditioners)

Exchange Control

Once Central Bank consent has been received for offshore status, the entity is non-resident with complete freedom from Cyprus exchange control restrictions; thus it may maintain bank accounts inside or outside Cyprus in any currency and use its funds as it chooses.

Offshore Activities

Offshore entities may not carry out any trading activities in Cyprus with Cypriot



residents. The only permissible activities within Cyprus are those compatible with the exercise of management and control.

Certain borderline activities may be carried on with express Central Bank permission, such as:

Transit trade through Cyprus Repackaging for re-export, within a tariff classification Printing of foreign-language magazines or books for distribution abroad Storage, repair or maintenance of goods to be used or sold outside Cyprus Establishment of a private bonded warehouse for the display of foreign-made goods

intended for re-export. Sales activities, provided these do not result in sales in Cyprus or to Cypriot companies.



DUBAI


Dubai 3.885 Km2 890.000GMT plus 4

hoursArabic - English


General Overview

Dubai's economy is fairly clearly divided between the 'onshore' sector, dominated by local business interests, with restrictions on foreign ownership, and the 'offshore' sector which consists of the Jebel ali Free Zone, the Dubai Investment Park, Dubai Internet City, where construction commenced in 2000, and the Dubai International Finance Centre (DIFC), due to open in 2003.

There are no taxes to speak of in Dubai, on- or off-shore, but 100% foreign ownership and customs privileges make the Free Zone and its successors some of the most favourable locations in the Middle East for international operations.

All business in Dubai is low tax, but in Offshore Business Review we examine the Free Zone, the newer DIC and DIFC, shipping and the banking and finance sector, which are the business sectors most interesting to international investors.

Banking and Finance Sector

The regulatory authority since 1980 has been the UAE Central Bank. Some 47 commercial banks operate, with a total of around 350 branches, of which about 28 are foreign banks with a combined total of more than 200 branches. Federal law restricts foreign banks to no more than eight branches each. There are a number of Islamic banks in Dubai.

Despite regional uncertainties, UAE banks saw increases in bank deposits during 2002. Central Bank figures revealed that deposits with the UAE's 47 commercial banks increased by Dh15.5 billion ($4.2 billion) to Dh198.3 billion ($54 billion) between January to September last year. 'There is a steady increase in domestic liquidity and this points to a return of funds abroad despite regional tension and low interest rates on deposits,' Ziad Dabbas, share dealing director at the National Bank of Abu Dhabi explained. .



Most banks provide trade, project and consumer financing. Their re-export financing accounts for a large portion of trade finance, and this is viewed as having substantial prospects for growth. Short-term loans (3-6 months) by commercial banks are offered at current interest rates. Project loans are given for five years. Consumer financing is also growing rapidly. Furthermore, the local banking system has well established correspondent relationships with international banks.Federal law requires that every commercial bank must have a paid-up capital of at least Dh 40 million. There are few investment or merchant banks at present.

In the UAE, the marketing of financial products and services is regulated by the UAE Central Bank under Federal Law No. 10 of 1980 (the Central Bank Law and related banking resolutions). Enforcement of Central Bank policy, however, is often undertaken by the local licensing authorities in the various Emirates.

The Central Bank Law establishes five principal categories of institutions in the UAE - commercial banks, investment banks, financial establishments, financial intermediaries, and monetary intermediaries - all of which must be licensed by both the Central Bank and the local licensing authorities. In addition to these five categories, current practice in the individual Emirates permits the licensing of financial or investment consultants. These consultants are not required to obtain a Central Bank license.

Commercial Banks

The Central Bank Law defines a commercial bank as any establishment which customarily receives funds from the public, grants credit and banking facilities, and conducts other banking operations prescribed for commercial banks either by law or by customary banking practice. In the UAE, customary banking practice includes the marketing and sale of investment products and services, including the sale of securities and various funds.

Central bank regulations announced on April 5, 1993, set the minimum capital to risk-weighted asset ratio at 10 percent, which is 2 percent higher than the minimum level recommended by the Basel Concordat committee on banking supervision.

Investment Banks

Central Bank Resolution No. 21 of 1988 regulates the activities of investment banks. Investment banks are defined as merchant or development banks or banks which provide medium or long term financing. The Central Bank Resolution authorizes investment banks in the UAE to offer financial products and services, including the issuance of financial instruments and the management of investment portfolios.

On June 1, 1997, the Emirates Bank Group, which is controlled by the Dubai government, launched UAE's first mutual investment fund with an initial capital of about US$ 8.2 million. The fund offered non-UAE nationals their first opportunity to invest in the UAE's tightly restricted equity market up to a limit of DH 500,000. The huge response by foreign investors prompted the UAE Central bank to raise its original ceiling of 20 percent of



foreign investment to 49 percent. When the fund closed for public subscription on June 15, 1997 the investment totaled to US$ 74.5 million.

Financial Establishments

The Central Bank Law permits financial establishments to lend money and to undertake other financial transactions but does not allow them to accept deposits. The Central Bank has adopted a policy that prohibits financial establishments from offering financial products and services. In comparison to commercial banks, the only activity that financial establishments may undertake which commercial banks may not is the lease of equipment and machinery.

Financial Intermediaries

Financial intermediaries are brokers. Regulations issued under the UAE Central Bank Law allow licensed brokers to market and to sell foreign and local shares and financial instruments in consideration for a commission. Local and foreign companies may obtain a brokerage license from the UAE Central Bank.

Monetary Intermediaries

Monetary intermediaries are money changers. They are not authorized to market or to sell investment products and services.

Investment Consultants

The UAE Central Bank has not published regulations on investment consultancy. Under the existing policies of the individual Emirates, a company licensed as an investment consultant may advise and assist clients in pursuing various investment strategies but may not directly sell investment products.

Sales of investment products introduced by consultants are, therefore, typically booked outside the UAE. Consultants are also not expected to receive investment funds from clients, although they may assist in the transfer of those funds. Consultants may not provide credit facilities or open accounts for clients but may assist them in opening accounts with brokers and banks. If properly authorized by the client, the consultant could also manage such accounts.

The UAE Central Bank has recently moved towards a tighter policy regarding investment companies and financial consultants. In the future, such companies will have to obtain a license from the Central Bank and to report under the rules it has established. Investment Companies for the purpose of these regulations have been defined as undertakings which are involved in investment in securities or in the management of trust funds or investment portfolios on behalf of others.

The minimum paid up capital for investment companies (including branches of foreign



companies ) is DH 25 million, increasing to a larger amount depending on the activities of the company. Financial consultants, on the other hand, are deemed to be individual professionals or groups of professionals providing advice to individuals or companies about the value of securities and other financial instruments or giving recommendation about investing.

For these, licenses can be issued with a minimum paid in capital of DH 1 million.Dubai could be said to be over-banked, and there is intense competition to offer

technologically-advanced services - services on offer include mobile phone banking and Internet banking. With proposed plans to develop the UAE as a regional e-commerce centre and plans for an Internet city, many banks are working on providing high-tech banking products and services.

Categories of business organisation

PartnershipPartnership companies are limited to UAE nationals only. The Dubai government does

not presently encourage the establishment of partnerships-en-commandite or share partnership companies.

In March 2001, the UAE government announced plans for a new commercial law, in its final stages of completion at the time, which will allow foreign companies up to a 70 per cent stake in local firms. Details were unclear at the time but it is likely that the majority shareholding for foreign companies will be limited to particular industries and that the future of free zones in the country will be affected by the new law.

Joint Venture Company

A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but the profit and loss distribution can be prescribed. There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who - unless the agreement is publicised - bears all liability.In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.

Public and Private Shareholding companies

The law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office.

Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and



Dh. 2 million (US$ 0.545 million) for a private shareholding company. The chairman and a majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.


A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company's capital. Such companies are recognised as offering a suitable structure for organisations interested in developing a long term relationship in the local market.

In Dubai, the minimum capital is currently Dh. 300,000 (US$ 82,000), contributed in cash or in kind. While foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed. Responsibility for the management of a limited liability company can be vested in the foreign or national partners or a third party.

The following steps are required in establishing a limited liability company in Dubai:Select a commercial name for the company and have it approved by the Licensing Department of the Economic Department;

Draw up the company's Memorandum of Association and have it notarised by a Notary Public in the Dubai Courts;

Seek approval from the Economic Department and apply for entry in the Commercial Register;

Once approval is granted, the company will be entered in the Commercial Register and have its Memorandum of Association published in the Ministry of Economy and Commerce's Bulletin;

The licence will then be issued by the Economic Department; The company should then be registered with the Dubai Chamber of Commerce and

Industry.

Branches and Representative Offices

The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.

Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local agents (which should not be confused with the term "commercial agent"). Local agents -- also sometimes referred to as sponsors -- are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature.

To establish a branch or representative office in Dubai, a foreign commercial company should proceed as follows:



Apply for a licence from the Ministry of Economy and Commerce, submitting an agency agreement with a UAE national or 100% UAE owned company.

Before issuing the licence, the Ministry will forward the application to the Economic Department to obtain the approval of the Dubai government and will forward the application specifying the activity that the office or branch will be authorised to undertake in the UAE, to the Federal Foreign Companies Committee for approval;

Once this has been done, the Ministry of Economy and Commerce will issue the required Ministerial licence specifying the activity to be practised by the foreign company;

The branch or office should be entered in the Economic Department's Commercial Register, and the required licence will be issued;

The branch or office should also be entered in the Foreign Companies Register of the Ministry of Economy and Commerce;

Finally the branch or office should be registered with the Dubai Chamber of Commerce and Industry

Sole Proprietorships

In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licences, visas, labour cards, etc.

Although Dubai is a 'no-tax' jurisdiction, the ownership restrictions on companies in the normal economy mean that only the Jebel Ali Free Zone offers an 'offshore' option to foreign operators. Operations inside the Free Zone can be carried out under various different types of license, but most often a foreign company will use a a 'Free Zone Establishment'.


Companies approved for operation in Jebel Ali Free Zone will be granted one of the following types of licences, renewable annually for as long as the company holds a valid lease from the Free Zone Authority:

Trading licences will be granted to companies holding a valid licence issued by the Dubai Economic Department or an equivalent authority in the UAE, and to companies incorporated outside the UAE. In each case, the permitted activities on the Free Zone licence must conform to those on the existing licence. Trading licences are also issued to Free Zone Establishments (FZE).

Industrial licences are issued to companies incorporated outside the UAE and to Free Zone Establishments.



Service licences are only granted to companies holding a valid UAE licence. National Industrial licences are issued to industrial companies registered within or

outside the UAE, provided they meet the conditions of having at least 51% AGCC (Gulf Cooperation Council) equity and their local production accounting for at least 40% value added. Such companies must obtain the provisional approval of the UAE Ministry of Finance and Industry.

A National Industrial licence grants its holder the same rights as those of national and AGCC companies, and products exported to AGCC states will be exempted from customs duties


Amongst the incentives offered to companies operating within the Jebel Ali Free Zone are:

Corporate Income Tax: No corporate income tax on profits. The exemption is for a period of 15 years with a guarantee of an extension for a further 15 years in the event that corporate income tax is introduced in Dubai. Currently only banks and oil companies are assessed to corporate income tax in Dubai.

The key difference with companies operating in JAFT is the guarantee of exemption in the event that corporate income tax is imposed by the Government.

Withholding Taxes: No withholding taxes. Import Duty: Exemption from all import duties on goods imported into the free trade

zone.


No personal income tax is deducted from wages and salaries paid to employees or on other income earned.

Exchange Control

There are no exchange controls in Dubai



GIBRALTAR


Gibraltar 6.5 Km2 29.000 GMT + 1 hour English-Spanish


General Overview

Under the Companies Ordinance 1930 all incorporated companies in Gibraltar are required to prepare accounts and have them audited by independent accountants.Auditors, who are individuals, are appointed by the directors of a company, must be independent of the company, and must be registered under the Auditors Registration Ordinance

The European Commission announced in 2001 that it would begin a review of Gibraltar's exempt and qualifying company regimes, but after Gibraltar sued the Commission to prevent the review, the European Court of Justice ruled in Gibraltar's favour in April 2002.

However, in July, 2002, Gibraltar's Chief Minister, Peter Caruana announced the territory's new corporate taxation policy to be applied from July, 2003, which includes the



abolition of the existing corporate forms which allowed zero taxation, the Exempt and Qualifying companies, although there is no news yet about the possible grandfathering of existing companies.


Gibraltar Limited Companies are incorporated under the Gibraltar Companies Ordinance 1930 which is based on the English Companies Act 1929. The basic rules are as follows:

Shareholder can be a nominee company holding a share on trust for the other shareholder; the maximum number of members is 50; the Memorandum and Articles of Incorporation state that the company is private, restrict the transfer of shares, and prohibit public offerings of the shares;

Annual returns must be made to the Registrar, and details of the shareholders and capital structure are held on the public files;

Only one director is required; secretaries are not mandatory, and they may be corporate; There must be a registered office in Gibraltar where the statutory books are kept; There is no requirement for accounts to be filed; tax-resident companies however have to

submit accounts to the tax authorities; A Gibraltar company can be incorporated within 7 working days and ready made

companies are available for immediate use. There is a 0.5% duty on authorised share capital (minimum duty £G10); There is an annual tax of £G225 payable by a limited company.

A private company limited by shares is required to have at least two members, who can be individuals or companies


The Company Limited by Guarantee, and its sibling, the Company Limited by Guarantee and having Shares, have the nature of mutual companies, and as such have normally been used essentially for charitable and non-profit purposes.

Lately they have come to be used sometimes for private family foundations in place of discretionary trusts. In addition, they have been used for proprietary and members' clubs in the international leisure and timeshare resort industry, where they meet all the requirements of modern EU (and Spanish) law.

Exempt Private Company

It was Gibraltar that originated the exempt company form, which has been widely copied by other jurisdictions. The low set up cost makes them ideal for property and investment holding, international trading and sales agencies, particularly if trade is being carried on between two high tax jurisdictions.



The exempt company is the main offshore vehicle in Gibraltar. An exempt company may be either incorporated in Gibraltar under the Gibraltar Companies Ordinance, or incorporated outside Gibraltar but registered as an overseas company under Part IX of the Companies Ordinance.

Shares in an exempt company may be transmitted free of estate and stamp duty on the death of the shareholder. An exempt company pays a flat rate annual fee regardless of profits. A company incorporated in Gibraltar which is ordinarily resident pays a flat rate fee of £225 per annum, whilst a non-resident company incorporates outside Gibraltar pays a flat rate fee of £200. Fees payable to non-resident directors and dividends paid to its shareholders are not subject to a withholding tax. For a company to obtain and retain its tax exempt status, it must fulfil the following conditions:

If a company obtains exempt status, the company will be exempt from corporate tax and stamp duty (save in certain specific instances) in Gibraltar under the Companies (Taxation and Concessions Ordinance) 1984 (as amended).

Its paid-up share capital at all times must not be less than £100 or the foreign currency equivalent thereof;

No Gibraltarian or resident of Gibraltar must have any beneficial interest in the shares of the exempt company except as a shareholder in a public company which is registered in a country other than Gibraltar.- if the company is incorporated in Gibraltar, it must keep its register of shares within Gibraltar and have a provision in its Memorandum and Articles of Association to the effect that its register will not be kept elsewhere. If the company is incorporated outside Gibraltar, it must keep a true copy of its register of members within Gibraltar;

The company must not, without the approval of the Financial and Development Secretary, carry on any trade or business in Gibraltar or with Gibraltarians or residents of Gibraltar except where these are other exempt companies.

An exempt company may, however, manage and control its business from Gibraltar and have an office and staff locally; and Its auditors must be approved by the Government of Gibraltar, who must confirm annually that the company is not in breach of the provisions of the Companies (Taxation and Concessions) Ordinance The privacy of exempt companies is protected by Section 14 of the Companies (Taxation and Concessions) Ordinance 1984, which states:

14(1)The Financial and Development Secretary and every person having an official duty in the administration of this Ordinance shall regard and deal with all documents, information and declarations relating to the identity of the beneficial owners or persons interseted in any shares, or bearer certificates or coupons issued under the provisions of this Ordinance as secret and confidential.

Disclosure is permitted for the purposes of any criminal or civil proceedings in which such document, declaration, matter or thing is material (Section 14(3))




A public company is defined as one which is not a private company and which has at the end of its name the words 'Public Limited Company' or 'P.L.C.'. A public company must have a minimum of two members.

The Gibraltar 1992 Company

The Gibraltar 1992 Company was introduced to implement the EU Parent/Subsidiary Directive 90/435. The 1992 Company is a normal private company limited by shares which conforms with the following conditions:

the company's main objective must be to invest in holdings in other companies incorporated in or outside Gibraltar amounting in each case to a minimum of 5% of the voting share capital;

at least 51% of the company's annual income should be derived from such investments; the company must have business premises in Gibraltar of at least 400 sq.ft and employ a

minimum of two employees; persons who are normally resident in Gibraltar cannot own shares in the company; the company must maintain a satisfactory debt to equity ratio (not defined).

Branch of Overseas Company

If a foreign company intends to establish a branch or a permanent place of business in Gibraltar, it must within one month deposit with the Registrar of Companies a certified copy of its Memorandum and Articles of Association, a list and particulars of its directors and company secretary, and details of one or more resident individuals authorised to receive notices and communications. Once registered, the foreign company will be treated in the same way as a Gibraltarian company, and can take exempt or qualifying status if appropriate. The annual fee for a branch registration is G£300.

Non-Resident Company

A company which is incorporated in Gibraltar (whether or not exempt), owned by non-residents of Gibraltar and managed and controlled by directors who reside and hold board meetings outside Gibraltar is considered to be non-resident.

A non-resident company pays Gibraltar corporation tax only on its income derived from or remitted to Gibraltar.

A non-resident company pays an annual tax of G£200.

General Partnership

Partnerships are governed by the Partnership Ordinance, which is based on the English Partnership Act 1890. Partners may be individuals or companies. In a general partnership, a



partner's liability is unlimited. Under the Business Names Registration Ordinance, partnership names must be registered

if they differ from the surnames of the partners. Partnership agreements and financial accounts do not have to be filed although a partnership that is resident in Gibraltar must submit accounts annually to the Commissioner of Income Tax. Partnerships are, of course, fiscally transparent. The minimum number of partners is two, and the maximum number 20, although this does not apply to professional firms.

Limited Partnership

Limited partnerships are governed by the Limited Partnership Ordinance, which is based on the English Limited Partnership Act 1907. Partners may be individuals or companies. A limited partnership consists of one or more general partners with unlimited liability, and one or more limited partners, who are liable only to the extent of their capital contributions.

A limited partner does not take part in the management of the partnership and is not entitled to dissolve the partnership by notice.

A limited partnership must file a statement with the Registrar of Companies giving details of general and limited partners, and the amounts of capital contributed, in order to benefit from limitation of liability. A limited partnership must have its principal place of business in Gibraltar.

Sole Proprietorship

The business name of a sole trader, who has unlimited responsibility for his liabilities, must be registered with the Registrar of Companies, if it is other than the name of the sole trader. An annual return must be submitted to the Commissioner of Income Tax.

Trusts

The basic law of trusts is contained in the Gibraltar Trustee Ordinance, which is virtually a copy of English trust legislation. Gibraltarian legislation affecting trusts also includes the Perpetuities and Accumulations Ordinance, the Trustee Investments Ordinance, the Bankruptcy Ordinance and the Trusts (Recognition) Ordinance. Appeal is to the Privy Council.

The Hague Convention has been implemented, but there are no provisions for the exclusion of foreign inheritance laws or for the nonrecogition of foreign judgements.

Under the Bankruptcy Ordinance there is statutory protection against creditors for asset protection trusts, providing the settlor is an individual, and was not insolvent at the time of the disposition, nor became so as a result of it.

Trust documents are in English, and there are no requirements for registration except that Asset Protection Trusts must be registered with the Registrar of Dispositions. There is no stamp duty. The normal perpetuity period of a Gibraltar trust is 100 years. There are no restrictions on the accumulation of income during the perpetuity period.



Legislation has not yet been introduced to provide for purpose trusts.

Foundations

The Gibraltar Private Foundation Ordinance 1999 establishes a regime for foundations as 'vehicles for the holding of private assets endowed on the foundation for the benefit of identified persons or classes of persons', and is effective from 1st January 2000.

Foundations may not carry on trading or financial services business.A foundation is established by a deed of endowment or by a deceased person's will, either

of which constitute the Memorandum of Endowment.A foundation has officers, with prescribed duties, a secretary, a registered office in

Gibraltar, and a supervisory board.A foundation must be registered with the Registrar, who must be sent an annual return. A

Register must be kept at the registered office with details of the various parties associated with the foundation.

A foundation may re-domicile into or out of Gibraltar.

Banking Law

Banking regulation is exercised under the Banking Ordinance 1992 by the Banking Commissioner (who is also the Financial Services Commissioner). Day-to-day supervision is carried out by the Banking Supervisor (on secondment from the Bank of England). The Ordinance protects banking secrecy and confidentiality, although pre-existing anti-drug-trafficking legislation provides for certain breaches of secrecy.

Banks with licenses issued by other EU jurisdictions have only to notify the Gibraltar authorities before commencing business there; banks which require Gibraltarian authorisation and licenses must conform to criteria set out below.

Licensed banks must maintain a solvency ratio of 10%. There is an annual fee of G£5,000 payable to the Financial Services Commission.

Banks providing local services are taxable on their profits in the same way as ordinary companies, banks working 'offshore' can apply for a 'qualifying' certificate allowing them to pay tax at a rate between nil and 35% as agreed with the authorities.

Licensing and Supervision

The Banking Ordinance 1992 (as amended) repealed the previous distinction between 'A' onshore and 'B' offshore licences, and introduced a single banking licence. Thus Gibraltar licensed banks can in theory take advantage of 'passporting' opportunities and branch out across the EU and EEA without the need for further authorisation (except for notification).

Difficulties which remained with regard to EU recognition of local regulatory authorities will hopefully have been eased by the Anglo-Spanish agreement in April 2000 which unblocked the relevant EU legislation

The minimum capital required for the issue of a banking license in Gibraltar is Euros 5m,



in line with EU requirements, and the supervisory regime follows EU and Basle Committee guidelines. In considering the issue of a banking license,

Commissioner applies a number of guidelines, including the following:Directors, controllers and managers to be fit and proper persons: the Commissioner takes

into account probity, experience, skills, judgement and likely degree of diligence; good reputation and the absence of a criminal record are also important; and the nature of a person's other business interests is also considered;

'Four eyes principle': the Commissioner will want to be assured that at least two individuals contribute on a continuing basis to the formation and execution of policy, so that every signifcant decision reuslts from the exercise of at least two persons' judgement;

Business to be conducted in a prudent manner: applicants for a license are required to provide sufficient information about the proposed business and its conduct and development, including the availability of capital to support planned levels of lending or investment, for the Commissioner to be able to form a view of the stability of the institution; it is normally unlikely that a new banking formation will be able to achieve the right level of credibility unless it has the support of an existing and soundly-based bank;

Paid-up capital and reserves will be adequate to protect the interests of depositors; large exposures to a single entity are a major negative factor;

Liquidity must be maintained at a satisfactory level in relation to the schedule of liabilities;

Adequate provision is and will be made for bad and doubtful debts and for contingent liabilities;

There will be adequate accounting and other records and control systems to ensure stability and predictability in the business;

The necessity that the institution itself will behave with the highest professional, ethical and business standards;

The Head Office needs to be in Gibraltar - meaning that the majority of board meetings will take place there, and that the management and direction should be exercised there; regular influence on managerial decisions by a dominant shareholder would be a negative factor, especially if the shareholder was not resident in Gibraltar.

Confidentiality

Within the general statutory duty of confidentaility, authorised institutions, and their controllers and subsidiaries, and institutions of which authorised institutions are controllers, are permitted to exchange between each other information about their customers necessary to facilitate supervision of institutions on a consolidated basis in accordance with Council Directive 83/350/EEC (as extended, where applicable, by the EEA agreement) or any successor thereto.



Trust Law

The basic law of trusts is contained in the Gibraltar Trustee Ordinance, which is virtually a copy of English trust legislation. Gibraltarian legislation affecting trusts also includes the Perpetuities and Accumulations Ordinance 1986, the Trustee Investments Ordinance, the Bankruptcy Ordinance and the Trusts (Recognition) Ordinance which implemented the Hague Convention. Appeal is to the Privy Council.

There are no provisions for the exclusion of foreign inheritance laws or for the nonrecogition of foreign judgements. Legislation has not yet been introduced to provide for purpose trusts.

As in the UK, in Gibraltar the essential requirements of a trust are that it is created orally or in writing and that a settlor conveys legal title to real property (land) or personal property (property other than land) into the name of one or more trustees to be administered in accordance with the wishes of the settlor for the benefit of one or more beneficiaries.

Trust documents are in English, and there are no requirements for registration except that Asset Protection Trusts must be registered with the Registrar of Dispositions. There is no stamp duty. The normal perpetuity period of a Gibraltar trust is 100 years. There are no restrictions on the accumulation of income during the perpetuity period

Gibraltar's asset protection trust legislation falls under the provisions of the Bankruptcy Amendment Ordinance 1992. This is unusual for offshore asset protection , which is dealt with under the law on fraudulent conveyancing laws in most offshore jurisdictions, as for instance in the Cayman Islands and the Bahamas.

Fraudulent conveyancing laws depend for their effect on the statutory definition of 'intent' to defraud. By contrast, under bankruptcy law, which contains no definition of intent, the only direct action which can be commenced is a bankruptcy proceeding, which has a significantly tighter test of intent.

For a bankruptcy proceeding to succeed, it is necessary to show that the target (the settlor) is resident or domiciled in the jurisdiction, and that an 'act of bankruptcy' was committed there. Since most asset protection trusts are settled via exempt companies, whose owner (= the settlor) cannot be resident and a beneficiary, this will be difficult or impossible in many cases

International Law

Gibraltar has not entered into any bilateral Mutual Assistance Treaties. However, the 1997 EU Directive on the Exchange of Tax Information with Member States applies to Gibraltar. It is not yet clear how the Directive will be interpreted in Gibraltar when it is put to the test.

The Criminal Justice Ordinance 1995 (implementing EU Directive 91/308) provides inter alia for the confiscation of the proceeds of drug-trafficking. Neither it nor any other piece of Gibraltar legislation deals with tax evasion.In the year 2000 various international organisations issued 'offshore lists' in which Gibraltar fared quite well:



In June 2000 the Gibraltar Government wrote a 'Letter of Commitment' to the OECD's Financial Action Task Force in which it promised to comply with international standards of transparency and mutual assistance.Gibraltar did not feature on the FATF's blacklist of jurisdictions that were considered to have inadequate money laundering controls.

It was in the middle group of the Financial Stability Forum's "could cause instability" list along with Bermuda and MaltaHowever, three of its offshore company types were included in the Primarolo Committee's list of 'harmful tax practices' in the EU. This is perhaps the most serious of the offshore lists for Gibraltar but it is politically improbable that the Code of Conduct Committee is going to achieve much considering that virtually every member state figures on the list, mostly with quite significant low-tax regimes.

Nonetheless, in July, 2002, Gibraltar's Chief Minister, Peter Caruana announced the territory's new corporate taxation policy, with effect from July, 2003, which will include the abolition of the existing corporate forms which allowed zero taxation, the Exempt and Qualifying companies, although there is no news yet about the possible grandfathering of existing companies.

In fact, Gibraltar had halted the Commission's action in its tracks at the European Court of Justice on a technicality, but has evidently accepted that sooner or later the overtly 'offshore' corporate forms would have to go.

Hong Kong


Hong Kong 1.084 Km2 6.600.000GMT plus 8

hoursEnglish-Chinese

Disclaimer: This General overview has been obtained from Government Sources so: Is not our responsibility if any part of Local Legislation or Rules has been changed by Authorities without advice us.-This overview is only for information and if wish to obtain more, please, consult



directly to each Local Authority and/or Experts.-

General Overview

Types Of Company

In Hong Kong businesses normally trade as either limited companies, limited partnerships or sole proprietorships. Being a common law jurisdiction the concept of a trust is readily understood and widely used. The tight secrecy, minimal corporate disclosure and loose administrative requirements which characterize some island offshore common law jurisdictions and make these territories attractive locations in which to base commercial operations have no counterpart in Hong Kong, whose company and trust law are virtually identical to their United Kingdom equivalents.

To found a business company in Hong Kong, it is necessary to register with the Business Registration Office of the Inland Revenue Department (Revenue Tower, 4/F, 5 Gloucester Road, HongKong, tel: (852) 2594 0888) within one month of the commencement of business. The annual registration fee is currently HK$2,250 (US$288). In general the minimum capital requirements for a business corporation are very low or nonexistent and all legal business forms are open for foreign participation

Applications for incorporation should be made to the Companies Registry (13th - 14th floors, Queensway Government Offices, 66 Queensway, Hong Kong, tel: (852) 2867 2587). The registration fee ranges from HK$600 (US$77) to HK$1,010 (US$128). Incorporation normally takes 7 to 10 working days, depending on the financial structure of the company.

It is also possible to purchase a shelf company, i.e. an already incorporated private company, through an accounting or law firm or through a secretarial company. It costs about HK$6,400 (US$800) and takes only a few days. Further time is required (about 3-4 weeks) if the name of the shelf company is to be changed.


Corporate entities are governed by the provisions of the Hong Kong Companies Ordinance 1984 which brought the territory's company law into line with United Kingdom company law. Incorporation can take 4-6 weeks. Their key features are as follows:

The minimum number of subscribers and shareholders is two; if the number of shareholders falls to one, the remaining shareholder is personally responsible for the company debts;

There is no minimum authorized or issued share capital requirement;Shares of no par value and bearer shares are not permitted;Shares can be issued at a premium or discount (if sanctioned by the court);A company may purchase its own shares out of distributable profits;Nominee shareholders, directors and secretary are permitted;The minimum number of directors is two; corporate directors are permitted (unless the

company is a public company);



The articles can provide that the directors' liability for the company be unlimited;Every company must have a secretary which can be an individual or a corporate body, but

must be resident in Hong Kong;Meetings can be held anywhere in the world;Accounts must be prepared, filed and audited;The migration and re-domiciliation of corporate entities to or from a foreign jurisdiction

is not permitted;Annual returns must be filed.The Articles of Association of a private company must restrict the right to transfer shares,

must limit the number of members to fifty (excluding employees), must prohibits any invitation to the public to subscribe for any shares or debentures of the company.he Articles of Association of a private company must restrict the right to transfer shares, must limit the number of members to fifty (excluding employees), must prohibits any invitation to the public to subscribe for any shares or debentures of the company.

Every Hong Kong company must register annually under the Business Registration Ordinance, the fee for which is about US$300.


A public company (plc) is any limited company which is not a private company.


Overseas companies starting businesses in Hong Kong can form a private company limited by shares, as above, or can simply establish a branch. The registration fee is HK$316 (US$40).

When a company incorporated outside Hong Kong establishes a place of business in Hong Kong, it must lodge the following documents with the Registrar of Companies:

A Certified copy of its charter or memorandum and articles of association;Particulars of directors and the company secretary;Name and address of a resident of Hong Kong authorised to accept notices on behalf of

the company;Power of attorney or other document appointing a Hong Kong representative;Address of principal place of business in Hong Kong and addresses of registered office

and principal place of business in the company's country of incorporation; andA Certified copy of the certificate of incorporation.



The company is also required to file a copy of its financial statements once a year. However, an application may be made to the Registrar of Companies who may grant exemption from filing accounts based on certain criteria and the production of prescribed documents.

A branch office is relatively easy to set up but is open to greater potential liability than a limited company since it is not treated in Hong Kong law as a separate legal entity.In some countries, branches have tax advantages as against limited companies, for a foreign parent, but not in Hong Kong: the territorial basis of taxation means that the branch will be taxed exactly as a limited company, on Hong Kong-source income.-

Limited Partnership

The law is contained in the Limited Partnership Ordinance. Limited partnerships have the following characteristics:

The maximum number of partners permitted by law is 20; Limited partnerships consist of general and limited partners; there must be at least one

general partner whose liability for the firms debts is unlimited; the remaining partners are limited partners whose liability is limited to the amount of their unpaid share capital;

A limited partner cannot reduce or take out his share capital whilst the partnership continues in existence and is not allowed to take an active part in the management of the partnership nor bind the same vis a vis third parties in default of which provision he assumes the liability of a general partner;

Limited partnerships must be registered at the Companies Registry under the Limited Partnership Ordinance in default of which they are deemed to be general partnerships with unlimited liability for each and every partner;

All partnerships are required to obtain a business license under the provisions of the Business Registration Ordinance which license annually costs US$300 per annum.

Sole Proprietorship

As in the UK, a sole proprietorship has the nature of a partnership with one partner, and the owner does of course have unlimited liability for his firm's debts. As an unincorporated business, a sole proprietorship is subject to profits tax in exactly the same way as any other business; but the rate of tax is 15% instead of 16% on taxable income

Trusts

Trust law in Hong Kong is virtually identical to English trust law and is contained in the provisions of the Trustee Ordinance (an Ordinance which is modeled on the English Trustee Act 1925).



Both fixed and discretionary trusts may be settled in Hong Kong. Documents do not have to be registered and there are no statutory requirements in Hong Kong for a trust to make annual returns, submit audited financial statements, etc., unless it is carrying on business in Hong Kong.

Unlike most offshore jurisdictions Hong Kong has not tampered with trust laws in order to make the jurisdiction a more attractive jurisdiction in which to create a settlement. Hong Kong will therefore not normally be a suitable location for an asset protection trust.

Financial Services Law

Until 1964 there were virtually no regulations governing the financial sector in Hong Kong. A banking crisis in the 1960s led the authorities to enact Banking Ordinance 1964, which introduced basic standards such as minimum capital requirements and rudimentary disclosure laws. However, bank failures, caused by poor management and excessive investment in the real estate market in the early 1980s, coupled with the stock market crash in 1987, resulted in a complete overhaul of Hong Kong financial market regulations. The country now has a transparent legal and regulatory environment that has facilitated its role as a modern regional and international financial center.

Under the Sino-British Joint Declaration on the Future of Hong Kong, Chinese authorities were committed to enact the Basic Law of the Hong Kong Special Administrative Region. The Basic Law is the legal basis for the "One Country, Two System" guarantee and provides for the continuance of Hong Kong’s system of common law and free market economic system after 1 July 1997.1 The Law stipulates that the Hong Kong dollar will remain freely convertible; that markets for foreign exchange, securities, futures, and other financial products will remain open; and that no controls will be placed on the flow of capital into or out of Hong Kong.

Three government agencies are responsible for regulating Hong Kong’s financial market: the Hong Kong Monetary Authority (HKMA), the Securities and Futures Commission (SFC), and the Insurance Authority. In addition to being regulated and supervised by the HKMA, banks are required to become members of and adhere to the rules of the Hong Kong Association of Banks (HKAB).

Banking Law

The Banking Ordinance is the basis of the legal framework governing the banking sector. The Bank Advisory Committee, which is composed of members of public-sector and private financial institutions, advises government authorities on issues concerning the Banking Ordinance.

The Banking Ordinance was amended in 1986 to authorize the Commissioner of Banking to regulate the banking sector, set minimum capital standards, and limit loans to customers and bank employees. Amendments to the Ordinance in 1995 gave the HKMA broader powers, including responsibility for all matters pertaining to the authorization of banks. The HKMA can suspend or revoke the license of a bank found to be in violation of regulations



designed to protect the safety and soundness of the financial system. It is also authorized, after consultation with the Financial Secretary of Hong Kong, to take over a financial institution that is unable to make payments or if it is deemed in the public interest to take control of the firm.

There is a three-tier banking system of "authorized institutions" in Hong Kong: licensed banks, restricted-license banks, or deposit-taking companies. Only licensed banks are permitted to accept deposits of any size and maturity and to offer checking and savings accounts. They effectively function as commercial banks. Restricted-license banks are limited to accepting deposits of more than HK$500,000 and thus offer investment banking services. Deposit-taking companies are only authorized to accept deposits over HK$100,000 that have an initial maturity of at least three months. Hong Kong adheres to the Basle principles for bank supervision.

The approach is one of ongoing supervision and includes on-site reviews of operations and financial records and off-site reviews of financial statements and reports. Banks are required to be incorporated and publish detailed audit reports as well as monthly returns showing assets and liabilities. In addition to information on their balance sheet and quality of assets, banks are required to disclose inner reserves, realized profits, and net assets. Authorities meet annually with internal and external auditors to review each institution’s audit and determine if the institution is in compliance with prudential standards and the Banking Ordinance. The Banking Ordinance, in turn, provides a legal basis for enforcing the Basle standards. Violation of the Banking Ordinance is punishable by fines, imprisonment, or both.

The Banking Ordinance restricts the use of the word "bank" to those institutions that are either licensed or restricted-license banks. In the latter case, the word "bank" must be accompanied by either "merchant" or "investment." Only a "fit and proper person" can be issued a banking license, and there exist controls regarding the ownership and management of an authorized financial institution. An authorized institution is required to inform the HKMA if it makes changes to any documents that outline the institution’s procedures. Approval is also required before there can be any changes in a bank’s ownership.

The Banking Ordinance also sets forth minimum capital requirements for authorized institutions. Locally incorporated banks must have paid-in capital equal to US$388 million and net assets of US$518 million dollars for authorization to operate a licensed bank. Applicants for a restricted-license bank must have paid-in capital equal to US$12.8 million.Authorized institutions are not permitted to lend more than 25 percent of their capital base to a single customer or group of related customers, nor are they allowed to hold more than 25 percent of shares in other companies. No more than 10 percent of an authorized institution’s capital base may be used for unsecured loans.

The HKMA adopted BIS capital-adequacy guidelines in 1989. The minimum standard according to BIS recommendations is a capital-adequacy ratio of 8 percent. The national requirement in Hong Kong is also 8 percent, although some banks are required to maintain 12 percent and some nonbanks at least 16 percent. The actual risk-based capital-adequacy ratio at the end of 1995 was 17.5 percent. In December 1996, the HKMA implemented reporting requirements that direct banks to address market risk in calculating their capital-



adequacy ratio.Foreign-owned commercial banks can enter the Hong Kong banking industry by

establishing a branch or by acquiring ownership of a local bank. Foreign-owned firms must apply for a license to enter the financial services market. License approval is subject to four criteria: foreign-owned firms must (1) have net assets of US$16 billion, (2) be incorporated in a country that applies the Basle principles for bank supervision, (3) have approval from their home country to operate a branch in Hong Kong, and (4) come from a country that offers reciprocal access to Hong Kong banks. Of the 366 banks in Hong Kong in February 1997, 333 were owned by foreign interests. Overseas incorporated banks hold 78 percent of the country’s banking assets, and bank deposits denominated in foreign currency represent 56 percent of total bank deposits.

Hong Kong does maintain restrictions on the number of branches that foreign banks are permitted to operate. In 1994, authorities relaxed the one-branch limit for foreign banks, allowing them to open one additional office in a separate building from the location of their main branch; however, the additional office is to be used only for "back office" functions such as processing and settling transactions conducted in the main branch office.

Fully licensed banks (commercial banks) are allowed to establish operations in Hong Kong only as a bank branch. Restricted-license banks (investment banks) are permitted to open branches or subsidiaries. Licenses for deposit-taking companies are extended only to locally incorporated subsidiaries.

In the light of China's accession to the WTO, in December 2001 the Hong Kong Monetary Authority announced that it intended to scrap the US$16 billion minimum asset requirement for foreign banks, bringing the amount needed down to HK$5 billion, in line with the requirements for local institutions. As well as encouraging foreign financial institutions to put down roots in the SAR, the authorities hope that this move will encourage the mainland to reduce its minimum asset requirements - currently set at US$16 billion - which would make it easier for Hong Kong banks to establish there.

Investment Management Law

The Intermediaries and Investment Products Division of the Securities and Futures Commission is responsible for regulating the marketing to the public of unit trusts, mutual funds and other collective investment schemes.

The Investment Products Department has regulatory responsibility for unit trusts, mutual funds, investment-linked assurance schemes, pooled retirement funds and immigration-linked investment schemes as well as other forms of investment arrangements. These products require authorisation by the SFC before they can be marketed to the public in Hong Kong.



IRELAND


Ireland

70,282 Km2 3,600,000 GMT Irish-English

Disclaimer:


General Overview


Irish company law is contained in the Companies Acts 1963 - 1990. A private company is one which by its articles:

Restricts the right to transfer its shares Limits the number of its members to 50 Prohibits any public subscription to shares or debentures

A company is formed by submitting its Memorandum and Articles of Association to the Registrar of Companies along with the registration fee. There need to be two directors and a secretary, none of whom need be Irish. However it is normal for there to be one Irish director who can act as a local representative.

A company must have an auditor, and accounts must be filed each year with the Companies Registration Office. Small companies can prepare abbreviated accounts which



do not have to include the level of turnover.


As from 1st October 1999, the Finance Act 1999 rendered all Irish incorporated companies resident, subject to certain exceptions.

For some time, limited liability companies whose ownership and control have been outside Ireland have been able, as non-resident companies, to benefit from favourable taxation conditions; the new ruling reduces the possibilities open to non-resident companies but does not remove the advantages in all cases, by any means.


A Public Limited Company (PLC), also registered under the Companies Acts 1963 - 1990, needs a minimum of seven shareholders and a minimum capital of IR£30,000, of which at least 25% must be paid up.A PLC is not subject to the restrictions that apply to a private limited company (see above).


As in England, companies limited by guarantee are normally used only for charitable or non-profit-making purposes. Apart from their share structure, they are similar to other types of private company and also fall under the Companies Acts.


Any overseas company may operate in Ireland as a branch, but must register with the Registrar of Companies under Part XI of the Companies Act 1963. Copies of the company's Charter and Bye-Laws (Memorandum and Articles of Association) must be lodged, along with details of the directors and other officers. There needs to be an authorised representative in Ireland. The branch needs to file annual accounts with the Companies Registration Office.

General Partnership

Partnerships fall under the Partnership Act 1890 (English legislation). Partners are individually liable for the debts of the partnership.

Partnerships do not need to file accounts or to be audited.

Limited Partnership

Limited Partnerships are formed under the Limited Partnerships Act 1907 (English



legislation). They are similar to general partnerships except that they have one or more general partners with unlimited liability and one or more limited partners whose liability is limited to the amounts of their contributions. The general partners may be limited companies.

This form is not now widely used in Ireland.

Investment Limited Partnership

The Investment Limited Partnership Act 1994 introduced this form, known as an 'ILP', which is useful for collective investment entities, having tax transparency which allows investors to obtain double tax relief, which is unavailable to unit trust investors.

There are one or more general partners, one of whom must be an Irish incorporated company with its head office in Ireland; the minimum share capital is IR£100,000 and at least two directors must be Irish. General partners must be approved by the Irish Central Bank, and there must be an Irish Custodian.

Monthly accounts must be submitted to the Central Bank.The development of the European single market during the 1980s and 1990s, together

with a consistently pro-business attitude on the part of the Irish Government has seen the emergence of Ireland as one of the fastest-growing European states, and the establishment of the International Financial Services Centre in Dublin, along with the Shannon Airport tax-free area, has led to the development of a substantial offshore business sector. This section of the site describes the main business sectors in which 'offshore' or other tax-privileged regimes are available.

Corporate Financial Services

The 'offshore' environment provided by the International Financial Services Centre (IFSC) in Dublin is attractive to multinationals looking to locate treasury management and other corporate financial functions in a fiscally-flexible but sophisticated environment, and many such operations have based themselves there.Application for a certificate entitling a company to favourable tax treatment is made to the Industrial Development Agency (IDA) and the certificate is issued by the Minister of Finance.

Among the stated activities which the IFSC was set up to encourage and accommodate are a number of corporate functions, including the following:

the provision of foreign currency services for non-residents; the carrying on of financial services for non-residents including global money

management, dealing and trading in securities denominated in foreign currencies; the provision for non-residents of services of or facilities for processing, control,

accountancy, communication, clearing, settlement or information storage in relation to financial activities; and

the development or supply of software for use in the provision of services or facilities



mentioned in the last item. Companies established in the IFSC are supervised by the Central Bank (The Bank of

Ireland) under the Central Bank Act 1989.

It is not necessary to establish a separate subsidiary in order to carry out corporate financial functions in the IFSC; there are agency companies and 'shared service centres' which provide certificated services to overseas client corporations for a number of the more usual corporate functions.

Banking

The Central Bank of Ireland regulates the banking industry under the Central Bank Acts 1942 to 1997, although as from 2003, the Irish Financial Services Regulatory Authority took over bank regulation from the Central Bank. The change was more apparent than real, since the new Regulator brings together many of the responsibilities previously held by the Central Bank (which continues to form a part of the Authority), the Department of Enterprise, Trade and Employment, the Office of the Director of Consumer Affairs and the Registrar of Friendly Societies.

Banks need licences from the Central Bank, unless they are already authorised in an EU member state under the Second

Banking Directive 89/646/EEC, in which case they have to comply with certain administrative and information requirements. A non-EU bank will need to have an Irish subsidiary in order to apply for a license.

Banks qualify under the legislation setting up the International Financial Services Centre (IFSC) in Dublin, and many have taken advantage of the low tax rate (10%) offered by the IFSC. Certificates giving entitlement to the low tax rate are issued by the Ministry for Finance, and initial application is made to the Industrial Development Authority. New applications in 1999 (the last year for them) were limited under the Irish Government's agreement with the EU and the 10% tax rate will apply only until the end of 2002. From the beginning of 2003 the EU-agreed rate of 12.5% applies generally to Irish companies.

The IFSC banking sector has grown extremely rapidly in the last few years; at the end of 2000 there were some hundreds of banks or bank-like organisations operating in the IFSC, with total non-resident assets over IEP£100bn, and total resident assets only slightly lower. By mid-2002 IFSC banking assets had reached a total of 214 bn euros. This is not surprising, given that a licensed Irish bank automatically gains access to other EU countries through subsidiaries, and that the Irish IFSC tax regime is probably the best in Europe; the new 12.5% tax rate may not dent this business all that much, given the other advantages of Irish establishment, and the much-improved position under double tax treaties once 12.5% is the 'normal' Irish rate.

In the last two years, the IFSC and the Irish Central Bank have begun to admit a number of blue-chip corporate (in-house) banks, reversing a previously stance against 'non-bank' banks, although there is still a preference away from them.



Forms of Low Tax Operation

The term 'offshore' is not used in Irish legislation or in describing company forms. Use of the various special regimes available in the Shannon Free Zone, the Dublin International Financial Services Centre, or through the 'Manufacturing Rate' of tax, or via a non-resident company are the main ways of achieving offshore tax treatment.

In Ireland there are no specific forms of company or other entities designed for offshore operation. There are a number of special taxation regimes offering low taxation; and non-resident companies offer a highly effective means of reducing international tax bills, although their efficacy has been reduced in some situations by the new rules introduced by the Finance Act 1999 following the Irish Government's agreement with the EU on a 12.5% mainstream corporation tax rate.

By the time that the agreed new regime is fully operational in Ireland in 2003, the various special regimes will have ceased other than for existing companies; on the other hand, the agreed new regime seems likely to be far superior to anything available elsewhere in the EU. It is difficult to see what other EU country would be brave enough to take its corporation tax rate down to 12.5%; and it is unlikely that the EU itself is going to allow an (even more harmful) tax competition to develop between member states.

International Financial Services Centre

The International Financial Services Centre (IFSC) has been the successful centrepiece of the Irish Government's appeal to the international financial community in the last ten years. A wide range of financially-oriented companies, now including corporate financial service centres as well, are able to obtain a 10% rate of corporation tax and a number of other fiscal advantages by locating themselves physically in the Customs House area of Dublin's dockland, which has been extensively fitted out to be a suitable home for state-of-the-art financial businesses.

To some extent the IFSC is history, since its purpose will mostly disappear once the overall 12.5% corporation tax rate is effective in 2003, and new entrants were permitted for the last time in 1999, on a quota basis (77 more companies only!). However, it is probably still useful to give some basic details of the Centre. It was established for the following types of operation (abbreviated and summarised):

provision of foreign currency services for non-residents; carrying on international financial activities for non-residents, including money-

management, derivatives, securities dealing; insurance; administrative and systems support for the above.

In order to take advantage of the fiscal advantages offered by the IFSC, a certificate has to be issued by the Minister for Finance, and application is made initially to the Industrial Development Agency (it should always be borne in mind that the IFSC was established - and got its EU acceptance - through its overt role as a job creation exercise). The main



advantages are as follows:Corporation tax at 10% on trading profits; A 10-year exemption from municipal taxes; Double rent allowances for leased property; 100% depreciation allowances for commercial buildings, plant and machinery; no withholding taxes on dividends or interest.

The application process is of only academic interest by now (late 2001), except perhaps in the event that an existing 10% certificate falls to be transferred to a new owner. It is not clear whether this is permitted under the agreement with the EU; perhaps, yes. There was no set format for an application, but it needed to address the business plan of the applicant, its funding, revenue and profit projections, and, importantly, the consequences for local employment. Existing IFSC companies will retain their tax privileges until the end of 2004; but new IFSC companies receiving certificates after July 1998 will pay 10% only until the end of 2002.

It is worth remarking that a number of permitted IFSC financial activities have come to be carried out by management companies, who take on the responsibilities for staffing etc that would normally have attached to the IFSC member; both parties benefit from the 10% tax rate, but the client does not have to open a separate office or even incorporate in Ireland.

Non-Resident Companies

Non-resident companies carrying on business in Ireland are liable to corporation tax on their Irish-sourced income only. Equivalent rules apply to capital gains; however there are roll-over exemptions available for capital gains.

For a number of years, residence has been determined primarily according to a 'management and control' test, with some subsidiary tests such as the location of actual trading, location of bank accounts, location of head office, etc. Until 1999 there was no statutory definition of 'residence', and it has been possible to maintain non-residence for an Irish company despite a substantial level of activity in Ireland.

As part of a general response to the EU's initiative against 'harmful tax competition', Ireland has installed or announced new tax regimes during 1999, agreed with the EU, which will continue the existing favourable tax regime in many respects, but which have brought some parts of the tax system much more closely into line with general EU practice.

Under the Finance Act, 1999, all Irish-incorporated companies will become resident; however, there are a number of exceptions to the rule, some of them to accommodate the situation of multinational companies (many American) who have established themselves in Ireland.

The most important exceptions are:an Irish-incorporated company which is resident in a treaty country (Ireland has Double

Tax Treaties with more than 30 countries) and which is not resident in Ireland will continue to be regarded as non-resident in Ireland;

an Irish-incorporated company which is under the ultimate control of a person or persons



resident in an EU member state or in a country with which Ireland has a double tax agreement, or which is, or is related to, a company whose principal class of shares is substantially and regularly traded on a stock exchange in an EU country or a treaty country AND which carries on a trade in Ireland or is related to a company which carries on a trade in Ireland will continue to be able to be non-resident under the management and control test. ('Related to' means that either one of the two companies owns at least 50% of the other, or that both are owned at least 50% by a third company; 'Control' is interpreted within Irish rules that attribute the rights of shareholders to related parties and associates.) Alongside these exceptions, some additional reporting requirements have been imposed on non-resident companies, and some stiffer incorporation rules have been imposed on all companies:

non-resident companies must declare their country of residence, the name and address of any qualifying trading company in Ireland, the name and address of any qualifying quoted controlling company, or else the name and address of the ultimate beneficial owners;

companies to be incorporated must intend to trade in Ireland, and will have to have at least one Irish resident director or else provide a bond.

As can probably be seen, these rules taken together are far from restrictive, and in most cases it will be possible for companies either to continue non-residence as they are currently structured, or else to make reasonably straightforward adjustments to fall within the new rules.

Exchange Control

Ireland has no exchange controls.

ISLE OF MAN


Isle of Man

572 Km2 76,000 GMT Irish-English

Disclaimer: This General overview has been obtained from Government Sources so: Is not our responsibility if any part of Local Legislation or Rules has been changed by



Authorities without advice us.-This overview is only for information and if wish to obtain more, please, consult directly to each Local Authority and/or Experts.-

General Overview

The term 'offshore' is not used in Isle of Man legislation or in describing company forms. Non-residence is the key criterion for obtaining offshore tax treatment other than for the International Company and Exempt Company, which are regarded as being resident. The main forms useful for offshore operations in the Isle of Man are the Exempt Company, the International Business, the International Limited Partnership, the Limited Liability Company (LLC) and the Trust. Normally, non-resident tax treatment is given to foreign income, while income arising in the Isle of Man is taxed more highly.

In December 2000 the OECD announced the Isle of Man's commitment to eliminate harmful tax practices by 31 December 2005 which has secured the jurisdiction's deletion from the OECD list of countries deemed to possess "harmful" tax practices.

The OECD said it welcomed the commitment, which includes undertakings in favour of transparency, non-discrimination and effective co-operation.


Offshore operations may take place within the following forms:Exempt Private company Branch Limited Partnership LLC Limited Liability Company international Company International limited Partnership Captive Insurance Company Trust

In June 1999 the Manx Government placed a moratorium on the formation of Non-Resident Companies; the future of existing companies with non-resident status has yet to be determined. In December 2000 the Island published the terms of its commitment to the OECD which included a statement that International Companies in their current form, Non-Resident Company Duty companies and Share Warrants to Bearer will be abolished. No timetable has been established for these moves, and the announcement was made before US resistance to the OECD forced the organisation to back off some of its proposals including those for 'non-discrimination' and upwards harmonisation of tax rates.


Offshore Manx companies are taxed as follows:



Non-resident limited liability companies (and foreign branches with non-resident status) are liable to an annual duty of £830, payable to the Registrar of Companies along with the annual return. They are exempt from income tax on foreign-derived income, but pay Isle of Man higher-rate income tax (18%) on any local income.

Exempt Companies pay a fee of £430 along with their annual application for exemption (more if it is late). They are not permitted local income, except (untaxed) bank interest (by concession).

International Companies (which, like Exempt Companies, are not permitted local trading income) negotiate a rate of tax up to 35% on their foreign income (minimum tax to be paid = £1,200). The intention is to help companies, particularly investment companies, conform to minimum tax requirements imposed by other jurisdictions.

Non-resident partners in a Manx partnership, limited partnership or Limited Liability Company are liable for tax only on Manx-derived income (with the usual concessions regarding bank interest), and then as individuals .

The International Limited Partnership, which is analogous to the International Company, pays £400 annually with its application for such status; it may not have local income other than bank interest.(Captive) insurance companies can apply to be exempt from IOM income tax under the Income Tax (Exempt Insurance Companies) Act 1981. As with exempt companies in general, application for exempt status must be made annually, with a total fee for insurance companies of £2,500. Normally exemption will only apply to underwriting of risk arising outside the island. Applications are made to the Chief Financial Officer.

As a consequence of its commitment to the OECD, the Isle of Man announced in its 2002 budget that shipping and insurance companies would be brought within the regular income tax system, but at a zero rate.

Trusts with non-resident beneficiaries are exempt from Isle of Man income tax on income arising outside the island and (by concession) on IOM bank interest.

Exchange Control

The Isle of Man has no exchange controls.

Offshore Activities

For exempt companies, International Companies and International Limited Partnerships, activities on the island are limited to administration of external business, or dealing with other exempt organisations.

Non-resident companies can have activity on the island, but not such as to constitute management and control; in their case, and in most other cases, there can be trading activity on the island, but it will be taxed. As long as the operation is not judged to be resident (when all income will be taxed) income is simply split according to its source and taxed or not accordingly.




Isle of Man Private Limited Companies are incorporated under the Companies Acts 1931 to 1993. A private company limited by shares is required to have at least one member, who can be an individual or a company, and it must be stated in the Memorandum of Association that the company is private. Annual returns must be made to the Registrar (cost £42), and details of the shareholders are held on the public files; but nominee shareholders can be used. A minimum of two directors are required, and they cannot be companies. An Isle of Man company can be incorporated within 7 working days and ready made companies are available for immediate use.


The Company Limited by Guarantee, and its sibling, the Company Limited by Guarantee and having Shares, have existed since the earliest days of Company Law over 135 years ago. They are essentially mutual companies, and as such have historically been used essentially for charitable and non-profit purposes.

In the last thirty years, they have been increasingly used for private family foundations instead of discretionary trusts, since they are readily intelligable to persons from a non-equitable legal background, and avoid most of the problems associated with trusts. In addition, they have been used for proprietary and members' clubs in the international leisure and timeshare resort industry, where they meet all the requirements of modern EU (and Spanish) law, as well as for other social organisations.

They have also been used for tax planning, making use of the extraordinary flexibility in relation to ownership and capital that such companies can provide. The Isle of Man is one of the leading jurisdictions for this form of company, not because it is unique to the Isle of Man, but because it was in the Isle of Man that all the development work has been done in the last three decades.

Exempt Private Company

The Income Tax (Exempt Companies) Act 1984 (as amended) provides exemption from Income Tax to a private company which is owned by non-residents, does not engage in any activity on the island (with minor exceptions), and has no source of income in the Isle of Man other than income from money invested with the Isle of Man Government or from banks licensed by the Treasury.

One of the company directors must be resident in the Isle of Man. Additionally, the secretary of the company must be a Manx resident and hold a qualification as required by the Act. The exemption will require annual renewal. The granting of exemption does not affect the liability of a company to deduct and account for income tax under the Income Tax (Instalment Payments) Act 1974.

To make a first-time application for exemption a company is required to complete forms TEC1 (signed by a director of the company) and TEC1(u), signed by a Manx-resident



director of the company. The completed forms should be submitted to the Income Tax Division together with the appropriate fee: £400 if the application is received not later than 30th June in the year of assessment; £1200 if the application is received after 30th June but not later than 30th September.From 6 April 2001 the annual duty payable by a Manx exempt company will increase by £30 to £430


A public company is defined by the Companies Acts as one which is not a private company and which has at the end of its name the words 'Public Limited Company' or 'P.L.C.'. A public company must have a minimum of two members.


Limited Liability Companies were introduced by the Limited Liability Companies Act 1996. A Limited Liability Company (LLC) must have at least two members whose liability is limited to the extent of the capital they contribute to the company.

Profits are divided among the members and are taxed in their hands, as for a partnership. An LLC does not have directors or a secretary, but it must have a registered agent on the island. The life of an LLC is limited to thirty years. LLCs are governed by articles of organisation and not memorandum and articles of association.

International Company

The International Company (IC) was introduced by the International Business Act 1994. In effect this form broadens the concept of the exempt company. IC status can be acquired by a Manx-registered company (including public companies and limited liability companies) or by a foreign company registered on the island. International Companies are excluded from the same activities on the island as exempt companies (see above). The income and receipts of an IC (other than local bank deposit or approved investment income) have to be derived from outside the island, or from dealings with other ICs. An IC must have a resident director and secretary (or agent in the case of a Limited Liability Company).

The International Company legislation is particularly aimed at helping finance sector companies. The rates of tax payable are negotiated between the company and the Manx authorities, but will not be less than the annual duty of £1,200 (more if the application is filed late). As with exempt companies, the status of International Company has to be applied for each year.

The Isle of Man's commitment to the OECD includes abolition of this form by 2005; but it is not clear whether or when this will actually take place.

Branches of Overseas Company

If a foreign company intends to establish a branch or a permanent place of business in the



Isle of Man, it is subject to Part XI of the Companies Act 1931, which provides for registration on the island. Within one month it must deposit with the Registrar a certified copy of its Memorandum and Articles of Association, a list and particulars of its directors and company secretary, and details of one or more resident individuals authorised to receive notices and communications.

Once registered, the foreign company will be treated in the same way as a Manx company, and can take exempt or international status if appropriate.


A Manx-registered company can apply to be non-resident if its central management and control is exercised from a foreign base. It will only be liable to income tax if there is any income from the Isle of Man apart from bank interest.

To obtain Non-Resident status a Declaration of Non-Residency has to be filed with the Registrar of Companies. A flat duty of £775 has to be paid annually upon filing of the annual return with the Registrar of Companies. From 1 June 2001 the flat duty for a non-resident company, which has to be paid annually upon filing of the annual return with the Registrar of Companies, will be increased by £30 to £830.

General Partnership

Partnerships are governed by the Partnership Act 1909, which is based on the UK Partnership Act 1890 and the UK Limited Partnership Act 1907. Partners may be individuals or companies. In a general partnership, a partner's liability in unlimited. Under the Registration of Business Names Acts 1918 and 1954, partnership names must be registered if they differ from the surnames of the partners. Partnership agreements and financial accounts do not have to be filed at the general registry.

Limited Partnership

Limited partnerships are also governed by the Partnership Act 1909. They must be registered as such, or they may be deemed to be general partnerships. Partners may be individuals or companies.

A limited partnership consists of one or more general partners with unlimited liability, and one or more limited partners, who are liable only to the extent of their capital contributions. A limited partner does not take part in the management of the partnership and is not entitled to dissolve the partnership by notice. Limited partnerships may have up to twenty partners; but in banking only up to ten partners.

International Limited Partnership

An International Limited Partnership (ILP) is similar in structure to a Limited Partnership



and was introduced by the International Business Act 1994. The general partner must be a Manx-resident company and must comply with the requirements for a company to be an International Company (see above); the limited partners must either be non-resident or must be themselves International Companies.

The status of International Limited Partnership has to be applied for each year, with payment of a £400 fee, and the Assessor issues a certificate. On demand, an ILP must produce its accounting records to the Assessor. There is no limitation on the number of partners in an ILP, and this format is suitable for collective investment vehicles, among others.

Sole Proprietorship

The business name of a sole trader, who has unlimited responsibility for his liabilities, must be registered at the General Registry if it is other than the name of the sole trader.

Trusts

The law of trusts is based on the English law and is governed by the following acts: the Trustee Act 1961 as amended; the Variation of Trusts Act 1961; the Perpetuities and Accumulations Act 1961; the Trusts Act 1995; and the Purpose Trusts Act 1996.

The Trusts Act 1995 establishes that both for Manx trusts and for foreign trusts migrating to the island, Manx law is conclusive and will overcome any forced heirship provisions emanating from civil law jurisdictions. The Isle of Man adopted the Hague Convention in the Recognition of Trusts Act 1988, albeit with some modifications.

Trust documents are in English, and there are no requirements for registration; there is no stamp duty. The normal perpetuity period of a Manx trust is 80 years. There are no restrictions on the accumulation of income during the perpetuity period.

Trusts used for Investment Funds (Unit Trusts) are governed by the Prevention of Fraud (Investments) Act 1968, which contains prudential rules among others.

Trust Law

The Isle of Man law of trusts is based on English law and is to be found in the following acts:Trustee Act 1961

Variation of Trusts Act 1961 Perpetuities and Accumulations Act 1968 (adoption of the Hague Convention) Recognition of Trusts Act 1988 Trusts Act 1995 Purpose Trusts Act 1996

In addition, being a common law jurisdiction, there is a considerable amount of case law (mainly English) which is persuasive authority for the Manx courts. The distinctions



between English law and Manx trust law arise principally from the fact that the Isle of Man has not adopted certain provisions of English trust law, for example, those relating to restrictions on accumulation of income.

Appeal from the Isle of Man courts is to the Privy Council in London.Trusts do not need to be registered unless they involve real estate on the island, when

settlements inter vivos must be registered. However, Unit Trusts (Collective Investment Schemes) are subject to various special requirements under the Financial Supervision Act 1988. There is no stamp duty.

There are no statutory accounting or auditing requirements and there is no need to file tax returns. It is possible to obtain an advance clearance from the relevant registry based on a draft trust deed so that the identity of the settlor and the beneficiaries can be kept totally confidential.

The maximum perpetuity for Manx trusts is 80 years. There are no provisions for non-recognition of foreign judgements; asset protection trusts are not available.

Recent legislation in the form of the Trusts Act 1995 has secured the position of trusts established in the Isle of Man in the face of challenges in the applicable governing law by other jurisdictions, particularly in the area of 'forced heirship'.

Trustees are not licensed or supervised by the Financial Supervision Commission, unless the fiduciary carries on business in investment, banking or insurance, in which case licences are required under those headings. Where this is the case the Financial Supervision Commission (1-4 Goldie Terrace, Upper Church Street, Douglas, Isle of Man 1M99 1DT) acts as the statutory regulator.

As in other jurisdictions whose trust law follows the English pattern, a beneficiary of the trust may apply to the court to stop a trustee from dealing with trust assets in an unauthorised manner. Loss as a result of an authorised conduct will result in the trustee being responsible for making the loss good. The asset value of the trustee is therefore an important consideration.

Where a breach of trust is committed by a corporate trustee, every person who at the time of breach was a director of the trustee may be deemed, in certain circumstances, to be guarantor of the trustee (ie personally liable) in respect of damages awarded by the court. Principles of constructive trusteeship also apply.

Banking Law

Banking is regulated by the Banking Act 1975 which governs licensing of banks and inspection of bank records as well as the control of advertising and other activities. Regulation is exercised by the Financial Supervision Commission under the Financial Supervision Act 1988.

The licensing policy that the Commission adopts for the banks is based upon the fact that the Island has no lender of last resort and is too small to shoulder high risk, or start-up, operations. Thus, licences are only issued to subsidiaries, or branches, of existing banks licensed in jurisdictions which subscribe to the international concordat on banking supervision. Applicants must have an established track record of at least five years'



profitable operation and the ownership and management approved. All beneficial interests of 5% or more must be disclosed. In addition, the Commission requires the written consent of the licensing and supervisory authority from the bank's own jurisdiction.

Banks are licensed either as domestic or offshore institutions. Domestic licenses are only issued to subsidiaries, or branches, of existing banks licensed in jurisdictions which are considered by the Commission to exercise proper licensing and supervision in accordance with the principles of the international Concordat on banking supervision. Applicants must have a profit record covering at least 5 years, and ownership and management must be acceptable to the Commission. The Commission requires written consent from a bank's home supervisor, and expects the home supervisor to exercise consolidated supervision over the bank concerned.

Offshore Banking Licenses are issued subject to the same tests as domestic licenses, but on the basis that the applicant bank will operate through managed units, ie it will not have staff or office on the island, but will appoint a local licensed bank as its manager. An offshore banking institution must agree its intended activities with the Commission before the licence is granted; these may not include transacting business with Manx residents (other than banks).

The FSC has a system of supervision based on quarterly or half-yearly financial returns. This is reinforced by annual audited accounts which must be audited by qualified accountants who have effected professional indemnity insurance currently at £10 million.Details of the banks that are licensed and supervised by the Financial Supervision Commission are listed in a public register maintained by the Commission at its offices.

All banking licence holders are required to participate in the Depositors Compensation Scheme. The FSC is the Scheme Manager. The Banking Business (Compensation of Depositors) Regulations 1991 extends to all licensed banking institutions, except those listed by name in the Schedule. Deposits are protected up to 75% of the first £20,000 per depositor and the Scheme extends to the sterling equivalent of foreign currency deposits. Compensation is not available with regard to secured deposits or deposits which had an original term to maturity of more than five years.

The Scheme was successfully operated in respect of the default of BCCI which had a branch in the Isle of Man. The Scheme was successfully operated in respect of the default of BCCI which had a branch in the Isle of Man. To date a total of £42.8 million has been received from the liquidators, representing 60 cents on the dollar. Of this, £19.4 million has been paid to claimants. The remaining £23.44 million formed part of the general pool of funds held by the FSC and enabled repayments of £23.47 million to banks — equivalent to 100 per cent of the total levies imposed on them to date.

International Agreements

In June 2000 the Isle of Man Government wrote a 'Letter of Commitment' to the OECD's Financial Action Task Force in which it promised to comply with international standards of transparency and mutual assistance. The Government has not revealed what specific legislative consequences may follow, but it is supposed that there may be some changes to



company law, and a strengthening of international treaty obligations which may be reflected in domestic law

In September 2000, an inter-governmental report was published by the Offshore Group of Banking Supervisors and the Financial Action Task Force (FATF) which praised the Isle of Man authorities for their successful endeavours in countering money laundering and related criminal activities with a 'robust arsenal' of pro-active initiatives. The report examined the effectiveness of the island's legislation, regulations and administration activities directed against money laundering. The authors were particularly impressed with plans to strenghten company sector regulations, saying that these enabled the Island to be 'at the forefront of international efforts to prevent the abuse of company structures for criminal purposes.'

The report also welcomed the creation of a new financial crime unit which draws on the combined efforts and expertise of the police, customs and regulators with a pro-active enforcement strategy. And financial professionals and institutions on the island have also been praised by the report - it says that the financial sector has a 'good compliance culture' which allows it to quickly highlight potentially suspicious transactions.



LIECHTENSTEIN


Liechtenstein 160 Km2 32.000GMT plus 2

hoursGerman -English


General Overview

Liechtenstein corporate bodies are formed under the Law on Persons and Companies 1926, known as the PGR Code.Trust Enterprises are formed under the Law Concerning the Trust Enterprise 1928. A wide variety of types of entity can be formed under the PGR Code, the most commonly used of which are described below; other possible forms include the limited partnership with a share capital, the company limited by quota shares, the association, the cooperative association and the company without juridical personality; but they are not commonly met with in offshore situations.

All corporate forms that are allowed under the Code, and the Trust Enterprise, can additionally be either 'holding' companies (companies that hold investments) or 'domiciliary' companies (not having trading activities inside Liechtenstein). Holding, domiciliary and non-resident entities are sometimes known as 'exempt', ie exempt from certain types of taxation.

No permits or licenses are required to do business, except for financial sector companies and professional services.It is a notable feature of the Liechtenstein PGR Code that there is very great freedom, within the basic forms it describes, to constitute corporate and share structures in a flexible way according to the particular purpose of the entity and its originators' wishes. Therefore only rather general statements can be made about the rules governing the operation of the various forms; the rest will depend on circumstances.

Corporate bodies formed under the PGR Code (not Trusts) share a number of characteristics:

there must be written Articles of Association; they are deposited with the Registrar and are available on the public file, including details of capitalisation, share structure, registered office, etc;

the corporate body does not come into existence until its details have been entered into



the public register; the names of the directors, officers and shareholders are kept at the registered office; the corporate name can be in any language and must include the name of the type of body

concerned (Limited, Foundation, etc), but some words are not permitted, mostly those with national or international territorial meanings (exemptions may be available)

Company Limited by Shares

The Company Limited by Shares is designed to be used as a public company, although it does not have to be public. There are founders who are (can be) distinct from the shareholders.

The Company Limited by Shares has a minimum capital of SFr 50,000, 20% of which must be paid up, with a minimum paid up of SFr 50,000. Bearer shares must be fully paid up, although the Articles can permit them to be 50% paid up; the minimum is still SFr 50,000.

If there is to be no public subscription, the company is formed 'simultaneously', in one legal act, and the founders are the shareholders. They create the company by entering into a Deed.

If there is to be a public subscription, the company is formed 'successively': first, the founders declare their intentions in general, then the subscription process takes places, and in a general meeting of subscribers (shareholders) the final details of the company's constitution are ratified.

Shares can have variable voting rights (eg multiple votes, or restricted votes), but non-voting shares are not permitted. The appointment of an auditor, and the annual submission of audited accounts to the Registrar, are mandatory for the Company Limited by Shares.

LLC - Limited Liability Company

The Limited Liability Company (Aktiengesellschaft) is formed by two or more members and has a minimum capital of SFr 30,000. The minimum subscription amount from any one shareholder is SFr 50. Further amounts need not be paid up unless the Articles provide for it; but the joint liability of the shareholders on liquidation or withdrawal is the amount of the registered capital.

Various types of share can be issued, including preference, registered, voting, no-par-value and bearer shares; only registered shares can be issued at below par value;

voting rights can be allocated or not freely to all types of shares, and voting rights can be limited according to defined circumstances or occasions;

a minimum of one director is required, who may be corporate; secretaries are not required; an exempt company needs to have a local professional as an agent;

audited annual accounts have to be filed



Establishment (Anstalt)

The Establishment, or Anstalt, is a corporate form that is peculiar to Liechtenstein. It has no members or shareholders.

It is an autonomous fund with beneficiaries. It is often used as a holding company for patents or royalties, or for estate assets. It has a founder or founders, who are not necessarily the same as the beneficiaries; the founders' rights can be transferred, if the capital is not divided into shares, giving the current tenants of the founders' rights considerable powers over the Establishment. In this respect, the Establishment is similar to the Foundation.

The minimum capital, if not divided into shares, is SFr 30,000; and if higher, at least half (minimum SFr 30,000) must be paid up;

the minimum capital, if divided into shares, is SFr 50,000 (but this form is never nowadays used);

a minimum of one director is required; it is normal to delegate substantial powers of management to the director(s);

if the Establishment has commercial objects, audited annual accounts must be filed; but note that the management of investments or other assets is not deemed 'commercial

Foundation (Stiftung)

A foundation exists to give effect to the stated, non-commercial wishes of its founder, as set out in a foundation deed and the Articles of Association (Statutes). In effect, the assets with which the foundation is endowed become a separate legal entity.

The Foundation has no members or shares; it is set up by a founder (or founders). Most often, this is the form that is used for the continuation of family assets. The Foundation has beneficiaries, who may be identified in a variety of ways.

No public registration is necessary, except that a copy of the Foundation Deed is lodged with the authorities. It need contain only very general statements about the purpose of the Foundation, while detailed rules are set out in private bye laws.

Founder's rights are transferable, and they normally include the right to terminate the Foundation or amend the bye laws.

Commercial activities are not permitted except in so far as they are in pursuit of the Foundation's non-commercial goals. The minimum assets of a Foundation are SFr 30,000, which can not be divided into shares; the assets do not necessarily have to pass to the Foundation on formation;

A Foundation is normally administered by what amounts to a board of trustees

Trusts Enterprises

The Trust Enterprise is set up by a Trustor (settlor) through a Deed of Trust which is equivalent to Articles of Association, and must specify the name and purposes of the Enterprise, the identity of the trustees, the composition of the trust fund, and (if the purposes



are commercial) the identity of the auditors. As usual, 'commercial' does not include asset management or holding operations. The Deed of Trust is filed with the Registrar of Trusts. The minimum trust fund is SFr 30,000. The participants in a Trust Enterprise are largely shielded from creditors of the Enterprise, who have access only to its own assets.

A Trust Enterprise can be created either without legal personality, and is then called an 'active trust' (eigentliche Geschaftstreuhand), or with legal personality, in which case it is called a 'non-active trust' (uneigentliche Treuunternehmen). Only non-active trusts have gained currency in Liechtenstein, and they are frequently used to hold investment assets, for instance in merger situations, and for the distribution of income from real estate holdings.

One of the trustees must be a resident of Liechtenstein holding a recognised professional or other qualification. In the case of a non-commercial (ie unaudited) Trust Enterprise, this person certifies to the Registrar that the Trust has kept proper books and that no commercial activities have been carried out. This is the only reporting that is required.

Trusts

Liechtenstein is the only civil law jurisdiction which has adopted largely anglo-saxon trust legislation (contained in the PGR Code), although, unlike the common law trust, there is no bar against accumulation of income, nor against perpetuities.

A Liechtenstein Trust is set up by a written agreement (Trust Deed) between the trustor (settlor) and trustee(s) which does not have to contain the names of beneficiaries. If the Trust Deed is deposited with the Registrar of Trusts, it will not be publicly available, and later instruments (eg naming beneficiaries) will not have to be revealed; if the Trust Deed is not deposited within 12 months, details of the Trust must be placed on the public register. A registration fee of US$ 200 is payable on registration.

Some of the characteristics of Liechtenstein Trusts are as follows:a trustee (apart from the Liechtenstein professional mentioned above) can be an

individual or a corporation or association;trustees are liable for breach of trust to the full extent of their assets; joint trustees are

jointly liable; supervision of the trust is ultimately under the Court, even if the Trust Deed specifies alternative supervision;

the interests of named beneficiaries can be embodied in trust certificates, which if registered are transferable securities;

being a civil law jurisdiction, trust assets are vulnerable to forced heirship provisions, although there are time limitations on such claims;

in general, there is a limitation of one year on creditors' claims; trust documents, including the Trust Deed, can be in any language

Trusts may be set up under foreign law, but may not have more favourable treatment than would apply under Liechtenstein law. A trust under foreign law is a Liechtenstein Trust and subject to local taxation. Liechtenstein law applies to a foreign trust if the trustee, or more than half of the trustees, are resident in Liechtenstein, if the trust property is in Liechtenstein, or if the Trust Deed says so.



Banking, especially private banking, is Liechtenstein's flagship financial service, although its trust regime, modelled on common law precedents, is unique among civil law jurisdictions, and is widely used. The variety and great flexibility of the corporate forms available in Liechtenstein, coupled with excellent tax-saving possibilities, has encouraged an inflow of holding and investment management companies.

It is unclear whether the EU's Savings Tax Directive, which will probably force Liechtenstein to make a choice between information-sharing and a withholding tax on the returns from savings, will have an impact on the country's highly successful private banking sector.

The administration has recently been developing legislation for captive insurance and collective investment sectors, but they have yet to reach significant size.

International Holding Companies

The structure of Liechtenstein company and tax legislation makes it a very suitable place in which to base various types of holding company.

In Liechtenstein, a holding company is recognised as such, but does not have a special legal form: it can take any of the forms permitted under the Law on persons and Companies 1926 (PGR Code), including a company limited by shares, a private limited company, a foundation, a trust enterprise (not a trust) or an establishment.

The objects of holding companies are described in the tax legislation as 'exclusively or predominantly the management of assets, participation in other enterprises, or the permanent management of holdings in other enterprises'. Holding companies are permitted to own and manage movable and immovable property whether inside or outside Liechtenstein, including real estate and the various types of intellectual property.

Banking

A substantial banking sector has developed in Liechtenstein, particularly in private banking, due to a combination of factors, including a relatively relaxed but still highly respected regulatory regime, the very flexible company legislation, and strict banking privacy.

The Liechtenstein banking sector is regulated under the Law on Banks and Finance Companies 1993; this law was substantially amended following Liechtenstein's entry into the EEA in 1995, through the Law on Banks and Finance Companies 1998. The Act concerning Banks and Savings Funds 1960 imposes heavy penalties for breaches of professional secrecy. Other recent legislation dealt with due diligence on the part of bankers accepting deposits or assets, installing 'know your customer' rules.

The "know your customer" system is now legally compulsory (from 1 October, 2000) for all banks that belong to the Lichtenstein Bankers' Association. This means that banks in Lichtenstein, previously known as one of Europe's most secretive tax havens, can no longer guarantee anonymity for new and existing account holders, although further account details will remain under normal banking secrecy agreements.



Liechtenstein private banks are able to offer highly tax-efficient asset management services to clients, using one or other of the forms available under the PGR Code, so that income received in Liechtenstein from international assets can be forwarded or reinvested with minimal or no local taxation.

There are a total 16 banks in Liechtenstein, with 12 of them having been granted licences in the last four years alone. Collectively they have some SFr120bn (US$70.3bn) under management (which equates to a staggering SFr3.7m for every man, woman and child in the principality).


Offshore operations may take place within the following forms: Holding and Domiciliary EntitiesEstablishment FoundationTrust Enterprises Trust Non Resident Entity


'Offshore' ('low tax' would be a better expression) entities are taxed as follows:Holding and domiciliary companies (often called exempt companies) do not pay profits

or property tax; the net worth tax is 0.1% of taxable capital subject to a minimum of SFr 1,000. This tax is payable annually, in advance.

The Establishment (Anstalt) is taxed on the same basis as holding and domiciliary companies, if it has similar types of activity. Stamp duty is reduced to 0.5% for capital exceeding SFr 5m, and 0.3% for capital exceeding SFr 10m.

The Foundation (Stiftung) and the Trust are taxed on the same basis as holding and domiciliary companies, but the rate of tax is 0.075% if capital is between SFr 2m and 10m, and 0.05% if capital is over SFr 10m. Payment to non-resident beneficiaries of a Stiftung or Trust are free of withholding tax. Family foundations pay a reduced rate of stamp duty of 0.2% on their formation capital.

Non-resident companies, which are companies active only outside Liechtenstein, even though they may have a Liechtenstein headquarters (not always easy to distinguish from domiciliary companies) are taxed in the same way as holding and domiciliary companies; income remitted to Liechtenstein may be taxable.-

Exchange Control

Liechtenstein has no exchange controls.



Offshore Activities

'Offshore', ie low-tax, activity in Liechtenstein is possible only through the various specialised forms and statuses listed above. Broadly speaking, commercial activity (ie non-investment activity) is not permitted within Liechtenstein to any of the 'offshore' entities.

The 'holding' entity is not limited as to where it holds assets, and can therefore operate within Liechtenstein as long as it sticks to holding activities.

The 'domiciliary' entity is limited to external trading operations, but is permitted certain internal activities.-The establishment (Anstalt) can operate freely within Liechtenstein on an exempt basis as long as it sticks to (non-commercial) holding and investment-type operations.

The foundation (Stiftung) and the Trust are not limited from a tax point of view as regards holding and investment activities, and can carry these out in Liechtenstein as well as outside.

LUXEMBOURG


Luxembourg 2.586 Km2 420.000 GMT plus 1 hour German -English


General Overview

The term 'offshore' is not used in Luxembourg legislation or in describing company forms. Use of the special 'holding company' forms is the key criterion for obtaining offshore tax treatment for most types of business; special forms are also available for collective investment vehicles and investment funds.




Offshore operations may take place within the following forms:Holding Company Milliardaire Holding CompanyFinancial Holding CompanySOPARFI (Society with financial Participation)Fonds Commun de Placement SICAV (Investment Society of Variable CapitalSICAF (Investment Society of Fixed Capital

In July 2001 the EU's Finance Ministers decided to press ahead with a investigation of 'harmful tax measures' identified in the Primarolo report, named after British Paymaster-General Dawn Primarolo who chaired the EU committee that identified 66 measures two years before.

The Commission immediately announced that it was targetting 15 of the measures as illegal state aids, including Luxembourg financial holding companies. The investigation is expected to take at least two years.

In April 2002 the OECD, having published its final 'offshore' blacklist made threatening noises towards Luxembourg, saying it was considering what sanctions it could apply if the country didn't clean up its supposedly 'harmful' tax practices by a deadline of April, 2003.


Offshore entities are not covered by Luxembourg's Double Taxation Treaties except as indicated below.

Offshore companies are taxed as follows:Holding companies formed under the law of 31st July 1929 are exempt from income

taxes (the IRC and the Municipal Business Tax on Profits) and from the Fortune Tax. No tax is levied on the transfer of shares, and there are no taxes due on the liquidation of a 1929 Holding Company. No withholding tax is due on dividends payable to a 1929 Holding Company.

1929 Holding Companies are subject instead to the capital contribution tax (droit d'apport) of 1% of subscribed capital, either on formation or on a later capital increase, and to the subscription duty (taxe d'abonnement) which amounts to 0.20% of the value of the shares issued by the Holding Company, payable annually in four equal instalments. If shares are quoted, the value is the current market value; if there is no quotation, the paid-in value is used. There are adjustments if dividends are paid out during the year, if profits are written to reserves, or if losses are incurred.

Milliardaire Holding Companies are taxed on the basis of various percentage rates applied



to interest paid out and dividends distributed by the company, and on the remuneration and fees paid to directors, auditors and liquidators residing less than six months of the year in Luxembourg. The minimum annual tax liability of a Milliardaire Holding Company is LUF 2 million (much less than an equivalent 1929 Holding Company would pay).

Financial Holding Companies are taxed on the same basis as 1929 Holding Companies. SOPARFI companies, which were created under the law of 24th December 1990, are

subject to the normal regime of income taxes etc, but do receive the benefit of Double Taxation Treaties, and in many circumstances are exempt from taxation on dividends received from or paid to resident and non-resident companies in which they have a significant participation. The EU Parent-Subsidiary Directive also provides some withholding tax exemptions, but the SOPARFI benefits are more extensive. The rules are complex; there are conditions; and there are limitations on the deductibility of expenses.

The various forms of UCI are all exempt from all Luxembourg taxation, and pay only a capital duty of LUF 50,000 on start-up, plus an annual tax on net assets which varies between 0.01% and 0.06% depending on the type of fund.

Exchange Control

Luxembourg has no exchange controls.

Offshore Activities in Luxembourg

These types of holding company and collective investment fund are limited to the specified holding and financial activities for which they were created. All other types of commercial and business activity have to be conducted in the mainstream, and therefore highly-taxed, economy.

International Holding Companies

The structure of Luxembourg company and tax legislation, along with its membership of the EU and its double taxation treatries, makes it a very suitable place in which to base various types of holding company.

Under the Law of 31st July, 1929, Luxembourg holding companies do not have a separate legal form; they can be formed as SAs or SARLs.

They are limited to holding and financing operations and may not undertake commercial operations themselves.

They are exempt from normal corporate taxes. More recently, a Grand-Ducal decree of 24th December 1990 created a further type of holding company, the SOPARFI or Societe de participation financiere, which is within the normal Luxembourg corporate tax net but can receive dividends which are exempt from tax, and which can take advantage of the country's double tax treaties (which the 1929 holding companies cannot).

Holding company structures are used chiefly for the following purposes:



The classic controlling or management holding company holds (for instance) the stakes of a multinational in its international subsidiaries, can accumulate dividends from them in a tax-efficient way, and is not subject to withholding tax when it pays out its own dividends to its international parent.

The finance holding company (under Circular 11/5020 dated 9th September 1965) can lend money to all members of a group (loosely defined) in which it has invested at least than 10% of its capital (rather than only to direct subsidiaries as previously). It can then receive interest or other types of payment in a tax-efficient way and can pay them on to its owners without taxation.

Offshore Banking Unit

A substantial international banking sector has developed in Luxembourg due to a combination of factors, including a relatively relaxed regulatory regime, the 'holding' company legislation, the growth of the Euromarkets, and the existence of the Luxembourg Stock Exchange on which most Eurobonds are listed. It is also significant that CEDEL is based in Luxembourg.

There are more than 200 institutions with full (universal) banking licenses from 25 countries; 30 of the world's top 50 banks are represented in Luxembourg.

Broadly speaking, the needs of domestic companies are handled by local Luxembourg banks, while the international banks provide cross-border services. A very wide range of capital markets and commercial banking products are on offer; some of the key services are:

multi-currency lending and loan syndication; issuance and listing of securities, particularly Eurobonds custodial and depositary services 'fiduciary' business which is the local equivalent of the trust project and international financing vehicles equity and financial derivatives issuance and trading foreign exchange trading trade finance gold trading (settled through CEDEL)

Private banking services are particularly strong in Luxembourg, due to the absence of withholding tax on interest payments, and tight banking secrecy, alongside the very wide range of financial products that is available. Banking secrecy has a statutory basis in Luxembourg, under articles 458 and 459 of the Penal Code, the Grand-Ducal Regulation of 1989 which prevents disclosure to the tax authorities, and most recently the law of 5th April 1993 which prevents bank staff from passing information on deposit accounts to parent banks. It is a criminal offence for bank staff to break secrecy laws except in clearly defined and very limited circumstances.

The Luxembourg courts are likely to permit disclosure of information only when there is



clear evidence of tax fraud or money-laundering activity.In a report issued in June 2002, Standard & Poor's gave Luxembourg's banking sector a

clean bill of health. Although S&P expressed concerns over the possible impact of competition from other jurisdictions, and of the much-disputed EU savings tax directive on the Duchy's financial sector, its report concluded that:

The continued liberalization of Europe's financial markets, the Luxembourg government's and banks' initiatives to develop fee-earning businesses, and the sector's experience in certain niche activities should ensure that the Grand Duchy remains attractive as a center for all forms of personal investment business.

The analysis praised Luxembourg's long-established banking sector as 'cost-efficient', and cited factors such as the jurisdiction's political stability, favourable location, highly qualified and multilingual workforce, tight banking secrecy, and advantageous fiscal framework, as reasons why Luxembourg is attractive as a location for both foreign and domestic financial service providers and their clients.

Offshore Financial Services Company

As a civil law jurisdiction, Luxembourg's laws do not accommodate the anglo-saxon trust concept. In fact local institutions, particularly banks, have developed some expertise in setting up foreign trusts for their clients.

A local equivalent of the trust was established by the law of 19th July 1983 which permitted banks to offer 'fiduciary' services which have many of the characteristics of the trust.

The ownership of fiduciary assets does not pass to the bank managing them; and there is a contract under the 1983 law which resembles a trust deed. Such arrangements have been used for a variety of asset management and participation arrangements.

Anonymous Society - Joint Stock Company

The Societe Anonyme, abbreviated SA, or joint stock company, is formed under the Commercial Companies Law 1915, as amended. SAs must have a minimum capital of LUF 1.25 million divided into freely transferable shares held by at least two shareholders, who may be resident or non-resident persons or juridical entities. The shareholders' liability is limited to the amount of their subscribed (not necessarily paid-up) capital. There is a Board of Directors (at least three), and day-to-day management may be delegated to a managing director.

Incorporation takes 2 or 3 days; the SA's statutes must be printed in French or German; a director must give his name, address and occupation. There must be registered office in Luxembourg, but only the share register need be kept there.

Accounts need to be submitted annually to the Registrar of Companies, but need only be audited if a company exceeds a certain size: either the balance sheet is greater than LUF 93 million, or sales are greater than LUF 186 million, or there are more than 50 employees.



LLC´s - Limited Liability Company

The Societe a Responsabilite Limitee, abbreviated SARL, or limited liability company, is also formed under the Commercial Companies Law 1915, as amended. The SARL must have a minimum paid-up capital of LUF 500,000 divided into 'participation certificates' which are not freely transferable.

There may not be more than 40 shareholders, and they are liable for the amount of their paid-up capital. If there are fewer than 25 shareholders an annual gemeral meeting is not necessary. In other respects, the SARL is similar to the SA.

General Partnership

General Partnerships are recognised in Luxembourg law either as a Societe Civile (most professional partnerships take this form) or as a Societe en Nom Collectif (for instance, a family business might choose this form).

The partners are liable jointly and severally for the full debts of the partnership. Partnerships must be registered with Greffe du Tribunal de Commerce.

Limited Partnership

Limited partnerships in Luxembourg have general partners, who are responsible for management, and have unlimited liability, and limited partners, who are liable only to the extent of their capital contributions to the partnership.

A limited partnership can either be a Societe en Commandite Simple in which case it is subject to the same rules as a general partnership, or it can be a Societe en Commandite par Actions, in which case the limited partners are issued with shares and the partnership is treated in the same way as an SA in most respects.


An overseas company can carry on business in Luxembourg through a branch office, but will need to obtain a permit as does every business. A branch office will normally constitute a permanent establishment from a tax point of view

Holding Company

The Luxembourg Holding Company and 'Soparfi' (Societe a Participation Financiere) are the forms which permit 'offshore' activity in Luxembourg:



MALTA


Malta 320 Km2 382.000 GMT plus 1 hour Maltese -English


General Overview

Maltese company law derives chiefly from civil or 'Roman' law, rather than common law. A new Companies Act 1995 replaces the old Commercial Partnerships Ordinance, and sets up a new regime for commercial entities under the Registrar of Companies.

Companies set up under the old regime had until 1st January 1998 to convert themselves into the new formats, except that 'Offshore Companies', which can now no longer be formed, have 10 years to adapt. Shipping companies, and, while they survive, offshore companies, continue to be subject to the old Commercial Partnerships Ordinance.

Private Limited Company

The private limited company, (or 'partnership anonyme' in civil code terms), has the suffix 'Limited' or 'Ltd'.

The company is formed by submission of the Memorandum and Articles to the Registrar (in English), together with the appropriate fee. Incorporation takes about 7 to 10 days and shelf companies are not available.

The following are the chief characteristics of a private limited company:

only one member is necessary;

only one director is necessary, and must be a natural person, but can be of any nationality and resident anywhere;

there must be a company secretary, which must be a licensed Maltese Nominee Company;

there must be a registered office in Malta;

the minimum authorised and paid-up capital is Lm500, but it is usual to have capital between Lm2,000 and Lm5,000 (the highest amount within the lowest duty band); a minimum 20% of the authorised value must be paid up; if there are non-resident members then the minimum capital is Lm10,000 of which 50% must be paid up, and they must obtain



exchange control permission (a formality);

shares can be registered but not bearer; preference or redeemable shares are permitted; and shares do not have to carry voting rights;

accounts must be kept but do not have to be filed.

Registration and annual return fees are as follows:Share capital, Lm Registration Fee, Lm Annual Return Fee, Lm

below 5,000 200 50

5,000 to 49,999 100 + 6 for every additional 1,000 of

capital 100

50,000 to 99,999 100 + 6 for every additional 1,000 of

capital 150

100,000 to 499,999

116 + 1 for every additional 1,000 of capital to maximum 573

200

500,000 and over 116 + 1 for every additional 1,000 of

capital to maximum 573 250

International Holding Company

The International Holding Company (IHC) is similar to the International Trading Company except that as its name implies it holds participations in foreign companies. Its effective tax rate is 11.67% or less; if dividends emanate from a 'participating holding', ie one of more than 10% in the paying company, then the effective rate of tax is nil.

Like the ITC, the IHC can make use of Malta's Double Taxation Treaties.

Offshore Company

Offshore Companies were brought into being by the Malta Financial Services Centre Act 1988.

The details of their formation are no longer interesting, because in 1994 the Government legislated them away.

The final date for forming an Offshore Company was 1996, and existing Offshore Companies must convert into other forms (most likely International Trading or Holding Companies or Trusts) by the end of 2003.

Offshore Companies, which must be owned by non-residents and which must deal or trade only with non-residents, come in two flavours: the Trading Offshore Company, and the Non-Trading Offshore Company.

Trading Offshore Companies can be General Trading Offshore Companies (for any purpose other than banking or insurance), Banking Offshore Companies or Insurance Offshore Companies.

The two latter are dealt with in Offshore Business Sector, the General type is used for many purposes including barter and counter-trade operations, reinvoicing centres,



employment centres, leasing, construction management, administration etc. Trading Offshore Companies pay 5% tax (or more if they wish).Non-Trading Offshore Companies are property-holding vehicles, property being defined

very widely to include shares, other holding companies, investments, ships, etc. Non-Trading Offshore Companies are exempt from tax, including withholding tax.

Offshore Companies do not benefit from Malta's network of Double Taxation treaties. Offshore General Trading Companies pay an annual fee to the Government of $3,000; Non-Trading Offshore Companies pay an annual fee of $1,500.

General Partnership

General Partnerships are formed under the Companies Act 1995 as a partnership 'en nom collectif' which has a partnership name.

There is a Deed of Partnership giving the names of the partners, the address of the registered office, the objects of the partnership, its duration, and the amount of capital contributed by each partner. The Deed is registered by the Registrar of Companies.

The partners are liable jointly and severally for the full debts of the partnership.

Limited Partnership

Limited partnerships in Malta have general partners, who are responsible for management, and have unlimited liability, and limited partners, who are liable only to the extent of their capital contributions to the partnership.

A limited partnership is formed under the Companies Act 1995 as a Societe en Commandite Simple and is subject to the same rules as a general partnership.

The SICAV (Societe 'd'Investissement a Capital Variable) is also formed under the Act, but as a partnership limited by shares (Societe en Commandite Limitee par Actions), and is used by mutual funds.


An overseas company can carry on business in Malta through a branch office, and is not subject to the local income tax regime (ie its profits can be freely remitted back to head office); the disadvantage is that it is not eligible for any of the incentives offered by the Maltese government for inward investment.

Maltese and Foreign Trusts

Trusts in Malta are based on the Offshore Trusts Act 1988, which was largely based on Jermal trust law, itself a common law implant stemming from English trust law.

Trusts under this Act must have non-resident settlor and beneficiaries, and trust assets must not include Maltese real estate.

The Recognition of Trusts Act 1994 gave effect to the Hague Convention, and results in a division of trusts into:



Maltese trusts, where the proper law of the trust is Maltese, and the governing legislation is the 1988 Act (now called the Trusts Act 1988); and

Foreign trusts, governed by whatever law the settlor has nominated.

All trusts, including foreign ones, must register with the Maltese Financial Services Centre (MFSC), which costs Lm200 on registration and annually thereafter. Foreign trusts which do not register with the MFSC will not benefit from the tax advantages of registered trusts (they are tax-exempt).

A registered trust must have a Maltese nominee company as one of its trustees, which files an annual declaration of conformity with the law; no accounts or tax returns need be filed. (A nominee company is a Maltese company which has been authorised by the MFSC to provide services to trusts, and carries the supervisory responsibility on behalf of the MFSC.)

It is likely that a Malta-registered trust will often be a more effective holding vehicle than the International Holding Company

On the other hand, when the assets to be held are Maltese real estate, it may be better to use an unregistered foreign trust.

Financial Holding and Investment activities

Many international investors choose Malta as the location for financial holding and investment companies, using the International Holding Company form, due to the jurisdiction's combination of tax treatries and low-tax offshore regime.

Investment into most of the leading OECD economies benefits from low treaty withholding tax rates. Often it would be best for the investment to have a high debt component, since the interest is normally a charge against profit in the destination country, and the treaty rates of withholding tax on interest payments are normally lower than the withholding rate on dividends, except in some cases where there is a major (usually means 25%) participation.

Whatever the mix of interest and dividends, the income once in Malta will be taxed after deduction of expenses at an effective rate of 12% or less, and if there is a 10% participation by the Maltese company the rate will be zero as long as the profits are distributed onwards to non-resident persons

Banking

Maltese banking is now conducted according to the Banking Act 1994 (for credit institutions aka commercial banks) and the Financial Institutions Act 1994 (for non-lending institutions, mostly meaning foreign exchange bureaux).

This legislation conforms to current EU banking directives.'International Banking Institutions', seven of which were licensed as offshore companies

under the Malta International Business Activities Act 1988 now have to convert to 'credit institution' status under the Banking Act. Incoming banks are now licensed only under the Banking Act. With the gradual abolition of exchange controls, there now remains little



distinction between 'international' and 'local' banks, or between 'offshore' or 'onshore' banks.Maltese and foreign banks are supervised by the Malta Financial Services Centre;

minimum capital for a new bank is 5 million euros. Foreign banks may operate through branches, but are still subject to supervision by the MFSC.

The Maltese banking sector has remained largely a domestic affair, with only a small number of foreign banks establishing themselves on the island, for a combination of reasons. Given Malta's EU application, the arrival of HSBC and the growth of mutual fund listings on the Stock Exchange, it would not be surprising to see more international banking activity in Malta in the near future.

The powers of the Malta Financial Services Centre could be extended in the near future to enable it to become Malta's first single financial services regulator. Lowtax.net will keep you posted but for the moment, preliminary discussions have taken place on the Island involving the government, Malta Stock Exchange, Central Bank and the Financial Services Centre.


Offshore operations may take place within the following forms:

International Trading Company


SICAV

Offshore Company

Trust

Tax treatment of Offshore Operations

International Trading Company Pays tax at the regular rate, 35%, but a non-resident shareholder, or a Maltese company shareholder owned by non-residents, is subject to Maltese tax only at 27.5% on dividends received from an ITC, and can apply for a refund of the difference. In addition, the non-resident shareholder is entitled to a refund of two-thirds of tax paid on dividends (imputed tax) which equals 23.33%, giving a total return of 30.83%, and an effective rate of tax of 4.17%.

The two-thirds rule is in fact optional, and the shareholder can choose just to take the tax credit of 27.5% if he wishes.The rules for tax payments and refund payments are such that there is a gap of only 14 days between payment of the tax due by the company and receipt of the refunds by the shareholder.




Operates a Foreign Income Account to receive income from foreign sources, pays 35% tax on its net income as usual, but can make use of four levels of abatement of the tax:

Malta has treaties with 25 countries, including almost all of the leading OECD countries, with another 10 treaties in the pipeline.

Most of the treaties allow offsets against local taxation. Commonwealth Relief: Not much used now, but equivalent to treaty relief in the case of

Commonwealth-source income; Unilateral Relief: when there is no tax treaty, Malta gives equivalent relief unilaterally; and

Flat-Rate Foreign Tax Credit: if no documentation is available to establish treaty or unilateral relief, Malta gives a 25% tax credit anyway.

Only one of these four types of relief applies to a given piece of foreign income; the Maltese Inland Revenue is involved in determining which applies. One way or another, double taxation is avoided.

Once the income passes as dividend to a non-resident shareholder (individual or company) he is entitled to a refund of two-thirds of the 35% imputed tax charge. Therefore the effective tax rate on the originating foreign income will be a maximum of 11.67% (there may be deductible expenses).

If the income arose from a participating holding (a company owned 10% or more by the Maltese company) then the refund is 100% of the imputed tax, so that the effective rate becomes nil

Sicav (Societe d'investissement a capital variable) is used by mutual funds.

Licensed collective investment funds in Malta are exempt from income tax, but are also not eligible for tax treaty benefits. However, a SICAV can elect to be taxed at 25%, which brings it within the treaty rules and may be advantageous in some situations. Fund management companies (investment services companies) pay tax at 35% but are able to use an extensive list of deductions, including double deduction of salaries paid to Maltese personnel.

The Offshore Company is being phased out. New ones cannot be formed, but existing ones can continue until 2003. Tax is charged on the net income of trading offshore companies at 5%, but they can choose to pay a higher rate if they want (this kind of 'designer' tax situation has been targeted by the UK Treasury, and other Finance Ministries will no doubt follow suit). Non-trading offshore companies (investment holding companies) are exempt from tax; they do not have to file a tax return.

There is no taxation of any payments by offshore companies to non-residents.Until the end of 1996, incoming banks, insurance companies and mutual funds took the

form of offshore companies; existing institutions can convert into one of the other corporate forms that are available, or they can remain as offshore companies until 2003. They pay fees on registration and annually as follows:

Offshore banks: Lm 25,000

Offshore insurers: Lm 5,000



Captive insurers: Lm 1,000

Offshore collective investment company: Lm 5,000

Apart from collective investment schemes (see above) there are no special tax regimes for financial institutions: they are taxed according to their corporate form, ie as Offshore Companies, International Trading Companies, International Holding Companies or regular Private Limited Companies as appropriate. A special taxation regime for insurers is being prepared as part of a general revision of Maltese insurance legislation.

Both Maltese trusts and foreign trusts registered in Malta have by definition non-resident settlors and beneficiaries, and are exempt from income tax, except that they pay an annual amount of Lm 200 to the Government.

Trusts do not have to file tax returns; the nominee company which is acting as their trustee makes an annual declaration of conformity with the law. No stamp duty or other taxes are payable in respect of trust transactions or documents. Trust property may be imported free of customs duty. A trust is not subject to exchange control unless a transaction is carried out with a Maltese resident.

Exchange Control

The Central Bank of Malta applies exchange control under the terms of the Exchange Control Act 1972. Current transactions were freed from exchange controls in 1994; capital controls are being gradually loosened, and those that remain apply mostly to external investments by residents.

The Maltese corporate forms likely to be used as offshore or non-resident entities are all exempt from exchange controls.

Non-residents are allowed to have foreign currency or Lm accounts with local financial institutions; these accounts can be freely credited with incoming effects, and with authorised (ie under exchange control) payments from residents.

They can also be debited freely with payments to residents or overseas. Permission is also given readily to Maltese companies controlled by non-residents to maintain foreign currency accounts in Malta or overseas.

Offshore Activities

The various forms of offshore entity in Malta are limited as regards the trading they can do in the jurisdiction, but not as regards the running of their businesses from Malta.

International Trading Companies are allowed the following local activities:

purchases for export of Maltese goods provided that they are not made from a 15% shareholder in the buying company;

trading with companies registered in Malta under the Financial Services Centre Act 1988 (ie Offshore Companies);

trading with other International Trading Companies.



Registered Maltese and foreign trusts and International Holding Companies can hold a wide range of assets including the shares of other offshore entities; but not Maltese immovable property or companies owning such. The foreign unregistered trust comes into its own here, and can be used in a variety of more or less complicated structures to own Maltese property assets in a tax-effective way.

The situation of Trading and Non-Trading Offshore Companies is broadly similar to that of International Trading and Holding Companies, respectively.

MAURITIUS


Mauritius 1860 Km2 1.200.000GMT plus 4

hoursFrench -English


General Overview

Offshore business activities became a significant sector in Mauritius as from 1992, when the Mauritian Offshore Business Activities Act (MOBA Act 1992) came into force, bringing into being the Mauritius Offshore Business Activities Authority (MOBAA), which has been active and effective in structuring offshore regimes in various sectors.

Alongside this initiative, Mauritius began to offer a range of very attractive investment incentives. Initially the accent was mostly on employment creation in manufacturing rather than the development of a financial services centre; but this has gradually changed, and



there is now a modern legislative structure for most of the main financial sector activities.In 2001, under the Financial Services Development Act 2001 the government established a

Financial Services Commission (FSC) and an Advisory Council. The FSC now monitor the country's stock exchange, offshore business activities and the insurance industry. It also supervises non-regulated or partly-regulated non-banking activities such as fund management, pension schemes and management, collective investment schemes, investment advisory services and leasing.

The Advisory Council helps guide the development of financial services in the country and act as an information centre to keep the industry in touch with the latest international trends.

In the new structure, MOBAA ceased to exist, and most existing laws bearing on offshore activities were replaced.Due to its network of double tax treaties with most of the significant economies in its region, and above all with India, Mauritius is often chosen as a base by firms needing to set up an offshore holding or investment company, or trading subsidiary.

Banking

Mauritius has adopted a cautious attitude towards banking development, having admitted only 10 'Offshore Banking Units' (OBUs).

The legal and supervisory regime for OBUs is to be found in the Banking Act 1988, with amendments in the MOBA Act 1992, the Foreign Dealers Act 1994, the Finance Act 1998 and the Financial Services Development Act 2001. The Bank of Mauritius (the Central Bank) is responsible for licensing, regulation and supervision of the banking sector.

Offshore Banking means banking and investment banking business conducted in currencies other than the Mauritius rupee. OBUs may engage in fund administration and portfolio management, and offer treasury, custody and trust services.

OBUs, like Offshore Companies in general, can be formed as companies under the Companies Act 1984 (now the Companies Act 2001), or as branches.

The application process is fairly rigorous, and includes provision of audited financial statements for the past 5 years. The licensing processing fee is $3,000, and the annual license fee is $20,000.

Prudential ratios are agreed between the applicant and the Bank of Mauritius, but the minimum paid-up capital that must be maintained is MR50m (US$2m).

Form a Company

Until 2001, companies in Mauritius were formed under the Companies Act 1984, which was modelled on the English Companies Act 1948.

Companies may be limited by shares or by guarantee, or they may be unlimited.Companies are incorporated by swearing a deed of incorporation in front of a notary, after

the Registrar of Companies has approved the company's name. There has to be a local registered office where the company's books and records are kept, but this can be maintained



by a professional firm.There must be a minimum of two directors, and a secretary who must be a local resident.

Audited annual financial statements and an annual return must be filed with the Registrar of Companies. Company formation takes between two and three weeks. Minimum authorised capital is MR 25,000, and annual registration fees vary between MR 4,000 and 8,000 depending on the amount of share capital.

The new Companies Act 2001 replaces most of the Companies Act of 1984, other than sections dealing with insolvency and public companies, which will remain in force until new legislation is brought forward in separate bills.

The Government's starting point for the new law was New Zealand company law, which is widely regarded among English-speaking jurists as representing the best available compromise between the various modern trends in corporate legislation, now that English law has been so influenced by EU law as to be no longer satisfactory as a model for common law jurisdictions.

The incorporation and management of Offshore Companies and International Companies, which were previously constituted under the separate International Business Companies Act 1994, have been brought under the Companies Act 2001.

Some key features of the new legislation are as follows:The Act introduces a simple form of incorporation enabling a company to be incorporated

on the filing of a single application together with the necessary consents from the proposed directors and secretary and a notice of reservation of the proposed company name. It will not be necessary to submit a constitution at the time of incorporation. If a company wants to depart from the standard requirements set out in the Actl, then, either on incorporation or subsequently, it needs to file a separate constitution setting out the departures from the standard form. The new legislation also recognises the reality of 'nominee' shareholders by allowing companies to operate with just one shareholder.

The Act does away with the need for a separate objects clause, and provides that a company has the rights, powers and privileges of a natural person; this incidentally removes the remains of the one-time ultra vires doctrine. This would not preclude a company from stating specific objects in its constitution if it wished to limit the capacity of a company in this way.

The Act replaces the Memorandum and Articles of Association by a single constitution, which is no longer required to be notarised.

Private companies continue to be prohibited from offering shares or debentures to the public, and are able to dispense with the holding of company meetings by passing resolutions by means of entry in the company minute book. Exempt private companies will not be required to appoint a qualified auditor or a qualified secretary and will be entitled to file only a summary statement of accounts with the Registrar.

The proposed legislation retains the distinction between exempt and non-exempt private companies in the same form as in the existing legislation.

The Act introduces no par value shares and permits a company to issue shares which are not designated with any monetary value.



The Act incorporates the new procedure of self-purchase and holding of treasury shares introduced by the Finance Act 1999.

The new legislation makes provision for a company to provide in its constitution for the company to have power to indemnify or insure its directors, secretary or employees in accordance with the limitations provided by the Act.

The Act contains a requirement that public companies and non-exempt private companies are required to prepare and present their accounts in accordance with international accounting standards and that exempt private companies are required to present their accounts in accordance with accounting practices and principles that are reasonable in the circumstances and having regard to any requirements set out in regulations made under the Act.

The old Companies Act required all companies to appoint an auditor but relieved exempt private companies from the requirement to appoint a qualified auditor. The new Act allows an exempt private company not to appoint an auditor (whether qualified or unqualified).

Offshore Companies are brought under the Companies Act and redesignated as "external companies". New provisions allow for the continuation in Mauritius of companies which are incorporated elsewhere and also provides for the incorporation of limited life companies.


A private company is one which says it is private in its constitution and which restricts the transfer of its shares, which cannot be offered to the public; there is a minimum of 1 and a maximum of 25 members.

A private company can be exempt or non-exempt: exempt companies are those which have issued share capital and reserves below MR 1m and turnover below MR 2m. Exempt private companies are required to present their accounts in accordance with accounting practices and principles that are reasonable in the circumstances and having regard to any requirements set out in regulations made under the Companies Act. (Exempt status is not available to offshore companies other than through the International Company form).


The Company Limited by Guarantee (the hybrid Company Limited by Guarantee and Having Shares is no longer permitted), may be used only for a non-profit organisation.

The liability of the members is limited to the amount they have undertaken to contribute to the company; there must be a minimum of MR 5,000 of guarantees.




A public company is defined as one which is not a private company and which has at the end of its name the words 'Public Limited Company' or 'P.L.C.'. A public company must have a minimum of two members.

Foreign Company

A company incorporated outside Mauritius can register itself in Mauritius and will then be treated for most purposes as a Mauritius-incorporated company. Under the old legislation its status was properly that of a branch, but the new Companies Act provides for continuation under Mauritian law.

The following documents need to be provided to the Registrar:Notarised Certificate of Incorporation and Constitution (Memorandum and Articles of

Incorporation); List of directors and details of the powers of local directors; Particulars of registered office in Mauritius; Names of two resident persons authorised to act on the company's behalf in Mauritius,

and their declaration. financial accounts have to be lodged with the Registrar within 3 months of the company's annual general meeting.

Direct ownership by foreigners of an onshore Mauritian company, or part of it, requires permission from the Prime Minister's Office, which is not automatic if the activity to be carried on is one which is in competition with Mauritian-owned companies

Offshore Company

A company incorporated under the Companies Act 1984, or a registered branch of an overseas company, used to be able to apply for Offshore Company status under the Offshore Business Activities Act 1992, which varied some of the terms of the 1984 Act and set up the MOBAA (Mauritius Offshore Business Activities Authority) to supervise the offshore sector.

The 1992 Act listed the activities which MOBAA would approve:Aircraft leasing and financing; Authority approved activities; International consultancy services; International employment services; International financial services; International franchising and licencing International management of assets; International technology services including data processing;



International trading; Offshore banking operations; Offshore management of funds including pension funds; Offshore insurance operations; Shipping operations including ship management; The operation of a headquarters.

MOBAA has now been abolished and replaced under the Financial Services Development Act 2001 by a Financial Services Commission; the existing legislation was largely 'grandfathered' into the new regime.

Offshore companies have now been brought under the Companies Act 2001 and redesignated as 'external companies'.

Offshore (external) companies may be 100% owned by non-Mauritians; but restrictions apply to Mauritian residents.

The business of an offshore (external) company must be conducted in foreign currency other than for day-to-day transactions; and offshore (external) companies must not do business in Mauritius, other than to take professional advice, employ local labour, and to rent property.

International Company

The International Company (IC) is the Mauritian equivalent of the International Business Company found in many offshore jurisdictions. It was established by the International Companies Act 1994, but is now constituted under the Companies Act 2001, in which it is known as a Category 2 Global Business Company.

An IC can take any of the forms permitted under the Companies Act 1984 (now the Companies Act 2001). Unlike the Offshore Company, the IC could issue bearer shares, and is not obliged to file annual accounts. Only one shareholder and one director are required, and there is no minimum capital. NB: The Finance Act 2000 removed the possibility of issuing bearer shares.

However, an IC is treated as non-resident, cannot get the benefit of Mauritius' double tax treaties, and cannot operate in the Free Port. Mauritian citizens are not permitted to own shares in an IC. There are a number of other restrictions on ICs; they may not:

Raise capital by public subscription; Carry on banking or insurance business; Own real property in Mauritius; Own or manage a collective investment fund; Provide nominee services, or provide trustee services to more than three trusts.



Limited Life Company

The Limited Life Company was introduced by the Offshore Business Activities (Companies) Regulations 1995.

This form is not available to onshore companies, but only to Offshore Companies and International Companies.

The Limited Life Company allows the dissolution of the company on the occurrence of specified events, and has the nature of a partnership under US tax law. It is often used for private fund management or investment purposes.The Companies Act 2001 provides for Limited Life Companies, unlike the 1984 Act.

General Partnership

The general partnership in Mauritius is governed by the Code de Commerce and is known as the Societe en Nom Collectif.

Partners may be individuals or companies. In a general partnership, a partner's liability is unlimited. Under the Code de Commerce Amendment Act 1985, general partnerships can acquire offshore status.

The Finance Act 1996 further improved the situation of offshore partnerships, allowing them the benefit of Mauritius' double tax treaties.

Limited Partnership

The limited partnership in Mauritius is governed by the Code de Commerce and is known as the Societe en Commandite Simple. Partners may be individuals or companies.

A limited partnership consists of one or more general partners with unlimited liability, and one or more limited partners, who are liable only to the extent of their capital contributions. Under the Code de Commerce Amendment Act 1985, limited partnerships can acquire offshore status.

The Finance Act 1996 further improved the situation of offshore partnerships, allowing them the benefit of Mauritius' double tax treaties.

Sole Prorietorship

The status of sole trader is widely used in Mauritius, and is governed by the Code de Commerce.

The business name of a sole trader, who has unlimited responsibility for his liabilities, must be registered with the Registrar of Companies, if it is other than the name of the sole trader.

An annual return must be submitted to the Commissioner of Income Tax.



Trusts

Mauritius Offshore Trusts are set up under the Trusts Act 2001 (they used to fall under the Offshore Trusts Act 1992); the regime for trusts is based on English common law.

Offshore trusts are subject to the following conditions:The settlor must not at any time be a resident of Mauritius, although an offshore company

can be a settlor; At least one trustee must be resident in Mauritius; offshore companies (which are deemed

to be resident) can be trustees if authorised by MOBAA; Trust property must not include real property situated in Mauritius. Trusts pay a one-time registration fee of $250; there are no disclosure or annual reporting

requirements.

There used to be one main source of 'offshore' regimes in Mauritius, the Mauritius Offshore Business Activities Authority (MOBAA) constituted under the Mauritius Offshore Business Activities Act 1992 (MOBA Act 1992), which supervised almost all types of offshore entity other than banks, including the Free Port, and the Export Processing Zone.In May 2000 Mauritius wrote a 'commitment letter' to the OECD in order to avoid inclusion on the OECD's list of jurisdictions which offer 'unfair' tax competition.

Partly as a result of this commitment, the Government passed a range of replacement legislation in 2001 including the Financial Services Development Act 2001, which set up a Financial Services Commission to replace MOBAA.

Most existing offshore legislation has been 'grandfathered' into the new regime.


Offshore operations may take place within the following forms:Offshore CompanyInternational CompanyLimited Life CompanyGeneral PartnershipLimited PartnershipOffshore Trust

In addition, the Free Port, the Export Processing Zone and the Export Service Zone, whose occupants don't have to have offshore status as such, offer benefits broadly similar to those available to offshore companies;


Offshore Company pays corporate income tax at 15% (0% if it was incorporated before 1st July 1998). In fact it can opt to pay tax at any rate it chooses between 15% (or zero) and 35%, and will normally make this choice according to the rules governing 'controlled



foreign corporations' in the country where its major shareholder is based. Legislation enacted in 2000 will remove the facility to choose tax rates from 2003.

Offshore Companies are also exempt from stamp duty, land transfer tax, and capital gains (morcellement) tax. The expatriate staff of offshore companies pay half the normal rate of personal income tax; two of them per company can import cars and household equipment free of customs duty.

There are no withholding taxes or equivalent deductions on dividends or other payments made by offshore companies to non-resident shareholders (residents aren't normally allowed to hold the shares of offshore companies).

Offshore Companies are regarded as being resident, and are therefore able to take advantage of Mauritian Doble Taxt Treatries.

The tax treaty with India is particularly favourable, and Mauritius is a favoured location for holding companies for those trading with or investing in India.

Offshore Companies can also utilise the unilateral foreign tax credit which is 90% of the Mauritian tax rate (leaving a residual liability of 10% of the Mauritian tax rate = 1.5% for offshore companies); legislation adopted in 2000 will reduce the credit to 80% of the Mauritian tax rate and it is likely that there will be further reductions before 2005, when Mauritius has committed itself to adhere to OECD guidelines for offshore centres.

Offshore Banking Units, Captive Insurers and Offshore Investment Funds, all of which have the Offshore Company as their basis, are taxed as for Offshore Companies in general. The same applies to Offshore Companies holding ships on the Mauritian Open Registry (this is the mandatory structure), but additionally, earnings from shipping operations are exempt from tax, the crew of the ships are exempt from payroll taxes, and materials, fuel, equipment etc for the ship are all free of customs and excise duties.

International Company,

(Exempt-status Offshore Company) has the same tax benefits as an Offshore Company; however, it is considered as non-resident, and cannot make use of Mauritian Double Tax Treaties.

Limited Life Company Offshore Company

Can be based on either an Offshore Company or an International Company, and will have equivalent treatment from a tax point of view.

General Partnerships - Limited Partnerships

Can acquire offshore status under the Code de Commerce Amendment Act 1995; and under the Finance Act 1996 they are given access to Mauritian Doble Tax Treatries.

Offshore partnerships would normally have non-resident partners, and they are treated as companies for tax purposes, in a way that is analogous to the treatment of Offshore Companies (see above).



Offshore trusts

Are taxed in the same way as Offshore Companies.-However, chargeable income is defined as the difference between (a) the net income

derived by the trust; and (b) the aggregate amount distributed to the beneficiaries under the terms of the trust deed. Moreover, any amount distributed to non-resident beneficiaries is exempt from Income Tax.

An offshore trusts is allowed a credit for foreign tax on its foreign-source income. If no written evidence is presented to the Mauritius Commissioner of Income Tax showing the amount of foreign tax charged, the amount of foreign tax shall nevertheless be conclusively presumed to be equal to 90 per cent of the Mauritius tax chargeable with respect to that income. However, this deemed foreign tax credit of 90% will be reduced to 80% as from the year of assessment 2003/2004, which will be based upon the year of income ending June 30, 2003.

An offshore trust may opt by written notice to the Mauritius Commissioner of Income Tax to be treated as non-resident in Mauritius for tax purposes, in which case it will not be subject to any income tax in Mauritius.

However, being non resident, the offshore trust may not benefit from Mauritius' extensive network of double taxation agreements.

Exchange Control

Repatriation of foreign investment and the profits from it is subject to proof of the origin of the money, and subject to payment of any outstanding Mauritian taxes.

Offshore Activities

The various forms of offshore entity in Mauritius are limited as regards the trading they can do in the jurisdiction, but not as regards the running of their businesses from Mauritius

The business of an offshore company must be conducted in foreign currency other than for day-to-day transactions; and offshore companies must not do business in Mauritius, other than to take professional advice, employ local labour, and to rent property.

Companies in the Export Processing Zone and the Export Services Zone are allowed, with permission, to conduct 10-20% of their trading domestically; but profits raised in this way will be taxed according to the normal domestic regime.



NETHERLAND ANTILLES


Netherland Antilles

960 Km2 210.000 GMT minus 4 hoursDutch-Spanish-

English




General Overview

At December 29th, 1999, the Parliament of the Netherlands Antilles passed new tax legislation known as The New Fiscal Framework intended to improve the jurisdiction's image as an Offshore Financial Centre and to revitalise its financial services industry.

Alongside the tax legislation, a new corporate form was introduced to allow offshore operations on a tax-exempt basis: this is the NABV (Netherlands Antilles Besloten Vennootschap), and it is expected to supplant the offshore NV for many purposes

The New Fiscal Framework went into effect from 1st January 2002.

Limited Liability Company (NV)

This is the form (NV = Naamloze Vennootschap) historically taken by almost all limited companies in the Netherlands Antilles, whether for domestic trading or for offshore purposes.

The legislation governing corporate operations is Articles 33 to 155 of the Netherlands Antilles Commercial Code, and is quite precise and prescriptive, as is usual in 'Civil Law' jurisdictions.

These are some of the main characteristics and requirements attaching to NV companies:A minimum of one shareholder is required, who may be an individual or a corporate

entity. A General Meeting of the shareholders must be held within 9 months of the end of a fiscal period to approve the annual statement, to discharge the management from its responsibility for the period concerned, to vote on dividends, etc. Such meetings must be held in the Netherlands Antilles, but shareholders can be represented by proxies.

There must be at least one director; more importantly, there must be at least one managing director resident in the jurisdiction. There can be multiple managing directors, and they have the statutory responsibility for management of the company, which is clearly defined, as usual in Civil Code jurisdictions.

Managing directors can be individuals or corporate entities, and need not be resident (except one of them). The managing directors exercise wide powers, including those of the anglo-saxon company secretary.

The authorised capital of the NV must be at least NAF50,000, of which 20% must be paid-up on incorporation and must remain so (this can be a mixture of fully and partly paid-up shares). Shares can be registered or bearer; but the latter must always be fully paid-up.

A registered office must always be maintained at the address of a licensed management company, or firm of lawyers or accountants in the jurisdiction. There is no requirement to audit or file annual statements. An small annual fee is payable to the Chamber of Commerce.

The incorporation process is somewhat cumbersome, involving an investigation of prospective shareholders by the Ministry of Justice (who issue a statement of 'No Objection' after several weeks), permission for the chosen name from the Chamber of Commerce (some restrictions), and other administrative procedures inluding the submission of the



Statutes in Dutch (an English translation is often attached). A quicker process is sometimes available.

A Netherlands Antilles NV cannot solicit funds from the public, sell its own shares publicly, or engage in banking, insurance, fund management etc without appropriate licenses and permissions from the Central Bank. A business license (not always given automatically) and a managing director's license need to be obtained annually from the Bureau for Social and Economic Planning, before business can actually commence.

Offshore Company

In the Netherlands Antilles, the expression 'offshore company' has historically referred to a standard NV as described above which conforms to some additional conditions allowing it to receive privileged tax treatment

The company is resident in the Netherlands Antilles (achieved simply by maintaining the registered office there);

All of the company's shares are held by non-resident individuals or companies; The company's income and profits are derived from outside the jurisdiction. In practical terms, the seemingly cumbersome statutory management arrangements are

usually overcome for offshore companies by appointing a local firm as 'attorneys' with delegated management power.

Netherlands Antilles Besloten Vennootschap (NABV)

The NABV, which was introduced alongside the New Fiscal Framework, has the following characteristics

Unlike the NV, no ministerial Declaration of No Objection is required - incorporation is quick and relatively informal;

There are no minimum capital requirements; The Deed of Incorporation can be in any language, although a Dutch or English

translation must be attached; Shares may or may not have a par value, voting rights or participation rights; Shares must be registered; bearer shares are not permitted; the BV must keep a share

register; The management arrangements are more similar to common law models than to the usual

civil code structure; The BV can be converted into an NV and vice versa, or the two may merge.

Exempt NABV

NABV can be exempt from profits tax and withholding tax when it conforms to the



following conditions:An application for a 0% tax rate needs to be filed with the tax inspector; The Board of Directors must consist of resident individuals or resident certified trust

companies (the Ministry of Finance has yet to publish the regulations governing certification of trust companies);

The purposes and activities of the BV should consist entirely or nearly so of lending and investment, or financial services, or other activities connected with these; but

The BV should not be a bank or other body subject to the supervision of the Bank of the Netherlands Antilles.

Due to the newness and lack of definition of the legislation setting up the NABV, professional guidance is crucial before considering any involvement with this type of company.

General Partnership

Partnerships are recognised under the Netherlands Antilles Commercial Code. In the General Partnership (vennootschap onder firma) each partner is liable for all the debts of the partnership, as in common law partnerships.

There are no filing requirements, and no auditing requirements.Partnerships are fiscally transparent.Details of partnerships and of the partners must be entered in the Commercial Register at

the Chamber of Commerce.

Limited Partnership

The limited partnership (commanditaire vennootschap) is similar to the general partnership except that it has one or more general partners with unlimited liability, who manage the partnership, and one or more limited partners each of whose liability is limited to the amount of his contribution.

The identity of the limited partners does not have to be disclosed or entered in the Commercial Register.

Stichting (Foundation)

The stichting (or foundation) is the equivalent in this civil law jurisdiction of the trust in a common law jurisdiction, although unlike the trust, the stichting has legal personality.

It was originally created for welfare purposes, but is now often used to act as a trustee or manager of assets for a third party, or to control shares in companies.

Shareholders receive certificates of participation in return for shares transferred to the stichting, and can be paid dividends. The certificates can be either registered or bearer and are freely transferable.



A stichting is constituted under the Civil Code; the main characteristics of the stichting are as follows:

A stichting must be entered in the commercial register of the Chamber of Commerce. There is no minimum capital requirement (but in practice it is usual to have US$100 as

capital). A stichting does not have members or shareholders A stichting is managed by one or more directors who do not share in the profits or assets

and who can be individuals or corporations; at least one director must be resident in the Netherlands Antilles.

Books of accounts must be kept but do not require auditing. The identity of beneficiaries or holders of certificates of participation need not be

disclosed. A stichting may transfer its seat into and out of the Netherlands Antilles provided that the

other jurisdiction concerned has suitable legislation (in practice this means that the other jurisdiction is a civil code jurisdiction, which is somewhat limiting since the bulk of offshore jurisdictions apply common law).

Under the National Ordinance on Profit Tax 1940, the profits of a stichting created for other than charitable purposes are treated in the same way as those of an NV,

Offshore Business

The Netherlands Antilles originated as an offshore financial centre in the Second World War, when it provided a good destination for emigration for Dutch comnanies during the German occupation of the Netherlands.

Since the war the Netherlands Antilles government has followed a consistent policy of encouragement towards international holding, finance, property and licensing companies, mutual funds and offshore banking.

Review we examine some of the main offshore business sectors in the Netherlands Antilles.

On December 29th, 1999, the Parliament of the Netherlands Antilles passed new tax legislation known as The New Fiscal Framework intended to improve the jurisdiction's image as an Offshore Financial Centre and to revitalise its financial services industry. The legislation, which came into force on 1st January 2002, removes the distinction between 'onshore' and 'offshore' companies, simplifies tax rates, and introduces a withholding tax. Alongside the tax legislation, a new corporate form is being introduced to allow offshore operations on a tax-exempt basis: this is the NABV (Netherlands Antilles Besloten Vennootschap), and it is expected to supplant the offshore NV for many purposes

As of April 1, 2001, special tax legislation for international Internet companies on Curacao came into force to act as an incentive to persuade e-commerce companies to relocate their activities to the Island. The new law replaces the old Free Zone law and governs 'E-Zones' which are areas within the Netherlands Antilles where international trade



and supporting services may be carried out by electronic communication and electronic commerce.

Holding Companies

Offshore holding or investment companies are defined in the National Ordinance on Profit Tax 1940 as companies that have the 'exclusive or almost exclusive purpose of investing their assets in securities, including shares and other certificates of participation and bonds, as well as other claims for interest-bearing debts however nominated and in whatever form'.

Netherlands Antilles holding companies are often used to hold the shares of Dutch corporations which are themselves the holding companies for investments or group operating subsidiaries in third countries, thus making use of the very wide network of Dutch Double Tax Treaties, and the permissive Dutch rules on withholding tax.

Netherlands Antilles companies which provide financing for other companies need a license from the central bank; but such a company established as part of a group financing structure can qualify as a 'Concern-Financing Corporation' which does not require a license if:

it receives at least 90% of its funding from the group, and any bearer bonds it issues are limited to institutional investors

its loans are only to group companies, and the parent company of the group has provided a guarantee to the central bank to cover its external borrowing.

Licensing Companies

Offshore Licensing Companies are defined by the National Ordinance on Profit Tax 1940 as corporations that corporations that exclusively or almost exclusively receive externally-generated revenues under the following headings:

the sale, transfer or lease of copyrights, patents, designs, proprietary processes or formulas, trademarks, and other analogous properties;

royalties or rentals from motion picture films, the use of industrial, commercial or scientific equipment, the operation of mines or quarries, or any other extraction of natural resources, and other immovable properties; or technical assistance.

Banking

Banks and other financial institutions in the Netherlands Antilles are licensed under the National Ordinance on the Supervision of Banking and Credit Institutions of 1994. Licenses are issued by the Bank of the Netherlands Antilles (the central bank).

The central bank distinguishes between 'Consolidated International Banks' which are normally owned or controlled by world Top 1,000 banks and which are subject to adequate consolidated supervision through their parent company, and 'Non-Consolidated International Banks' which are normally owned or controlled by a non-banking organisation, and for



which the central bank acts as the primary supervisor.The central bank further distinguishes between onshore banks, which are licensed to do

business with both local and foreign parties, and offshore banks, which are licensed for external business only. Offshore banks are known as International Credit Institutions and are exempt from foreign exchange controls. An offshore bank can operate either as a Netherlands Antilles limited comnany (NV) or as a branch. Currently in the Netherlands Antilles there are about 20 onshore banks and about 60 offshore banks.

Due to its proximity to South and Central America, the Netherlands Antilles have inevitably been used both for physical drug-running and for money-laundering. The Government is working with Dutch officials to establish legislation that will improve the ability of law enforcement officials to investigate drug-related financial transactions and accounts, and to require (local, but not offshore) financial institutions to investigate the origins of large cash deposits; although the Government of the Netherlands Antilles co-operates well with investigations into drug-related crime, these legislative controls are not yet in place at the time of writing. Parallel legislation to give the Dutch authorities command and control over a newly-established Antillean-Aruban Coast Guard (which they had asked for) has been defeated twice in the Antillean parliament.

Offshore Taxes

Under the legislation which applied until 1999, in order to qualify for offshore status a Netherlands Antilles entity had to be wholly owned by non-residents, and its income had to arise outside the jurisdiction. However, various business sectors have specially favourable taxation regimes which reflect their international nature. These special regimes are described in this section along with the tax treatment of offshore corporations as such.

In December 1999 the Netherlands Antilles adopted new legislation under the heading of The New Fiscal Framework (NFF). This legislation was intended to avert inclusion on the OECD's threatened 'black-list' of errant offshore jurisdictions in 2000. The NFF involves the abolition of the distinction between offshore and onshore companies, at least for new formations, the introduction of a new company form named NABV (Nederlands Antilliaanse Besloten Vennootschap) which can be tax-exempt but which does not benefit from tax treaties, the introduction of a 10% withholding tax on dividends (not in fact being put into effect), and the reduction of the profits tax rate to 30%.

Provisions under the NFF and a revised 'BRK' (tax treaty with the Netherlands) came into effect from January 1, 2002. They include:

for an intial period the proposed Netherlands Antilles dividend withholding tax of 10% will not enter into force

dividends from a Dutch corporation to Netherlands Antilles corporate shareholders, who own at least 25% of the shares in the Dutch corporation, will be exempted from Dutch dividend withholding tax, provided that the dividend is subject to Netherlands Antilles tax at a rate of at least 8.3%.

the Dutch corporation will have to withhold 8.3% dividend withholding tax from the



gross dividend. The 8.3% which has been withheld upon the dividend distribution in the Netherlands can be credited against tax in the Netherlands Antilles

dividends and capital gains derived from shareholdings in a Netherlands corporation will be exempted from additional profit tax in the Netherlands Antilles provided that the shareholding amounts to at least 25% and that 8.3% Netherlands Antilles tax is paid on the gross amount of dividends received

dividends paid by Dutch corporations to Netherlands Antilles corporations unable to take advantage of the participation exemption will be subject to 15% Dutch dividend withholding tax. Existing Netherlands Antilles offshore corporations may elect for the new dividend treatment.

the activities of an exempted company (NABV) will be restricted to investments in debt instruments, securities and deposits

for Netherlands Antilles coporations incorporated before June 30, 1999, subject to profit tax and having a book year which ends before 1st January 2002, the grandfathering rules with respect to the offshore regime will remain applicable until 2019 as long as the company continues to have substantial business.

In December 2000 the OECD announced the Netherlands Antilles' commitment to eliminate harmful tax practices by 31 December 2005 which has secured the jurisdiction's deletion from the OECD list of countries deemed to possess "harmful" tax practices.

Legal Regime for Offshore Companies

Most offshore operations in the Netherlands Antilles have hitherto taken the form of a limited liability company (Naamloze Venootschap, or NV).

The formation process for an offshore NV follows the normal pattern. Beneficial ownership does not have to be disclosed, but the professional firms involved apply a 'know-your-customer' rule. Opening a bank account will require references of some type. A registered office must be maintained in the jurisdiction.

Offshore companies do not have to be audited, other than financial institutions, which are regulated by the central bank


The taxation of Netherlands Antilles companies is governed by the National Ordinance on Profit Tax 1940; special taxation regimes have been introduced for companies falling under articles 8A, 8B, 14 and 14A of the Ordinance, as follows (NB the special regimes normally apply only to non-treaty-related income - also note that these articles have been repealed under the New Fiscal Framework and will only continue to apply to existing companies under the grandfathering provisions of the NFF - see above):

Investment and Holding companies Income is taxed at 2.4% on the first NAf 100,000 of net income and 3% on the balance. Municipal surtax is not applied. Capital gains are not taxed; but capital losses are not deductible.



Mutual Funds These are exempt from profits tax if they have either minimum net assets of $50m, at least fifty shareholders, and four local employees, or if they have minimum net assets of $300m and two local employees; otherwise the fund will be taxed on its net assets, giving a minimum charge to tax of $1,000 rising to a maximum charge of $10,000.

Trading companies The normal applicable rates of tax are 24% on the first NAf 100,000 of net income and 30% thereafter; however it is usually possible to obtain a ruling from the Inspector of Taxes exempting 90% of income, which has the effect of reducing the rates to the usual offshore levels of 2.4% and 3%.

Banks Investment and interest income (which qualifies under Article 14) is taxed on the usual offshore basis at 2.4% and 3%; commission and fee income will suffer 24% and 30% unless a tax ruling can be obtained (normally possible).

Intellectual Property Holding companies If a tax ruling can be obtained, the effective tax rate for income from royalties, licenses, patents, copyrights, trademarks etc will be 1%.

Insurance companies Foreign-owned captive and reinsurance companies not in receipt of treaty-related income benefit from a concession that deems their income to be NAf 100,000, giving them a fixed tax rate of NAf 2,400 annually.

Real Estate Holding companies These companies are not taxed on income derived from real estate (or subsidiaries wholly or predominantly engaged in owning real estate) outside the Netherlands Antilles.

Ocean Shipping and Aviation companies These companies are taxed at 7.73% on the first NAf 100,000 of net income, and 9.66% thereafter (including the 15% municipal surcharge). They have the option of paying tax at the rate of NAf 0.40 per gross registered tonne (minimum tax NAf 1,000 per vessel).

Businesses organised as Stichtings (Foundations) will be treated as if they are companies from a tax point of view. Partnerships are treated as fiscally transparent, so that the individual partners pay taxes, not the partnership.-

Exchange Control

Netherlands Antilles companies owned by non-residents that do not carry on business on the islands may obtain a license from the Bank of Netherlands Antilles (the central bank) which exempts them from all exchange control regulations.

Many transactions involving foreign exchange in the Netherlands Antilles attract a 1% 'license' tax which is payable by the bank concerned to the central bank. The rules are complex, and professional advice is needed if this tax is likely to be a significant factor.

The repatriation of income or capital from the Netherlands Antilles requires a license, but these are granted automatically on application.



SWITZERLAND


Switzerland41.295 Km2

7.300.000 GMT plus 1 hourFrench-German-

Italiansh


General Overview

Banking Law

The Swiss banking sector is regulated by the Federal Banking Commission (FBC) under the Banking Law of 1934, as amended most recently in 1999. Banking is defined to include all deposit-taking activity, in whatever corporate format, but does not include the issuance of bonds or securities trading.

The offices, branches, agencies and permanent representatives of foreign banks are covered by the law.

Banks are licensed by the FBC. The main conditions for the granting of a license are as follows:

If the banking activity is to be on any significant scale, the management and supervisory functions of the bank must be separated;

The bank must conform with currently applicable minimum capital requirements, as set by the Federal Council;

Officers must have good antecedents; Persons having 10% or more of the bank's capital (a 'qualified participation') must

guarantee that they will not influence the bank in any negative way; The bank (and the persons concerned) must notify the FBC of any change in a qualified



participation; Corporate documents (statutes etc) must be lodged with the FBC, and any changes

notified; Establishment of a foreign subsidiary or branch must be notified.

Banks with a controlling foreign shareholding must conform additionally to the following requirements:

The home country of the controlling shareholder must guarantee reciprocity; The name of the bank must not indicate Swiss control; If the foreign owner is a group, it is likely that the FBC will require consolidated

supervision; The foreign owner must keep the FBC fully informed about its activities; in particular,

changes in 'qualified participations' may lead to a demand for a new license.

The FBC applies world-standard equity, capital and liquidity rules to banks that it supervises. There are compulsory reserve requirements for banks which solicit deposits from the public, but these do not apply to private banks which avoid public solicitation of clients.

Banks licensed by the FBC must report both to the FBC and to the Swiss National Bank, and the latter has considerable reserve powers under the Banking Law. Reports submitted are however to be kept secret.

The Banking Law imposes strict secrecy on Swiss banks, but the Money Laundering Law 1998 (MLL) responded to increasing international concern by clarifying the circumstances under which banks should breach secrecy.

Under the MLL financial intermediaries were placed under a legal duty to report suspicious transactions and to retain clients' funds for a period of 5 days so as to give the authorities time to seize the assets should circumstances warrant such a response. Banks can be fined up to US$7m for non compliance with the money-laundering regulations. Other regulations include the requirement that customers be identified by way of adequate documentation, that staff be trained in money laundering detection techniques and that internal money laundering units be set up within institutions. Within 6 months of the law being passed US$124m of assets were seized.

In April 2002 the Federal Banking Commission announced that it wanted to introduce provisions to make information exchange with foreign securities regulators easier in order to prevent the misuse of the Swiss banking sector.

The banking watchdog made the announcement at a press conference in Bern, explaining to reporters that the recommendations had come about partly as the result of international pressure from the OECD, the EU, and the International Commission of Securities Commissions.

Director of the Banking Commission, Daniel Zuberbuhler, explained that although banking secrecy is an integral part of the country's financial sector, certain provisions can be overly restrictive when dealing with international securities regulators:'Our legal provisions are too narrow and make it very complicated and recently as we've seen in the case of the Federal Supreme Court impossible even to grant information to the



United States Securities and Exchanges Commission, which is clearly not what the legislator had intended.'

Although in various ways the Swiss authorities have attempted to fall into line with the international campaign against money-laundering, they have not seriously dented the principle of banking secrecy. For instance, they refused to sign the OECD's declaration concerning 'Unfair Tax Competition' in late 1999, and in 2000, while they signed the OECD's 'Information Exchange' declaration, they stated that they considered they already conformed to its standards.

In mid-2001 the Swiss parliament decided to form a new central authority to combat financial crime in the country. The decision arose from concerns raised over just how efficient the system is regarding money laundering controls.

In the three years since Switzerland implemented its anti-money laundering legislation, not one single case headed by the federal authorities had been successfully prosecuted. However, cantonal prosecutors acting on their own authority had secured 213 convictions.

The Money Laundering Control Authority (MLCA) had been dogged by controversy with its director, Niklaus Huber handing in his resignation after bemoaning a lack of support from the Swiss finance ministry. His departure did not help to quash rumours, rife at the time, that the MLCA was under-staffed and under-funded.

Ultimately, the inconsistency of the system across the cantons is unhelpful to implementation of the law; so parliament has decided to try a different tack by removing the responsibility for prosecuting cases from the cantons and giving it instead to the new central authority which will also be responsible for notifying and investigating cases.

The new authority, to be located in Bern, is currently training its staff in Lucerne and it is expected to employ around 450 staff in total.

This will allow experts with specialist know-how to be more efficient in their investigations,' she said.In December, 2002, the Swiss Bankers Association issued new guidelines designed to separate research and banking activities in the country's financial institutions. The SBA said:

The Board of Directors of the Swiss Bankers Association (SBA) has passed binding guidelines concerning the independence of financial analysis with a view to further strengthening the good reputation of Switzerland as a banking and financial centre.

In particular, the SBA wants to ensure that financial analysis in Switzerland continues to remain independent and credible

Corporate Taxation

Due to the federal structure of Switzerland there is no centralized tax system, with some taxes being levied exclusively by federal authorities whereas other taxes are concurrently levied at cantonal, communal and federal levels. Although the rate of tax levied at a federal level is consistent, that levied at a cantonal level varies from canton to canton. (There is currently legislation in the pipeline that aims to terminate this variation, and to reorganise the division of responsibilities and of revenues between the federal and cantonal administrations, but the timescale of change in not yet settled). Because significant



differences presently exist in the rates of taxes levied at cantonal level the choice of canton is an important element in all tax planning.

By international and OECD standards Swiss tax rates are relatively low.

Corporate Income Tax

For corporate income tax purposes a company is deemed resident in Switzerland if it is either incorporated in Switzerland or effectively managed from there. Thus a UK registered company whose effective seat of management is in Switzerland is a Swiss resident company for corporate income tax purposes.

The General Assessment Rule is that resident companies are assessed on their worldwide income except for profits generated by enterprises, permanent establishments and real estate situated abroad, whereas non-resident companies are only assessed on profit generated by enterprises, real estate and permanent establishments situated in Switzerland as well as interest on loans secured on Swiss real estate.

Corporate income tax is levied at a federal, cantonal and communal level. The level of corporate income tax payable varies amongst the cantons but at present Zug and Fribourg are considered the best cantons in which to locate trading and holding companies respectively.

Corporate income tax payable to the federal authorities may be tax deductible for the purposes of an assessment to cantonal corporate income tax and vice versa.Advance tax rulings on the level of corporate income tax payable are available and are advised as a matter of prudence.

The Swiss branch of a foreign company pays the same rates of corporate income tax on profits, income and capital gains as would be paid by a Swiss-resident corporate entity. Profits remitted abroad by the branch are not subject to any tax in Switzerland.

Rates of Corporate Income Tax

Corporate income tax is levied at federal, cantonal and municipal levels.The basic federal tax rate is 3.63% of taxable profits with an additional percentage based

on a formula which relates trading profits to net worth (i.e. capital and reserves). The maximum rate of 9.8% is arrived at if profits exceed 23.15% of net worth.

Cantonal tax rates vary between 17% and 35% and like the federal tax are progressive, using a scale based on the relationship of profits to net worth.

Municipal tax on corporate income is calculated as a small proportion of cantonal tax.

Banking

Switzerland is the world's largest private banking center. It is home to over 500 major banking institutions and is estimated to hold up to 35% of the world's private wealth.

In recent years a combination of legislative measures and market forces have re-orientated the Swiss banking services market so that banks cater less and less to the traditional small-



to-medium-sized private accounts and more and more to large professional clients for whom sophisticated services are being offered at competitive prices.

One of the driving forces behind these changes has been Switzerland's desire to be seen internationally to be playing a meaningful part in the war against organized crime and money laundering.

The Swiss banking sector is regulated by the Federal Banking Commission (FBC) under the Banking Law of 1934, as amended most recently in 1999. Banking is defined to include all deposit-taking activity, but does not include the issuance of bonds or securities trading.

The offices, branches, agencies and permanent representatives of foreign banks are covered by the law.

Banks are licensed by the FBC.The Banking Law contains stringent provisions to ensure secrecy, which are echoed in the

FBC's regulations, and are an important component of Swiss banks' appeal to investors and depositors. The secrecy provisions are subject to limited exceptions contained in the domestic and international legislation that Switzerland has adopted as part of its campaign against money-laundering.

The key pieces of legislation in this respect are the Money Laundering Act 1998 and the Federal Act on International Mutual Assistance in Criminal Matters 1983. The Money Laundering Act in particular has been very effective: it allows penalties of up to US$7m for non-compliance, and in the six months after it came into force assets totalling $124m were seized.

In 2001 the European Union began negotiations with Switzerland to attempt to gain agreement to the information-sharing required as part of the EU's withholding tax directive and without which it will not be effective.

Switzerland has been politely helpful, offering to extend its 35% withholding tax on resident savings income to non-resident account holders, and to distribute much of the tax collected among EU member states, but the government is adamant that it will not shift on the issue of banking secrecy. The Finance Minister, Kaspar Villiger confirms this, commenting frequently that: 'Banking secrecy is not negotiable'.

Intricate negotiations finally reached an outcome in January, 2003, when the EU adopted a package which offered a choice to its members and outside countries such as Switzerland between information-sharing and the imposition of a withholding tax.

Although Switzerland has accepted the package in principle, its eventual implementation is dependent on acceptance by the US and some of the more important offshore jurisdictions. As of May, 2003, it was in any case being held up by Italy, of all countries, over a squabble about milk quotas.

Tax Privileged Companies

The term 'offshore' is not used in Swiss legislation or in describing company forms. However, there are a number of specialised forms of the basic Stock Corporation which offer tax-privileged treatment equivalent to that obtainable in offshore jurisdictions.



Forms of Tax-Privileged Operation

Tax-privileged operations may take place within the following forms.-Holding Company Domiciliary Company Auxiliary Company Service Company Mixed Company


Swiss corporate taxation, which also apply to offshore entities except as indicated below.

Holding Companies

For federal tax purposes a company is defined as a holding company if it holds either a minimum of 20% of the share capital of another corporate entity or if the value of its shareholding in the other corporate entity has a market value of at least 2m Swiss Francs (known as a "participating shareholding").

Although the definition of a holding company varies among cantons a corporate entity is a holding company for cantonal corporate income tax purposes so long as it either

derives at least 51%-66% of its income from dividends remitted by the subsidiary; or holds at least 51%-66% of the subsidiary's shares.

Generally speaking foreign dividends remitted to a Swiss company and any capital gains realized by a Swiss company on the sale of shares in a foreign entity in which it holds a stake are taxable in Switzerland unless they are remitted to a company which by Swiss fiscal law is defined as a Swiss "holding" company.

Swiss holding companies enjoy the following relief from corporate income tax:At federal level a holding company pays a reduced level of corporate income tax on any

dividend income received from the subsidiary or the company in which it holds a "participating shareholding". The reduction in the level of corporate income tax payable depends on the ratio of earnings from "participating shareholding" to total profit generated.

At cantonal or municipal level no corporate income tax is payable on income represented by dividends so long the corporate entity meets the cantonal definition of a holding company.

Furthermore holding companies which hold a minimum of 20% of the share capital of a subsidiary pay reduced corporation tax on any capital gains made on the sale of that shareholding so long as

the shareholding was held for at least one year and was purchased after 1st January 1998; or

the shareholding was purchased before 1st January 1997 and will be disposed of after 1st January 2007.



Fribourg is currently considered the best canton in which to locate a holding company for corporate income tax purposes.

Domiciliary Companies

Domiciliary companies are companies that are both foreign-controlled and managed from abroad;have a registered office in Switzerland (i.e. at a lawyer's premises); have neither a physical presence nor staff in Switzerland; carry out most if not all of their business abroad; receive only foreign source income.

Domiciliary companies enjoy the following relief from corporate income tax:At a federal level there are no tax advantages in terms of corporate income tax payable on

income and gains; At a cantonal and municipal level the corporate income tax rate may be substantially

reduced or even reduced to zero; taxes levied by the cantons are calculated according to a formula which relates the company's paid up share capital and reserves to profit.

Mixed companies:

Mixed companies are companies which have the characteristics of both domiciliary companies and holding companies but which do not qualify as either. A mixed company gets the following relief from corporate income tax

At federal level no relief is granted; At a cantonal and municipal level a mixed company may pay reduced tax or be totally

exempt if it meets the following conditions: It is foreign controlled; a minimum of 80% of its total income comes from foreign sources; the company has close relationships to foreign entities.

Exchange Controls

Switzerland has no exchange controls.

Activities of Tax-Privileged Operations

The various tax-privileged forms described above are all subject to limitations on their activities or structures as set out.

Holding Companies must derive most of their income from subsidiaries; Domiciliary Companies must have only the smallest toe-hold in Switzerland; Auxiliary Companies (in 7 cantons only) may have some local activity; Service Companies must be active only within their own groups; and



Mixed Companies combine Domiciliary and Service Company restrictions.

TURKS and CAICOS


Turks and Caicos

430 Km2 15.000 GMT minus 5 hours English


General Overview



Forming Companies

The Turks and Caicos Islands emergence as a major corporate domicile dates from the enactment of the Companies Ordinance 1981. The legislation was regarded as highly innovative and has been duplicated by other jurisdictions.

The Ordinance continues to be amended to meet the changing demands of the international business community.Currently there are five types of companies which can be incorporated under the Ordinance, namely the Ordinary company, the Exempt company (also known as the International Business Company), the Foreign company, the Limited Life company, and the Hybrid company. All the companies can be limited by share or guarantee.

An existing overseas company may transfer its domicile to the Turks and Caicos Islands where the laws of the overseas country do not prohibit such a transfer. A Turks and Caicos company can transfer its domicile to an overseas country where the overseas country laws allow for such a transfer. Once a company is redomiciled to the Islands it is deemed to have been incorporated there under the 1981 Companies Ordinance.

The companies registry offers same day clearance of names, same day registration and extremely competitive registration rates. All names of companies require the prior approval of the Financial Services Commission to ensure that no name gives the impression of providing a public financial service without due licensing.

The law on ultra vires need not apply to Turks and Caicos Islands companies since there is no requirement under the Ordinance for a company to have an objects clause in its Memorandum. The legal consequence of this provision is that if no objects are specified then the company has power to carry on any business not prohibited by law.

There is no distinction between a private and public company under the law. However the shares of an exempted company cannot be offered to the public unless a prospectus is approved by the registrar of companies.


Turks & Caicos Islands Government has constructed a regulatory regime that is highly favourable to offshore operations, especially since there is no taxation other than stamp duty

and import dutiesThere are more than 15,000 companies registered in the Islands, including 13,000

International Business CompaniesOffshore entities may take the following forms (click on a form for a description of the

legal regime under which it is constitutedIBC´s (International Business Company)

Foreign CompanyLimited PartnershipHybrid Company

Limited Life CompanyExempted Limited Partnership



Trust

Banks, insurance companies, mutual funds, trust management companies and other financial institutions use an appropriate corporate form from the above list; in addition they are subject to registration or licensing

Exempted companies and exempted limited partnerships receive a statutory guarantee on formation against the imposition of any taxes for a 20-year period


Ordinary companies are generally used by those wishing to purchase real estate or otherwise carry on business within the Turks and Caicos Islands (in contrast to Exempt companies which are used by those wishing to carry on business outside the Islands).

The company must include the word 'limited' in its name.For public record purposes the Ordinary company must file an annual return with the

names, addresses and occupations of shareholders, directors and corporate officers. An Ordinary company must also declare on an annual basis that there has been no change in its beneficial ownership.

An Ordinary company must conduct a shareholders general meeting at least once annually.

Fees on incorporation depend on the level of authorised capital:For capital up to $50,000 the fee is $275; For capital over $50,000 and up to $100,000 the fee is $450; For capital over $100,000 and up to $750,000 the fee is $550; For capital over $750,000 and up to $2m the fee is $1,050; Capital over $2m is charged at $2,050.

The annual filing fee to accompany the annual return is $250; these fees can be paid in advance at a discounted rate.

Exempt Company

The attraction of the Exempt Company lies in a combination of its tax exempt status and minimal disclosure and administrative requirements. In order to obtain tax exempt status the subscribers must at the time of incorporation lodge at the Companies Registry a signed declaration stating that the business of the company will be mainly carried on outside the Turks and Caicos Islands.

The subscribers are not required to inform the Registrar of the identity of the beneficial owners. An exempt company must nominate a representative resident in the Islands for the purpose of service of legal process.

By the end of 1998 there were over 13,000 International Business Companies registered in the Turks and Caicos Islands of which over 3000 had been incorporated in that year alone.

Bearer shares or shares of no par value are permitted;



A sole shareholder, director or subscriber: is permitted; Resident or non-resident corporate directors, shareholders or secretary are permitted; Only the registered office and articles of association are available on the public file; the

only other reporting is an annual declaration of compliance with Exempt company conditions;

The company must keep its corporate seal at its registered office but need not maintain there any record of the shareholders, directors, secretary, mortgages or charges;

The company need not hold any annual meetings and such as are held need not be held in the Turks and Caicos Islands;

Subject to certain solvency requirements the company may purchase or redeem its own shares;

The company can use a foreign name and need not use or include the word limited in its name;

The company's capital may be registered in a foreign currency; Accounts need not be filed or audited.

Fees on incorporation depend on the level of authorised capital:For capital up to $5,000 the fee is $100; For capital up to $50,000 the fee is $100 plus 1% of the excess of capital over $5,000; For capital over $50,000 and up to $100,000 the fee is $550 plus 0.5% of the excess of

capital over $50,000; For capital over $100,000 and up to $1m the fee is $800 plus 0.1% of the excess of

capital over $100,000; Capital over $1m is charged at $1,700.


Limited Life Company

The Limited Life Company (LLC) was designed to combine the benefits of a partnership with the advantages of a corporate entity.

The legislation was drafted primarily to comply with the United States Internal Revenue Service criteria for treating the entity as a partnership for tax purposes meaning that profits and losses are treated as attributable to the shareholders rather than the company itself.

The demand for LLCs comes primarily from the United States where they are known as limited liability companies.

The LLC has the following characteristicsThe memorandum of association of the company must limit the life of the company to a

period of 50 years which may by a special resolution be extended to 150 years; Automatic dissolution of the company will occur upon one of several events specified

under the law; it is possible to override these provisions by providing otherwise in the articles of association;



The LLC may be managed by its members or by a designated manager (thus the corporate characteristic of centralised management is absent; instead management of the LLC more closely resembles management of the common law partnership;

The law expressly contemplates the cessation of membership upon the occurrence of prescribed events e.g. death, bankruptcy or transfer of ownership where the same is specified or prohibited in the Articles;

The Articles may be drafted so as to prohibit or restrict the transfer of any shares or interest in the company and may provide for the consequent cessation of membership;

The law allows for a variety of capital structures and for members to have different levels of liability on winding up.

The company must describe itself as a Limited Life Company.

Hybrid Company

The Hybrid company turns accepted concepts of company law on their head. It has 2 classes of members:

The shareholders who have voting control but no right to dividends or to share in any distribution of capital upon winding up;

The guarantor members who have no voting control but who have a right to dividends and to any distribution of capital on winding up.

The Hybrid has been described as a quasi trust with the shareholders (the controlling members) effectively constituting the trustees and the guarantor members (the participating members) effectively constituting the beneficiaries.

It may be particularly useful for persons from civil law jurisdictions where the concept of a trust is not legally recognised but the concept of a company is and who can therefore use a company to avail themselves of all the benefits of a trust.

Furthermore, difficult questions affecting a trust such as the governing law can be avoided since most jurisdictions accept that the law governing an incorporated body is the place of its incorporation.

Foreign Company

A company incorporated in a foreign jurisdiction that wishes to carry on business or hold land in the Turks and Caicos Islands must register as a foreign company with the Registrar of Companies within a month of undertaking such activities.

Its status will then be similar to that of the Ordinary Resident Company (see above). Registration costs and an annual fee are payable thereafter.

When filing its annual application for re-registration the foreign company must give details of a resident who can accept legal process on its behalf and must file information on the names, addresses and occupations of its shareholders, directors and officers




Limited Partnership

The law is contained in the Limited Partnerships Ordinance (1992). Every Limited Partnership must have at least one general and one or more limited partners. A Limited Partnership cannot have more than 100 partners. A general partner's liability is unlimited whereas the limited partners liability is limited to the amount of unpaid capital unless the partnership agreement specifies a different amount.

A general partner manages the firm; a limited partner who manages the firm will lose his exemption from limited liability. A general partner can be both a general partner and a limited partner at the same time. A partner may be an individual, a company or a partnership in itself .

At least one general partner must be resident or incorporated in the Islands or if the partner is a partnership then at least one of the partners of the partnership must be resident or incorporated in the Islands.

Every Limited Partnership must have the words Limited Partnership in its name and must have a registered office on the Islands for the service of process and delivery of notices.

To register as a Limited Partnership the general partner must pay the prescribed fee and file at the companies registry a statement specifying the name of the partnership, the general nature of its business, the address on the islands of its registered office, the duration of the partnership and the full name and address of each general partner.

A Limited Partnership must file an annual return and pay an annual fee.


A Limited Partnership doing business outside the Islands can apply to the Governor for tax exempt status which if granted will exempt it from paying any Island taxes for a period of 50 years. An Exempt Limited Partnership is not required to file details of its limited partners at the Companies Registry although a requirement to maintain proper details at the firm's registered office still applies.

An Exempt Limited Partnership must both file an annual declaration of compliance with the law and pay an annual fee.

Trusts

The Trust Ordinance (1990) sets out the law relating to trusts. The Ordinance is not exhaustive and English principles of law apply unless overridden by the specific statutory provisions. The Ordinance was drafted with a view to making the Turks and Caicos Island a more attractive jurisdiction in which to settle a trust and to this end contains features from other jurisdictions and recommendations from eminent English counsel.

The Ordinance defines a professional trustee as someone who receives remuneration for his services as a trustee, sets out the general requirements for licensing professional trustees, the powers and duties of the Superintendent of Trustees, and has miscellaneous provisions regarding liability, confidentiality and the non application of the Recording of Deeds



Ordinance, which improves privacy.The Ordinance has been approved for the purposes of the Hague Convention.Characteristics of the trusts regime in the Turks and Caicos Islands are as follows:There is strict regulation of licensed professional trustees There is no requirement to register trust deed or the beneficiaries; There is no rule against perpetuities; The trust deed may specify one proper law for interpretation of the terms of the trust deed

and another to apply to the administration of the trust assets; Foreign judgements are excluded; The Voidable Dispositions Ordinance 1998 sharply circumscribes the circumstances in

which a "disposition" can be set aside by a creditor; Trustees have wide investment powers; Re-domiciliation of a trust is permitted.

The Turks and Caicos Islands emergence as a major corporate domicile dates from the enactment of the Companies Ordinance 1981.The legislation is regarded as highly innovative and has been duplicated by other jurisdictions. The Ordinance continues to be amended to meet the changing demands of the international business community.

In common with many other offshore jurisdictions, the Turks and Caicos Islands are responding to pressure from the OECD by tightening up regulation. Specifically, the Turks and Caicos are responding to the recommendations of the November 2000 KPMG Independent Review of Financial Sectors in the Caribbean Overseas Territories.

Legislative changes to tighten the regulatory regime can be expected during 2001.

Banking

In recent years in line with international banking guidelines the Turks and Caicos Islands have adopted a policy of accepting only established banks or the treasury operations of listed corporations. In 1998 Belize Bank selected the Turks and Caicos Islands as the venue for its first venture outside Belize making Belize Bank only the 4th bank ever to be licensed in the Turks and Caicos Island for domestic purposes.

The recent introduction of mutual funds legislation is expected to attract further applications for banking licences.

Types of banking licence can be granted:National Banking Licence:

This licence is granted for banking activities to be carried out locally with islanders and other residents and will only be granted to the branches or subsidiaries of banks which have an established track record and which are subject to effective consolidated supervision by their home supervisory authority. Exceptionally a national banking licence may also be granted where the bank is predominantly locally owned.

Overseas Banking Licence: This licence is granted for banking activities which are to be carried on outside the Turks and Caicos Islands. The holder of such a licence cannot accept deposits from or lend to residents of the Islands. An application for such a licence will only



be considered from: The branches or subsidiaries of banks with an established track record and which are

subject to effective consolidated supervision by the overseas banks home supervisory authority

Banks which although not subsidiaries are closely associated with an overseas bank and which by agreement will be included within the consolidated supervision exercised over the overseas bank by the overseas banks home supervisory authority

Wholly owned subsidiaries of major corporations where the objective of the subsidiary is to undertake in house treasury operations which are fully consolidated within the published financial statements of the parent company

All banking licences are subject to continual detailed review. Whilst there are no published guidelines as to the minimum capital, two of the main requirements are the submission of a detailed business plan and the written consent of the home supervisory banking authority. A national banking licensee holder must file monthly and quarterly statements.

An overseas banking licensee holder is required to file less detailed returns on a quarterly basis. All banks must submit annual audited accounts

Trust Management

In 1998 there were more than 20 licensed companies offering professional trustee services making trusts one of the most active areas of the Turks and Caicos Islands offshore centre. Most functions relating to the licensing, review and regulation of trusts are carried out by the Superintendent of Trustees based at the Financial Services Commission.

The Trustees (Licensing) Ordinance 1992 provides for the licensing and regulation of trust companies and other professional trustees. The Trustees (Licensing) Regulations 1992 set out the form of the application for obtaining a trustee licence, the categories of trust licences, the details required in an application for a trustee licence, reporting requirements and the rules governing the conduct of licensed trustees. Licensed trustees are required to submit financial returns, appoint auditors and maintain professional indemnity insurance.

The Trust Ordinance (1990) defines a professional trustee as someone who receives remuneration for his services as a trustee, sets out the general requirements for licensing professional trustees, the powers and duties of the Superintendent of Trustees, and miscellaneous provisions regarding liability, confidentiality and the non- application of the Recording of Deeds Ordinance.

Licenses can be restricted or unrestrictedA restricted Trustee Licence is issued on the basis of an undertaking by the trustee that it

will act as a professional trustee only in respect of a named trust or trusts. An annual fee of $750 is payable for this licence. In 1998 there were 5 restricted trust licensees operating in the Islands. Restricted Trustee Licences are normally used in connection with family trusts.

An unrestricted Trustee Licence is issued without any restriction on which trust or trusts the trustee can act for. An annual fee of $3000 is payable to the Financial Services



Commission. In 1998 there were 16 unrestricted trust licensees operating in the Islands. An important requirement in the licensing process is the submission of a Business plan together with full financial disclosure and business references on both the principals and managers of the proposed licensee .The minimum capital requirement is $250,000. Many professional firms consider a trustee licence to be an appropriate and cost effective alternative to a banking licence.

The Trustees Licensing Exemption Order 1992 exempts the following entities from...A company which is the trustee of a single trust and the issued share capital of which

company is entirely beneficially owned by one or more of the beneficiaries, the settlor or by a combination of the beneficiaries and settlor. Family trust companies sometimes fall under this category;

A company which is the trustee of a single trust and which has its registered office in an approved jurisdiction;

A company which acts as a bare trustee with no interest in or duty to the trust property except to convey it when directed by the beneficial owner.
