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OFFSHORE CORPORATIONS

 

WHY INCORPORATE OFFSHORE
Because of the litigation explosion in Canada and elsewhere, professionals and small business owners are forced to focus on ways to protect their savings, investments and other accumulated assets that may be attractive targets for hungry trial lawyers.

In the Canadian Legal System, the deck is often stacked in favor of plaintiffs and against defendants. Because this observation encourages the filing of spurious lawsuits, the average business owner or professional may be sued several times during his or her lifetime, thereby facing the possibility of being on the receiving end of a ruinous judgment. Failure to plan for such a situation can result in the instant loss of a lifetime's accumulated wealth. Once a lawsuit has been filed, or one is anticipated, the Canadian Legal System will not allow assets to be moved. Acting now while the waters are calm is imperative.

FINDING YOUR ASSETS
Lawyers for plaintiffs only prosecute cases they believe will pay off, not cases against judgment proof defendants. How does a lawyer find out if you have something of value? Very easily. Many services are available that can provide a detailed account of personal and/or business bank accounts, property ownership, investment holdings, income, savings and many other facts relating to your financial well being. The only hope of getting the plaintiff's lawyer to accept a token settlement is to convince the lawyer that the defendant's assets are truly beyond the lawyer's reach.

CORPORATE OWNERSHIP
How can you minimize the chances of losing assets? By becoming a smaller target. How can you become a smaller target? By shrinking the size of your estate so that you are no longer the legal owner of the assets to be controlled and enjoyed. How can you shrink your estate? By getting as many assets out of your personal name as possible. One of the best ways to do this is to transfer money, investments and assets into a corporation, a legal entity that you control.

CANADIAN CORPORATION VS. OFFSHORE CORPORATION
Most trial lawyers will tell you that forming a Canadian corporation for liability protection and privacy is not worth the certificate it is printed on. Canadian corporate formation documents are public information and any good search firm can find bank accounts, investments, real estate and other assets held by the corporation. The Canadian corporate veil is routinely ignored and lawsuits are filed against the corporation and any of its beneficial owners. By forming a corporation offshore you have a legal entity to hold assets of which only you know the beneficial owner. The information-gathering agencies and services that help trial lawyers, ex-spouses, ex-business partners and creditors will be unable to find your accounts and assets, therefore, making you a poor prospect for a lawsuit. This is how you become a smaller target.

CANADIAN JUDGMENTS ARE NOT RECOGNIZED OFFSHORE
An offshore corporation can conduct any type of business in Canada that a Canadian corporation can. You sacrifice nothing by having complete privacy and a corporate veil with real teeth in it. Even if your offshore Bahamian International Business Company (IBC) becomes involved in a lawsuit, the Bahamian Supreme Court does not recognize Canadian judgments against a company incorporated in its jurisdiction. A plaintiff would have to hire a Bahamian attorney (there are no contingency fees) and try to convince the Bahamian Court to hear the case. Historically, the Bahamian Courts will not rule in favor of a plaintiff if it can be shown that the assets were moved before the judgment was filed. Once the plaintiff sees the uphill battle involved plus the enormous cost out of his/her own pocket, he/she may either reevaluate the merits of filing a lawsuit or settle for a fraction of the settlement he/she may have received in a Canadian Court. More and more doctors, professional business people and small businesses are going offshore to lower their liability insurance coverage. This alone can be a savings of tens of thousands of dollars each year in premiums. Small businesses also go offshore to reduce or eliminate state income (franchise) taxes and to give them other alternatives to insurance coverage that have become too expensive to carry.

OFFSHORE BANKS

BARCLAYS BANK, BAHAMAS / B.V.I.
Barclays Bank PLC has been established in the Bahamas for over 45 years. It is a member of the Barclays Group, one of the world’s oldest and largest banking institutions, whose history can be traced back to the reign of Queen Elizabeth I of England. Barclays is one of the world’s leading international banks and together with its associated companies, is represented in some 70 countries, spanning six continents.

Company Barclaycard / Corporate Secured MasterCard
Minimum credit line for MasterCard: $5,000—Interest bearing deposit required for security: 200% (Example: $10,000 deposit required for $5,00 line of credit on corporate card) Maximum credit line: $100,000

SWISS AMERICAN BANK, ST. JOHN’S, ANTIGUA
Swiss American Bank Ltd. was established in 1981, and offers a full range of commercial and private banking services through five branches in Antigua. Swiss American Bank is protected by Antigua’s International Banking Act and thereby offers a high degree of confidentiality over the banking affairs of clients.

SwissAmericard / Corporate Secured Visa
With the SwissAmericard, transactions and records of cards issued by Swiss American are protected by Antigua’s Offshore Banking Secrecy Act. As SwissAmericard accounts must be backed by an interest bearing time deposit at Swiss American Bank, you can set your own credit limit. SwissAmericard accounts offer flexible repayment terms with minimum monthly payments as low as 10% of the outstanding balance. You pay no interest on purchases if you pay your balance in full each month. Minimum credit line for Visa: $1,000-Interest bearing deposit required for security: 150% (Example: $1,500 deposit required for $1,00 line of credit.) Minimum credit line for Visa Gold: $5,000

BELIZE BANK VISA
Membership fee is US $100. Additional Cards can be issued to your family or business partners on your credit card account at a fee of $25 per card, and charges made by these persons will be included in your monthly statement. You pay no interest on purchases if you pay your balance in full each month. Minimum credit line: $2,000—Interest bearing deposit required for security: 150% (Example: $3,000 deposit required for $2,000 line of credit.

Corporate Bank Account vs. Personal Bank Account
Offshore bank accounts may be opened in either a personal name or a corporate name.

Most individuals looking for asset protection or privacy should not open offshore accounts in personal names. Wire transfers, credit card transactions and checks will identify you as the person holding this asset. Forming a corporation and opening a corporate bank account on the other hand, will give you more privacy and more options for transacting your business. For instance, wire transfers carry the company name and credit card transactions go through the system in the company name. Typically the company's bank accounts are the only places the owner and the corporate relationship meet, that is if the owner chooses to be the signer of the accounts. For this reason, the banking and other financial institutions you deal with will be a far more important decision and privacy concern than the jurisdiction of your company's incorporation.

Most all of the offshore banks require a very simple reference letter from your the bank of the signer of the account. Anyone signing the signature card and having access to the account is required to provide a bank reference letter. The letter must be an original. The banks will not accept fax or photocopies. Some banks, such as Barclays Bank, will spot check references by contacting your bank to verify that the letter was actually issued by your bank. A reference letter is fairly easy to obtain and most banks do them every day. If you wish, and to simplify the process, hand write your letter before going to your local bank. Usually you can ask the person in New Accounts or Customer Service to type the letter for you while you wait. The reference letter does not require a bank officer's signature.

Even though the reference letter is simple in form, it must contain specific information. For example, do not address the letter "To Whom It May Concern". The offshore bank requires that the letter be addressed to it. If you are concerned about your privacy, or a nosey bank employee, simply leave the jurisdiction out of the letter. Instead of addressing the letter to "Barclays Bank, Nassau, Bahamas", address the letter to "Barclays Bank, Attention: Manager". The letter must also state the date the account was established. The reference letter can be from a business account so long as the letter identifies you as a signatory. Often, banks fear or may hesitate issuing a reference letter because of the potential liability that is common in the lawsuit environment, especially in Canada. However, this letter is simple and is general enough that your local bank should have no objection to providing the letter for you.

The offshore bank requires a photocopy of a picture identification such as a passport or driver's license. Such picture i.d. reassures the bank that either the person personally appearing and presenting the bank application is the same person signing and making the application, or if your bank application was mailed to the offshore bank, the bank will have a tool to verify the correct signatory, should such verification be necessary. Most banks provide a form in the initial bank application documents that allow them to accept fax instructions from you. You will be able to make wire transfers and other banking transactions from a distance.

Most offshore banks require a minimum deposit of $1,000. Most have the same bank products that Canadian banks offer such as time deposits, savings accounts, etc. Offshore banks will hold the accounts in the most common currencies such as U.S. dollar, Swiss Franc, D.Mark, Yen, Sterling and Canadian dollar. A common perception is that offshore savings accounts in U.S. dollar pay a much higher rate offshore. The truth is that U.S. dollar rates are about the same or maybe a little less than what you see advertised at your local bank. If you have been told that you can get 12 % on your offshore account, you need to find someone else to deal with. Remember, once you get out from under the Canadian regulatory authorities, you will be fair game for any unscrupulous offshore operator. Offshore banks have no Deposit insurance or equivalent, so make sure you stay with the banks recommended. Most offshore banks are capitalized better than Canadian banks since they do not rely on the deposit insurance. Also, many offshore banks are bigger and stronger financially than Canadian banks.

HOW TO GET STARTED

To get started, please contact us for a confidential consultation.
A typical order would be an International Business Company (IBC), a bank account (bank does not have to be in same jurisdiction as company) and mail forwarding. Our prices include all first year fees. Initial bank deposits should be submitted later with the bank application package.
You will be billed annually for the registered agent and government fees. For payment, we accept any form of a USD check, wire transfer or cash. The bank application for the bank you have selected will accompany your corporate documents. There will be instructions with the bank forms. You will be asked to return the forms to our office. We will put certified corporate documents with the bank forms, complete all the corporate information, seal the documents and courier them to the bank along with your initial deposit. Depending on which bank you have chosen, the account number will be issued approximately 7 days after the bank receives the documents, if we are using Swiss American Bank in Antigua, and up to one month for Barclays either in the Bahamas or British Virgin Islands. All other banks will fall within this time period for issuing account numbers.

Using an Offshore Company to Encumber Canadian Real Estate
Using an Offshore Company to Encumber U.S. Company's Assets

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