2: Offshore Financial Services Flashcards
Define “financial services business”
This term is used to describe the carrying on of funds services business, investment business, general insurance mediation business, money services business or trust company business.
What is a “fiduciary relationship”?
A relationship founded on trust. A person with a fiduciary duty has a duty to act in the best interests of another person.
What is “fiduciary duty”?
A person with a fiduciary duty has a duty to act in the best interests of another person.
What is a “Settlor”?
A settlor is a person who provides trust property either during their lifetime or in their will.
What is a “Beneficiary”?
A beneficiary is a person who is entitled by the terms of a trust to benefit from the trust property or in whose favour a discretion to distribute the trust property may be exercised.
What is a “Beneficial Owner”?
A beneficial owner is the individual(s) or company that retains a direct or indirect ownership interest in the assets of an entity.
What is an “Ultimate Beneficial Owner”?
A UBO is the individual(s) that retains a direct or indirect ownership in the assets of a financial product, service, structure or entity, howsoever the legal title is constructed.
What is a “Legal Arrangement”?
Legal arrangements include fiduciary arrangements such as trusts.
What is “Capacity”?
A party to a contract must have legal capacity (the power legally to enter into it) for it to be enforceable. Vulnerable people such as children do not have capacity.
What is a “declaration of trust” (in relation to a settlement)?
A declaration of the trustee which sets out the terms upon which the trust assets are held and to which the settlor of the trust is not a party.
What is a “life interest trust”?
A life interest trust is a trust where an individual (known as the life tenant) has an absolute right to enjoy the trust property or income arising from the trust property during their lifetime.
State four uses of a company incorporated in an offshore judisdiction:
They can be used for things such as:
- Holding assets;
- Holding IP rights;
- Holding investment portfolios;
- Holding real estate;
- Ring fencing a risk in a particular company; and
- trading purposes.
What is a “shelf company”?
A shelf company is a company which has already been incorporated by a service provider and is therefore instantly available for use.
What is a “reserved company”?
A reserved company is a company that is incorporated by a service provider and the Registrar of Companies is advised that the company will be transferred to the client within the next six months.
What is a “declaration of trust” (in relation to a nominee shareholding)?
It is a short document within which the trustee admits and declares that the shares are held upon trust absolutely for the beneficial owner and in which the trustee undertakes to deal with the shares as instructed by the beneficial owner.
What is a “nominee shareholder”?
A nominee shareholder is a person who is the legal owner of a share and who holds the share absolutely for and on behalf of the beneficial owner.
Name the three types of portfolio management services.
- Execution only;
- Advisory management; and
- Discretionary management.
