Entites Available Offshore Flashcards
What is a foundation
Similar features of both company & trust
Separate legal personality / contract in own name
Don’t have shareholders
Founder - person requests for foundation to be incorporated by law
Guardian can be appointed to oversee admin & ensure council carries out its function properly
Council administers & makes decisions / similar to board of directors
Council carries out its objectives in accordance with Charter & Regulations
Outline restrictions on foundations council members
Some offshore centres impose restrictions on who can be appointed as council member
Provision is regulated activity / provided by licensed trust company business service provider
I.e JSY requires each council to have a ‘qualified’ member & application to incorporate must be logged by such person
What is a Chatter & Regulation in relation to foundations
Charter - doc available for public inspection / sets out name, duration, objects & name/ address of council members
Regulations - private doc sets out admin of the foundation
Docs govern foundations / provide for founder to exercise rights (settlor permitted to reserve certain rights)
Unless docs expressly provide, beneficiaries have no interest in assets & aren’t owed a fiduciary duty by council
Constitution of foundation drafted more flexibly because entity can continue to exist with no beneficiaries / trust fail lack of objects & case to exist
Outline uses of foundations
- appeal to clients from civil law jurisdictions / alternative product/ emerging markets in Europe where concept of trust less understood
- offer enhanced level of confidentiality
- used by global charities for making donations
- used for international structuring
- used for commercial transactions / orphaned SPV required
What are partnerships
Various types offered offshore
Avoid some risks exposed to sole traders as responsibilities, liabilities, profit & loses of the business are shared between partners
Simple arrangements / usually cheaper & lower admin burdens compared to company
Maybe preferred vehicle where owners don’t require limited liability
Outline general partnerships/ traditional
Existence with verbal agreement between 2 or more parties who work together to make a profit
No separate legal personality / not incorporated by law
Partners have unlimited liability / fully liable for its debts
Partners contract on behalf of partnership with 3rd parties
Partnerships cease to exists upon death of partners / no perpetual succession
Outline limited partnerships (LP)
Not corporate body / no separate legal personality
Requires to have; General partner (unlimited liability)
Limited partner (liability on amount of capital contributed / provided doesn’t take part in management)
Outline limited liability partnerships (LLP)
Incorporated under law by Limited Liability Partnership Act
Corporate body with separate legal personality
Members have limited liability
Members subscribe to incorp doc / delivered to registar of companies
Upon incorp members are those who subscribe & others added in accordance with others agreement
Incorp doc specifies designated members responsible for certain duties, I.e file AR
DIFFER OFFSHORE
-JSY LLP don’t have separate legal personality from partners / partnership itself responsible for debts rather than individual / liability limited to amount contributed to LLP capital
What is an Incorporated Limited Partnership (ILP)
Same as general except they’re corporate body & have separate legal personality from partners
Hold assets & contacts in own name
Perpetual succession
General partner responsible for managing assets & owes fiduciary duty to Partnership
Unlimited liability of partners / general partner acts as agent & liable for debts not satisfied
Liability of person managing general partner limited by structuring them as limited company or limited partnership
What is a separate limited partnership (SLP)
Similar to limited partnerships as separate legal personality but not corporate body
In all other aspects same as general partnership
What are ILP & SLP used for
Offer greater operational flexibility than corporate structures / protection & Certainty
Used for;
- investment funds
- asset holding
- family office holding
- structured finance transactions
- tax transparent joint venture arrangements
What are Special Purpose Vehicles (SPV)
Entity established for specific purpose / transaction
Usually offshore companies / used variety finance agreements internationally
Share capital owned by charitable trust (small profit distrusted to charities) or non-charitable purpose trust (without ascertainable benes but with ascertainable purpose to establish underlying company & enter agreements)
Referred as ‘orphaned structure’ / not controlled or owned beneficially
Used;
- bankruptcy remote vehicle
- to enter into securitisation or debt defeasance (make debt null & void)
What is a private trust company (PTC)
Company formed to act as trustee of particular trust/ group of trusts
Use is permitted offshore centres including JSY, GSY, Cayman & BVI
Directors chosen by settlor of underlying trust
Family members can be appointed to board alongside trust company business professionals / allows more involvement with admin than possible if trustee appointed
PTC enter agreement with trust company to ensure admin matters are adhered to
Legislation is PTC differ between jurisdictions / general rule not subject to same level of regulation & supervision (lower compared to trust companies)
