OFFSHORE GLOSSARY

This Glossary covers only the specific meaning of the words in the context of this Web Site and our services. Its definitions do NOT represent tax and/or legal advice.
 

Annual Fees Debit Card Nominees
Anonymous Debit Card Domicile Non-resident
Apostille Double Taxation Agreement Non-resident alien (NRA)
Asset protection Double Taxation Treaty Offshore
Assets European Union (EU) Offshore Financial Center (OFC)
Association Exchange Control Operating Expenses
ATM Financial Action Task Force on Money Laundering (FATF) Organization for Economic Cooperation and Development (OECD)
Bearer Shares Financial Stability Forum (FSF) Parent Company
Beneficial owner Forced heirship Partnership
Beneficiary Fortune 500 Private Foundation
Bond Foundation Council Private unlimited company 
Branch Founder (of a Private Foundation) Protector
British Common Law G-7 Public limited company (PLC)
British Commonwealth of Nations Goodwill Registered Agent
Broker Grantor Registered Office
Brokerage Holding Resident
Brokerage Account Holding company Securities
  Immigration Planning Settlor
Certificate of Formation Incorporation Share
Certificate of Good Standing International Business Company (IBC) Share Certificate
Certificate of Incorporation Jurisdiction Shareholder
Certificate of Incumbency Jurisdiction of the incorporation/formation Shelf Company
Common Law Legal Entity (Legal Person) Shipping Company
Common Law Trust Liability Subsidiary (Subsidiary company)
Company Limited Liability Tax haven
Company limited by guarantee Member Tax planning
Company limited by shares Minor The Statute of Elizabeth
Corporate Director (Secretary) Money Laundering Trust
Corporation Natural person Trust Company
Credit Card Nominal Director Trustee
Daughter company Nominal Shareholder (Member) Unlimited Company

Annual Fees
These are comparatively small fixed renewal fees a typical offshore company, especially an IBC pays annually to the authorities of the jurisdiction of incorporation/formation and to the Registered Agent. The companies may suffer penalties and/or be struck off the Register in case of late payment or failure to pay the fee. See more details in OUR PRICE LIST- ANNUAL RENEWAL SERVICES


Anonymous Debit Card
A Debit Card, which does not bear any personal details about its holder.


Apostille
A special form attached to a public document (e.g. Certificate of Good Standing) issued in accordance with the standards of the Le Hague Convention of 1961. Documents issued in a convention country, which have been certified by an Apostille are entitled to recognition in any other convention country without any further authentication. Authentication of a foreign legal entity's documents submitted is often requested e.g. when forming a subsidiary or opening an account with a bank or a brokerage.


Asset protection
The legal steps a natural or legal person undertakes to protect his/her/its assets from possible seizure by creditors. Such offshore tools as Private Foundations , International Business Companies , Delaware Limited Liability Companies , and Trusts are being used by our clients for the above purpose.


Assets
From the accounting point of view, assets of a legal entity are the entries on a balance sheet showing all properties (cash, inventories, securities, property rights, and goodwill) and claims against others. The assets may be applied to cover the liabilities of a person or business. Similarly, the assets of a natural person make up the entire property owned by him/her that can be used to settle creditors' claims.


Association
Within the context of our site it's an organization established by legal entities that have an interest, activity, or purpose in common.


ATM
An acronym, which stands for Automatic Teller Machine. It's a fully automatic electronic machine providing some banking services (i.e. cash withdrawal) to the owners of credit and debit Cards. >


Bearer Shares
The natural persons or legal entities holding bearer shares are considered to be the shareholders; there is no official record of ownership kept by the company that issued the shares or by authorities.
The International Business Companies (IBCs) incorporated in most Offshore Financial Centers are allowed to issue bearer shares.


Beneficial owner
Same as Beneficiary


Beneficiary
A natural person or a legal entity enjoying the right to receive benefits through a legal design (i.e. a Trust , Private Foundation , an International Business Company )


Bond
A long-term certificate of debt issued by a government agency or private company. A bond represents an obligation on the part of the issuer to pay interest and repay principal of a loan.


Branch
A division of a company . As opposed to a subsidiary , a branch is not a separate legal entity .


British Common Law
See Common Law


British Commonwealth of Nations
It is a voluntary association of 54 independent sovereign states comprising 30% of the world population. Commonwealth members adhere to the statements of beliefs set out by their respective heads of governments. The basis of these is the Declaration of Commonwealth Principles, agreed at Singapore in 1971, and reaffirmed in the Harare Declaration of 1991.
Commonwealth activities are diverse: e.g., they include observing elections, public health issues, international trade and law, etc. Most Offshore Financial Centers in the world belong to the Commonwealth, e.g. Britain , Cyprus etc .


Broker
A person, other than a bank, who acts as a qualified intermediary in the purchase of securities. Called a broker when buying securities, and a dealer when selling them.


Brokerage
A corporate broker/dealer.


Brokerage Account
An investment account opened by a buyer/seller of securities with a brokerage.


Certificate of Formation
The document of a Delaware LLC corresponding to the Certificate of Incorporation for a corporation.


Certificate of Good Standing
A Certificate of Good Standing (CGS) is issued by the authorities of the jurisdiction of incorporation/formation to a legal entity such as an International Business Company, Panamanian Private Foundation, Delaware Corporation or Limited Liability Company . The document attests that the aforesaid legal entity actually exists and is in good standing owing to compliance with all requirements of the local laws (timely payment of annual fees and local taxes, if any, as well as filing of annual statements and/or returns where applicable).
CGS is often requested by local authorities when a foreign legal entity is forming a subsidiary as well as by banks and brokerages when opening an account with them.


Certificate of Incorporation
A Certificate of Incorporation (CI) is issued by the authorities of the jurisdiction of incorporation/formation to a  legal entity such as an International Business Company or Delaware Corporation . The document bears evidence of actual formation and registration of the aforesaid legal entity with the authorities in accordance with the local laws. It contains some basic data about the company (name, date and place of registration, entry number in the register, etc.)
CI is often requested by local authorities when a foreign legal entity is forming a subsidiary as well as by banks and brokerages when opening an account with them.


Certificate of Incumbency
A Certificate of Incumbency (CI) of a company (e.g., an International Business Company) is issued by its registered agent or authorities of the jurisdiction of incorporation. The document attests that the person(s) listed is (are) actually director(s) of the company.
The CI is often requested by local authorities when a foreign legal entity is forming a subsidiary as well as by banks and brokerages when opening an account with them.


Common Law
The system of law that is widely used in England, USA, and in the most of the British Commonwealth countries. As opposed to the civil law system based on statutes and codes, common law court decisions are derived from precedents, i.e. past court decisions. Most Offshore Financial Centers have used common law as the basis for their International Business Company and trust legislation.


Common Law Trust
See Trust


Company  
A lawful legal entity, established and owned by one or more natural persons and/or legal entities. A company has a subject of its activities and bears such rights and responsibilities of a natural person as the ability to conduct commercial operations, own shares and other securities, hold titles to property, borrow and loan money. A company  bears liabilities, but exists and acts separately from its owners. Same as corporation.


Company limited by guarantee
A company in which members' liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up.


Company limited by shares
Such company members' liability is limited to the amount unpaid on shares they hold.


Corporate Director (Secretary)
Some jurisdictions allow a legal entity (corporation) to be appointed to the position of a director (secretary) of a company. It gives an opportunity to restrict a corporate director (secretary)'s liabilities and/or increase the anonymity features of the company. On the other hand a corporate director may meet some bureaucratic obstacles in the jurisdictions where such representation is unusual.


Corporation
See Company.


Credit Card
A plastic card with a magnetic strip on its reverse side. A credit card holder is entitled to purchase goods or services on credit provided by the card issuer (a bank or business) as well as make cash withdrawals via ATMs.


Daughter company
A company with some of its shares being owned by another company, which is called a parent company.


Debit Card
A plastic card with a magnetic strip on its reverse side. A Debit Card (DC) holder is entitled to purchase goods or services when accepted technically by a Seller. A DC doesn't provide any credit to the holder and it's a "mirror" of the underlying account with the DC's issuer (a bank or business). Most often DCs are used for cash withdrawals via ATMs.


Domicile
One's residence from a legal point of view. Generally, it may not coincide with the current physical place of residence of a person rather it's the place where one intends to return after the purposes of his/her absence are attained.


Double Taxation Agreement
A Double Taxation Agreement (DTA) is entered into between two countries to eliminate the possibility that the same income or gains might be fully taxed in both. This may happen where a natural person or legal entity is resident in one of the countries and has income or gains arising in the other. A DTA allocates the taxing right over items of income and gains to one or other of the countries. Where, however, certain items remain taxable in both, the DTA will generally provide that the country of residence of the taxpayer will either exempt the income or gains from further taxation or, alternatively, give a credit against its tax for the tax paid in the other country.
Such sophisticated offshore tools as Cyprus IBCs or Mauritius offshore companies are purchased by our clients to use to their benefit the exemptions of DTAs, respectively Cyprus or Mauritius have entered into. British Private Limited Companies and Delaware Corporations and Limited Liability Companies use relevant DTAs as well when applicable.


Double Taxation Treaty
See Double Taxation Agreement (DTA)


European Union (EU)
An intergovernmental organization, The European Union (EU) was founded in 1951. At the time being its members are Belgium, Germany, France, Italy, Luxembourg, the Netherlands, Denmark, Ireland, the United Kingdom, Greece, Spain, Portugal, Austria, Finland and Sweden. The following twelve countries have applied for the membership in the EU: Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia.
The main objectives of the EU are to promote single economic market, assert its identity in the international relations, and introduce European citizenship, currency (EURO) and law.


Exchange Control
Imposed by government limitation on transactions in foreign currency.

Financial Action Task Force on Money Laundering (FATF)  
The intergovernmental organization established by the G-7 Paris Summit in 1989. The principal aim of FATF is to identify the technology of money laundering, suggest the ways of its elimination, and monitor the anti-money laundering actions of the concerned countries.


Financial Stability Forum (FSF)
The FSF was convened on 14 April 1999 in Washington. Its members are the G-7 countries, Australia, Singapore, Hong Kong, Netherlands, and some international financial and regulatory institutions. It's an international watchdog identifying the crucial flaws in the international financial system, which may lead to regional or worldwide crises. Another tasks of the organization are to develop financial crises prevention policy and oversee its implementation.

 

Forced heirship
A provision of the law stipulating how a natural person may bequeath (pass on) his or her assets to another persons after his/her death.
Private Foundations or Trusts are used as lawful designs to avoid or circumvent undesirable forced heirship procedures.


Fortune 500
A listing of the top 500 U.S. companies, ranked by revenues, in accordance with Fortune magazine's list.


Founder (of a Private Foundation)
The person who actually creates a Private Foundation by transferring some property in its assets.


Foundation Council
The top administrative body in a Private Foundation providing administration and management of the foundation's assets and their further distribution among the beneficiaries.

 

G-7
A forum of the seven most economically powerful countries of the world: Canada, France, Germany, Italy, Japan, United Kingdom, and USA.


Goodwill
An intangible (immaterial) asset representing the value of long-term clientele, solid reputation among partners and customers, and connections.


Grantor
See Settlor .


Holding
A parent company which holds shares (interest) in another company or other companies.


Holding company
See Holding.


Immigration Planning
The legal steps a natural person plans and/or undertakes in view of his/her (and family members') future immigration. IP often includes tax planning and asset protection components.


Incorporation
The legal process of establishing a company (corporation), which entails submitting of definite documents to the authorities of a relevant jurisdiction, their further registration and issuing by the authorities of proper documentary evidences of the company's (corporation) legal existence (e.g., Certificate of Incorporation).


International Business Company (IBC)
A typical company of that type can carry on business outside its jurisdiction of incorporation, have meetings of its Directors and/or Members anywhere in the world, keep as many bank accounts as it desires anywhere in any currency, issue bearer shares . An IBC is exempted from all or the most part of taxes in jurisdiction of incorporation. As a rule such companies have low profile owing to the lack of requirements to register their Directors' and Shareholders' details with the local authorities.


Jurisdiction
Within the context of our site it's a country or a territory, where we provide incorporation and other services. Each such jurisdiction adopted its peculiar legislation which concerns incorporation/formation of offshore legal entities and their further activities.


Jurisdiction of the incorporation/formation
A jurisdiction where the company or corporation was incorporated/formed.


Legal Entity (Legal Person)
A legal entity (LE), e.g., an International Business Company, Delaware Corporation or Limited Liability Company , exists independently from its members , founders or shareholders . Generally, the liability is limited to the assets a LE owns, and the personal property of the members, founders or shareholders may not be seized by the creditors. A LE has many features of a natural person , e.g. it may hold property, suit other legal and natural persons, and be responsible in a court for its acts and deeds.


Liability
Any current or future legal obligation, e.g. debt, duties under a contract or a position.


Limited Liability
Within the context of our site it's limited liability of shareholders or members in a Company Limited by Shares or Company Limited by Guarantee.


Member
A holder of an interest in a Delaware Limited Liability Company or same as a shareholder in some other types of legal entities .


Minor
A person who has no attained full age under the law of his domicile.


Money Laundering
The process and technology of disguising, investing, and/or hiding the proceeds of criminal activities coupled with their "legitimization".


Natural person
An individual as a subject of legal and/or business relations.


Nominal Director
A Director holding its position only formally, while the real powers on administering and managing the company rest with the Beneficiary or its agent. See more details in OFFSHORE TOOLS - NOMINEES .


Nominal Shareholder (Member)
A shareholder holding the shares only nominally. At any point, the Nominal Shareholder will transfer the shares he/she formally holds to the person(s) listed in the appropriate instruction from the Beneficiary . See more details in OFFSHORE TOOLS - NOMINEES .


Nominees
General term for Nominal Directors, Nominal Shareholders (Members), and other nominal persons in an offshore legal entity.


Non-resident
In relation to a jurisdiction: a legal or natural person not having its domicile and/or place of business in the given jurisdiction.


Non-resident alien (NRA)
The person who is neither a resident in nor a citizen of the country, esp. in the USA.


Offshore
Managed, registered, located, conducted, or operated in a foreign country, especially when it is arranged for the tax-planning or asset-protection purposes.


Offshore Financial Center (OFC)
A jurisdiction , providing some or all of the following services: low or zero taxation; moderate or light financial regulation; banking secrecy and anonymity.
Please see OFFSHORE FINANCIAL CENTERS for description of the OFCs carefully selected for our precious clients.


Operating Expenses
The amount paid for assets maintenance or the day-to-day costs of running and maintaining a business.


Organization for Economic Cooperation and Development (OECD)
At the present time there are 29 countries in the OECD. They share the principles of the market economy, pluralist democracy and respect for human rights. The original 20 members of the OECD are located in Western countries of Europe and North America. Next came Japan, Australia, New Zealand and Finland. More recently, Mexico, the Czech Republic, Hungary, Poland and Korea have joined. The official goals of the organization are to help "member countries promote economic growth, employment and improved standards of living through the coordination of policy" and to encourage "the sound and harmonious development of the world economy and improve the lot of developing countries, particularly the poorest." 


Parent Company
A company in relation to its subsidiaries, branches, or daughter companies.


Partnership
A for-profit organization in which two or more persons (partners) furnished a part of the capital and labor. They share agreed proportion of profit and losses. A typical partnership does not create a legal entity separate from the partners, and is tax transparent. On the other hand, the partners' liability is not limited and may extend to their personal property.


Private Foundation
In the context of our services, it is a Panamanian legal entity combining the features of a trust and an International Business company . Similarly to a Trust, the purpose of a Private Foundation is to preserve the assets, donated by the Founder and some third persons, for the benefit of and distribution among the Beneficiaries. Akin to an International Business Company, a Private Foundation has a distinctive legal personality and tax-exempt status. PF is an effectual offshore asset protection tool.


Private unlimited company
A company with unlimited liability of its members .


Protector
The Protector is "a watchdog" overseeing the proper fulfillment by the Foundation Council of all instructions of the Founder.


Public limited company (PLC)
The shares of such company may be offered for sale to the general public and members' liability is limited to the amount unpaid on shares held by them.


Registered Agent
A registered agent represents an International Business Company , Panamanian Private Foundation , Delaware Corporation or Limited Liability Company in the jurisdiction of incorporation. A Registered Agent normally provides a Registered Office address, provides liaison with local authorities and receives all legal and tax papers and/or notices addressed to the underlying company, corporation or foundation.


Registered Office
It is the official address of a company to which authorities, courts, and suitors send their notices, letters and reminders. The Registered Office (RO) can be anywhere in the jurisdiction of the incorporation. It must always be an effective address for delivering documents to the company. The RO is provided by a Registered Agent.


Resident
In relation to a jurisdiction: a legal or natural person having its domicile and/or place of business in the given jurisdiction.


Securities
Shares, bonds, and other instruments, which give evidence to and assure the fulfillment of an obligation. Securities are traded in financial markets. Having opened an Offshore Brokerage Account you may buy and sell securities via the Internet.


Settlor
The person who actually creates a trust by donating property to be managed and administered by a trustee but from which all benefits and profits would go to a beneficiary.


Share
Part ownership in a company limited by shares.


Share Certificate
A document signifying part ownership in a company. Same as a "Stock Certificate". 


Shareholder
The owner of one or more shares in a company.


Shelf Company
A company , which has been incorporated by us in an Offshore Financial Center . It is "pure" in a sense that it has never entered into any commercial or other activities and/or obligations. The client him/herself appoints the initial Director(s) of the SC and decides on issuance of the shares.
We always keep in stock several Shelf Companies available for the immediate disposal by our precious clients.


Shipping Company
A company, which owns a ship or ships. One of the preferable jurisdictions for registration of SC is Cyprus .


Subsidiary (Subsidiary company)
A company with a majority of its shares being owned by another company.


Tax haven
A jurisdiction where local legislation provides for considerable tax exemptions for nonresidents.
See as well OFFSHORE FINANCIAL CENTERS for the details on such handpicked jurisdictions.


Tax planning
The legal steps a natural or legal person plans and/or undertakes to minimize lawfully his/her/its tax liabilities. Such offshore tools as International Business Companies , Delaware Corporations and Limited Liability Companies, and Trusts are being used by our clients for the above purpose.


The Statute of Elizabeth
It was enacted in 1576 by the Queen Elizabeth I. The Statute voids a transfer to a trust if the transfer could be interpreted as intention to hinder, delay, or defraud creditors, including potential future creditors. Some Offshore Financial Centers (i.e. Nevis ) declared The Statute of Elizabeth null and void in their trust legislation.


Trust
A legal design placing ownership of property in the name of one person, called a trustee, to be held by the trustee for the use and benefit of some other person, called a beneficiary. In some jurisdictions (i.e. Nevis ) Trust Law permits the Settlor and Beneficiary in a Trust be the same person.


Trust Company
A company properly licensed by the authorities to provide services of a Trustee.


Trustee
The person who administers and manages the property transferred in a Trust. This person becomes a legal owner of the property. In due time, a Trustee distributes the property and/or relevant earnings under the trust among beneficiaries.


Unlimited Company
See Private unlimited company .

 

 

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