IBC FAQ
 
By:
Cambridge Trust
Date:
05/15/2000


IBC FAQ


International Business Companies
Frequently Asked Questions
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What Is An International Business Company?
Why Should I Buy An IBC?
What Are the Main Advantages Of Moving Assets Offshore?
What Can My Company Do?
How Does A Offshore Company Compare To A Local Co?
What Countries Should I Consider For An IBC?
What Can I Name My Company?
What Is The Registered Office?
What Is The Registered Agent?
What Kinds of Shares Are There?
How Should The Shares Be Held?
What Is A Nominee Director?
What Are The Objects And Powers Of A Company?
What Is The Memorandum And Articles of Association?
How Does A Death Affect My IBC?
Is It Legal To Own An IBC, Bank Accounts, & Investments?
What Position Should I Hold?
Can The IBC Open A Bank Account In Its Name?
Can The IBC Open A VISA Or MasterCard In Its Name?
Can An IBC Buy Stocks Or Funds In Its Own Name?
Why Should I Deal With A Canada Offshore Specialist?
Can I Deal With My Own Lawyer?
Can Your Records Be Seized In Canada or the USA?
Why Should I Choose Belize?
What About Costs?
How Do I Begin?

What Is An International Business Company?
It is a separate legal entity similar to a domestic incorporated company, created under the authority of a statute. The primary
difference is the allowance in certain Countries of a tax-exempt status, in order to attract new business to their otherwise
remote location. A Company is a separate "person" for tax reporting purposes, so is a Foundation, but a Trust is not, a Trust
is an agreement.


Why Should I Buy An IBC?
An IBC is a globally recognized legal entity or form of doing business, which is treated as a separate "person" allowing the
Company to be responsible for it's own risks and rewards. The limiting of risk is a key factor with most experienced
business people, and the unlimited life-span of a company makes it a great vehicle for passing your successful enterprise
on to your family.


What Are the Main Advantages Of Moving Assets Offshore?
There are many advantages to moving assets offshore, some of these are:

Asset Protection - To secure against future claims such as judgment, divorce proceedings, bankruptcy, creditors and
litigation.
Estate Planning - Family and Protective Trusts for accumulation of investment income and long-term benefits for
beneficiaries on a favorable tax basis (without inheritance, income, or capital gains taxes);
Confidentiality - From claimants, ex-spouse, competitors, and other parties from whom you wish to keep your business
interests private; and
Reduction of Tax Liability - Through International Tax Planning - a foreign jurisdiction can offer unparalleled opportunities for
reducing your tax liability.


What Can My Company Do?
Your IBC can act in many ways, for example it can:

Open a bank account, make deposits and transact globally.
Manage offshore investments such as term deposits, bonds, stocks, mutual funds, etc.
Provide consulting, management, or professional services (and hire you).
Own a Corporate credit card, and allow you to cover your legitimate expenses using it.


How Does A Offshore Company Compare To A Local Co?

As you can determine from the chart below, it is wise to establish your company in a Country that has more favorable rules
than your local Government imposes.

Features Local Offshore
Tax exempt in Country of Incorporation û ü
No annual tax return required û ü
Shareholders can remain confidential û ü
Directors can remain confidential û ü
Corporate Directors and Officers Allowed û ü
Directors may Reside Anywhere û ü
Bearer Shares are Allowed û ü
Can be Exempted from holding Meetings û ü
Recognized Locally and Internationally ü ü
Can you get ahead operating this way? û ü




What Countries Should I Consider For An IBC?
There are over 65 countries that are trying to attract foreign investment by offering favorable rules to new companies. You
should narrow down the selection by insisting that English is the main language, that they follow British Common Law, and
that they are politically stable and Independent from your home Country. Your choice should be within 2-3 hours of your time
zone (so you don't have to set your alarm clock to call the Bank), which narrows the field down to Bahamas, Belize, BVI,
Nevis, and Turks & Caicos. With recent news reports that the US and UK governments are attempting to lift the privacy of
some countries, please contact us for the up-to-the-minute ranking of the best locations for your needs.


What Can I Name My Company?
Ideally, your company would have an alphanumeric random name, which is anonymous, and extremely private (i.e.
KZDL-8251 Inc). Nearly all Countries insist on a more identifiable and orthodox name for registration, such as Jones
Investments Inc, because it makes easier to find you. We recommend you put your privacy ahead of your desires to be
famous and well known. The government registrar can search specific company names and reserve, if available, however
pre-registered anonymous names will save you time and money. If you used a lawyer at the time of selecting your company
name, only the two of you will ever know the identity of the founder (you), and the lawyer is bound to privacy by Solicitor/Client
privilege.

You must use an approved designation, such as: Inc.; Corp.; Ltd.; S.A. (Society Anonyme), A.G; etc. You are not allowed to
use anything that resembles a company requiring a different class of license to operate such as: Trust; Bank; Insurance Co.
or implying connection to Royalty or Government;


What Is The Registered Office?
There is a standard requirement that a physical address be given in the Country of Incorporation that represents your
Company. Typically this is a lawyer, accountant, or preferably a Chartered Bank.


What Is The Registered Agent?
It is required that a local citizen of that jurisdiction act as the person capable of receiving any notice to your Company.


What Kinds of Shares Are There?
There are two categories of shares that may represent the ownership of your Company. The tradition type we have
domestically is the Registered Share, which is available for view at the Government Registrar. The more popular (for tax
saving and privacy purposes), is the Bearer Share, which is not registered. The main advantage of Bearer Shares, is that
there exists no record of who the shareholder(s) are. The ownership of the Company rests with who has possession of the
Bearer Share Certificate.
To keep your Company a true foreign entity, you should not hold your Bearer Shares at home. It is best to keep the Bearer
Shares offshore, and preferably in the name of your Trust or Foundation so any enforcer can't argue that you are the
beneficial owner by the fact you hold the shares or the control. Alternatively, the Trustee could use a private safeguarding
service, that only you have access to the Bearer Shares. Never leave them in a safety deposit box at a bank.

How Should The Shares Be Held?
The shares should be held in the name of an entity, best in a Charitable Foundation's name, not in your personal name or at
your home. This is achieved by establishing a Foundation, and then an offshore company. You then makes a disposition of
assets to the Foundation, which in turn capitalizes the company with the assets in exchange for 100% of the shares of the
company. The Foundation thus becomes a 100% shareholder of the company and appoints a signing officer of the
company. This maximizes flexibility and may enable the Founder to exercise a greater degree of control over the
administration of the assets, and does not require the Founder to rely wholly upon the fiduciary duties of the Trustee. The
use of an IBC and a Charitable Foundation can form a powerful combination of flexibility, efficiency and financial privacy.
back to the top


What Is A Nominee Director?
This is a foreign professional you elect (hire) to serve as the figurehead of your Company. Their name would appear in most
documents in place of yours to avoid being directly connected to the management of the company. The nominee Director
holds the Bearer Shares, since their name is used in all correspondence and obligations for the company, they need to
know that someone is not out there putting the shares at risk in some way. Ideally, you would have a second foreign
nominee and be the third signatory, (a signing officer) so that any two of three can sign for all transactions, while not being
able to exert complete control for tax purposes. A limited Power Of Attorney (POA) can also be used to grant a foreigner or
two authority to sign on your behalf, while limiting their ability to encroach on capital.


What Are The Objects And Powers Of A Company?
The Memorandum of Association will generally and specifically categorize the acts your Company may engage in. This will
typically include pages of descriptions relating to buying, selling, trading, holding, investing, services, and many other
purposes. Ideally your Company may engage in any activity that is not specifically prohibited under the law for the time being
in force in that Country. Exclusions are listed, as mandated by the laws of that Country.


What Is The Memorandum And Articles of Association?
It is the written document, which is filed with the Government registrar detailing the operating parameters of a newly formed
and incorporated company. The Memorandum and Articles of Association (M&AA), define the rules by which the Company
can exist, function, and change. Just as your Company can be governed by the laws of your Province, so to can you choose a
"tax-haven" jurisdiction that has more accommodating and business friendly laws to operate under. Contents of a
Memorandum may vary greatly from case to case, the necessary features are:

1.Naming the Company.

2.Defining the essential elements of a Registered Office, and a Registered Agent.

3.Defining the Company's powers and restrictions.

4.Describing the type of shares issued, Registered or Bearer shares.

5.Describing how meetings of members may happen.

6.Defining how Voting and Proxies will be carried out.

7.Defining the powers and proceedings of Directors and Officers.

8.Defining how Company business is run on a day to day basis.

9.Defining how Dividends, Audits, and Notices are issued.

10.Describing how changes are done through Amendments and Resolutions.


How Does A Death Affect My IBC?
In order to keep from having any disruption of the management of the company when a key person dies, you need to have a
successor named in advance. A good lawyer will prepare a minute, to be adopted at a meeting that appoints a particular
person to succeed the named individual in the event of their death. By having this advance minute established, the control
passes immediately to the successor, in the unfortunate event of the death of a Director or Shareholder. A Letter of Wishes
is another method of letting the Trustee know your desires to appoint a certain successor. We can provide a standard
wording for appointing a successor, upon request.


Is It Legal To Own An IBC, Bank Accounts, & Investments?
Absolutely, because Canada encourages International trade and investment, there are few restrictions on residents doing
business or having bank accounts in other countries. Offshore investment vehicles are used every day by sophisticated and
knowledgeable high net-worth individuals and corporations all over the world. However, Revenue Canada wants you to
report your world-wide income, and any interest you have in an offshore entity. Ask for our Reporting Requirements report, to
find out more regarding your obligations as a Canadian resident. Be sure to consult with a Canadian taxation professional,
to understand your reporting requirements and any exemptions to reporting that might be available.


What Position Should I Hold?
We recommend you have the least involvement possible with the company, under an Independent Contractor Agreement
with the IBC (as a financial advisor, or...?). With a properly prepared and valid agreement to work for the company, you can
receive income, and claim legitimate expenses to your discretionary advantage. It is best that you keep as low a position as
you can, while still being able to influence bank transactions. Better to be the consultant than the CEO when it comes to
paying income tax.

Can The IBC Open A Bank Account In Its Name?
Yes, a Canada Offshore Services IBC can open a private numbered bank account anywhere on this planet with relative
ease, with very little personal disclosure. An opening deposit of $1000 is the minimum requirement, and a set-up fee of
$200. You can access your account by wire transfers, bank drafts, a Company check-book, or a Corporate credit or debit
card used for purchases or cash at an ATM machine.


Can The IBC Open A VISA Or MasterCard In Its Name?
Yes, we can provide an anonymous Corporate credit card in the name of your private numbered account issued by a leading
Chartered Bank for a set up fee of $300. You will secure the card with a term deposit at 1.5 times the desired credit limit, with
a minimum of $2500 ($3,750), and up to a maximum of $25,000 US. These cards are acceptable anywhere in the World.


Can An IBC Buy Stocks Or Funds In Its Own Name?
Yes, we have an advanced on-line brokerage service that you can transact and monitor from your home computer using our
software and your internet access account.

Why Should I Deal With A Canada Offshore Specialist?
It is best to deal with an International Financial Planner or Litigation Lawyer who lives in North America to get the most
reliable and up-to-date advice. Any worthwhile foreign practitioner will have you sign a release stating that they are not
qualified to give you counsel on tax or financial matters in your country. If they don't, you would have a case against them,
unless they don't care because they figure you won't ever pursue them in their courts located thousands of miles away. Every
week we hear from individuals who were sold an illegal structure by a law firm in the Caribbean, and found out latter that
they wasted their money on something not up to current reporting requirements here at home.

Can I Deal With My Own Lawyer?
Yes, we will work with most open-minded lawyers. You would confirm your desire to retain counsel prior to the creation of
your IBC, by faxing us their complete address. We will contact them on your behalf, with instructions on how to proceed. The
lawyer purchases the IBC and Trust from Canada Offshore, and adds his legal charges for hourly services performed, which
will include some disclosure about your tax reporting requirements. You may elect to operate entirely through your legal
counsel, having them carry out all of your transactions so that you have the extra privacy protection of Solicitor/Client privilege.
Don't worry if you can't find an eager lawyer, there is only a handful of lawyers who practice in Offshore every day. Our
experience is they can be very negative if Offshore is not within their practice. (A fear of saying something favorable when
they could be wrong). We can refer you to excellent legal counsel, if you wish to find someone experienced with Offshore
Finance, Tax, and Income reporti
ng requirements.

Can Your Records Be Seized In Canada or the USA?
First, we do not do anything unlawful that would warrant a seizure. Second, we practice an over abundance of security and
privacy, including PGP data encryption, digital and paper shredding, and no storage of client names outside of our law office
files. All data that comes to us by E-mail, Web Form, or Fax, comes into a secured computer, into a PGP Disk encrypted
container, and is either safely wiped 8 times or backed up on PGP encrypted CD-ROMs for safe offshore storage. The
encryption key requires a lengthy pass-code, half known by a foreign Trustee, who has no reason to cooperate with our
courts, and is under orders to never disclose their key in the event of a duress occasion. Canada Offshore will fully
co-operate with a local court to avoid being in contempt, but is unable, within our own powers, to open documents that have
multiple key requirements.

Why Should I Choose Belize?
Belize meets all the basic requirements of a preferred Tax Haven for Americans and Canadians:

Independent Country (Formerly British Honduras) Member of the British Commonwealth.
English is the main language (only one in Central America).
Laws are based on British Common Law (Like Canada).
No currency exchange controls. (US Dollar account are still safe, unlike other areas)
Has a Bank Act, which provides for maximum privacy, by threat of jail and heavy penalties.
Has no tax treaty with Canada or the USA. (Tax evasion is not a crime in Belize).
Was intentionally created as a financial tax haven, not by accident or as a sideline to tourism.
Has not signed the US. Mutual Legal Assistance Treaty (only CarriCom Nation that has not).
Is a desirable place to visit or retire. United Nations rated Canada #1, US #2, and Belize #3.
You can drive there from here. (2 hours south of Cancun, on the East Caribbean coast).
We know of no other jurisdiction that has proven that it will back up their "paper and ink" with the strength demonstrated
recently by the Supreme Court of Belize which defended their Trust Act of 1992 from the mighty US Government regulator, the
SEC. The Companies Act of Belize are the most modern and most suitable in today's worldwide complex tax and political
environment. We do use other jurisdictions, such as the Turks and Caicos Islands, to diversify a client wishing a
multi-jurisdiction maximum privacy approach.


What About Costs?
Costs vary, depending on your choice of jurisdiction, and any optional services that may be suitable for your needs such as a
nominee Director. A fully functional private-numbered IBC begins at only $1950 USD.


Guaranty Trust Ltd. In Switzerland investigates and publishes an annual report, rating World Wide Tax Havens under the
following categories.

# - CATEGORY - WEIGHT - MAX POINTS

1 Codified Bank Secrecy +5 +5
2 Bearer Shares +5 +5
3 Nominee Shareholders +3 +3
4 Reporting of Accounts -2 +0
5 English Common Law +5 +5
6 Accessibility +1 +1
7 Communications +5 +5
8 Tax Treaties + or -5 +5
9 Favorable Court Decisions (Secrecy) +5 +5
10 No Exchange Controls +5 +5
11 English Language Used +3 +3
12 Major Banks Available +3 +3
13 Government Stability +3 +3
14 No Taxation +5 +5
15 Low Taxation + or -5 +0
16 Change of Situs (Cuban Clause) +3 +3
17 Annual Tax Return Required -3 +0
18 True Identity of Beneficial Owner -5 +0
19 Practical Usage + or -5 +5
20 Numbered Accounts Available +3 +3

TOTAL COMPOSITE RATING +64


Results Of Top 10 Tax Havens -1998

Belize @62
Nevis @59
Liechtenstein @53
Panama @51
Cayman Isles @49
Bahamas @48
St. Vincent/Grenada @48
Bermuda @48
British Virgin Isles @42
Turks & Caicos Isles @41
*NOTE: Until Belize, not Tax Haven had ever cracked a rating of 60.


Belize Court Makes Landmark Decision Protecting Privacy
Belize City, Friday, January 20, 1995


In a landmark decision asserting Belize's sovereignty as an offshore financial jurisdiction, the Supreme Court of Belize
upheld the country's confidentiality laws by revoking a previous court order set in motion by the Securities and Exchange
Commission of the United States requesting that confidential documents, belonging to Swiss Trade and Commerce Trust,
Ltd., be handed over to them.
In the case, Securities and Exchange Commission (SEC) vs. Swiss Trade and Commerce Trust, Ltd., Banner Fund
International, Lloyd Winburn et al, Supreme Court Justice Troadio Gonzalez ruled that documents held by the Belize court
belonging to Swiss Trade and sought by the SEC, be immediately returned to Swiss Trade and Commerce Trust, Ltd.
Lawyers for Swiss Trade said that what this means for Belize is that this aspect of confidentiality, which is an important
feature of the offshore industry, has been upheld. "What this means is that any party who seeks to destroy the concept of
confidentiality would have to contend with our system, which has demonstrated its ability to uphold the relevant laws,"
Attorney Oscar Sabido said.
The decision is expected to have major international repercussions as the world financial community looks to Belize and its
new offshore services industry. "It is certainly a shot in the arm of the offshore industry because of the fact that it is an
industry which is just beginning," Sabido said. A country's ability to assert its sovereignty without the interference of outside
forces is a major deciding factor in choosing a place to invest and protect personal property.
When asked for his comment related to the decision, Lloyd Winburn, Director of Swiss Trade & Commerce Trust, Ltd., in
Belize, stated, "The Court's decision confirms our reasons for establishing our company in Belize originally. The Law related
to confidentiality has been tested and found to be not lacking clarity and strength. Any other ruling by the Court would have
sent a signal throughout the financial world that Belize could not be trusted to protect assets, provide confidentiality of
transactions or otherwise serve the needs of those who seek to do business away "From their home jurisdiction."
The decision clearly shows that the SEC stepped out of bounds in trying to obtain confidential information, the matter having
been urged on both sides by learned Queen's Council.
The case arose after the SEC [bureaucrats] appeared at Swiss Trade's office on March 3, 1994 with the expectation that they
would be able to just take the files and leave the country with them, with no regard whatever to Belizean law. The quick
reaction of company employees prevented any further disregard for the law on the part of the SEC [terrocrats] and their
Belizean lawyer, Eamon Courtenay, who previously had been the lawyer for Swiss Trade.


Source:
Cambridge Trust
URL:
http://www.cambridge-trust.com
Reports:
Pirates of the Caribbean: Offshore Traps
Global Village Idiot's Guide


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