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Offshore Glossary

Term Definition
Apostille

The Apostille (Hague Convention Abolishing the Requirement for Legalisation for Foreign Public Documents, 1961) is a faster way of authenticating documents. It is an international certification comparable to a notarisation in domestic law, and normally supplements a local notarisation of the document. In the USA, it is normally obtained through the Secretary of State Department in your home state or, in the UK and Canada, through the Foreign Office.

Articles of Incorporation

The Articles of Incorporation is the document which establishes the corporation and contains basic information such as the name, share structure, and purpose of the corporation.

Asset Protection

Asset Protection is a term used to describe the concept of legally transferring your assets into a legal entity which will protect them from attack by frivolous litigation, seizure from government, attack from an estranged spouse - in fact anything which may threaten your hard earned wealth.

Bank Secrecy
A legal principle in some jurisdictions under which banks are not allowed to provide to authorities personal and account information about their customers unless certain conditions apply (for example, a criminal complaint has been filed[1]). In some cases, additional privacy is provided to beneficial owners through the use ofnumbered bank accounts or otherwise. Bank secrecy is prevalent in certain countries such as Switzerland, Lebanon, Singapore and Luxembourg, as well as offshore banks and other tax havens under voluntary or statutory privacy provisions.
Bearer Shares

Bearer share certificates do not indicate the name of the owner. The certificate is endorsed in blank such that the person having physical possession of the document is the owner. Bearer shares facilitate the transfer of assets because transfer of ownership is accomplished simply by the transfer of the certificate. As a rule, we do not advise the use of bearer shares because of its negative connotation in the eyes of judges and lawmakers.

By-laws

The By-laws, or in some jurisdictions "Articles of Association", are rules the corporation creates for its shareholders, officers, and directors. By-laws are adopted by the Board of Directors as one of the first organizational steps in setting up a corporation. Upon instruction, we can adopt a standard set of By-laws for a new corporation. Unlike Articles of Association, By-laws are usually maintained internally but may be publicly filed if requested.

Human Development Index

The Human Development Index (HDI) is a composite statistic used to measure development. By integrating life expectancy, education attainment, and income indicators, countries are ranked into four tiers of human development. The education component is comprised of two indicators: expected years of schooling and mean years of schooling. The income part is calculated by GNI per capita (PPP$). The index has been continually increasing the number of countries it covers in its report; in 2013, the index included 187 countries.

Index of Economic Freedom
The Index of Economic Freedom (IEF) is an annual composite indicator that measures 10 quantitative and qualitative factors, grouped into four major pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). The index is published annually by The Heritage Foundation (prominent Washington think tank) and The Wall Street Journal.
Nominee Director

A nominee director is a third party that is officially registered as the administrator of an offshore corporation instead of its real beneficial owner or manager, who may then remain anonymous. The nominee director is normally provided by the agency responsible for the formation of the company, or by the registered agent. It can be either an individual or legal person, i.e. another company specifically incorporated for this role. It is common to use the nominee director in conjunction with a nominee shareholder, since this way the client does not appear either as owner or as manager of the company.

Because the main purpose of the nominee director is to protect the client's privacy, their function in most cases is merely formal. That is, they appear to be in charge on the documents of the company, but they do not perform any executive function and are merely required to sign certain documents, including the minutes of the annual meeting of the board of directors or some extraordinary resolutions taken at the request of the client. All the operating functions are usually performed by the real owner, to whom the nominee director has given a general power of attorney before a notary, entitling them to perform the daily activities of the company. This includes opening and managing bank accounts, signing contracts, etc... Because of their lack of executive power, these nominee directors are popularly known as straw men.

Nominee Shareholder
A nominee shareholder is a person or entity listed as the holder of the securities or shares of an offshore corporation rather than its actual owner, which allows them to remain anonymous. This can be a natural person or another offshore company that is exclusively incorporated to be used for this purpose and is usually provided by the registered agent or the formation agency. In the second case, we are talking about a corporate trustee.

Because the nominee shareholder is included in all the documents of the company, it is necessary to take additional steps to ensure the rights of the real or beneficial owner. This can easily be solved by means of a document called declaration of trust. It is a private contract in which the nominee shareholder recognizes holding in their custody the company´s securities, although they actually belong to their client.
Offshore Corporation

A corporation is an entity recognized by law as a separate “person” with limited liability. A corporation has the option to sell shares, the right to sue and be sued, and has perpetual existence. An offshore corporation is one that is established in a low-tax jurisdiction and outside of the owner(s) country of residence.

Re-invoicing
Re-invoicing is the use of a tax haven corporation to act as an intermediary between an onshore business and his customers outside his home country. The profits of this intermediary corporation and the onshore business allow the accumulation of some or all profits on transactions to be accrued to the offshore corporation. It should be noticed that a similar structure can be utilized by an importer.
Registered Agent

A Registered Agent is required to ensure that the corporation has an assigned representative at a known address to receive all service of process (legal notices) on its behalf. The Registered Agent forwards these documents to the address of record of the corporation.

Registered Shares

Registered share certificates indicate the name of the owner on the document. As a rule we use the Panamanian Foundation to be the owner of the share certificates in a majority of the incorporations that we do. The name of the shareholder is also recorded in the internal corporate records of the company. Although the registered owner is recorded in the corporation's internal records, no public registry of shareholders is maintained. The share registry is an internal corporate document available only to directors, officers and shareholders, under conditions specified in the jurisdiction's corporate statute.

Shelf Companies

Shelf Companies are ready-made, never used corporations that have been created to meet a client's immediate needs.