The term "offshore company " or "offshore corporation" is used in at least two distinct and different ways. An offshore company may be a reference to:
58-426: A company , abbreviated as co. , is a legal entity representing an association of legal people, whether natural , juridical or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared goals. Over time, companies have evolved to have the following features: "separate legal personality, limited liability, transferable shares, investor ownership, and
116-456: A legal fiction not to be contracts due to the absence of promises of future action. A minor may not disavow such a trade. Generally, the courts base their determination on whether the minor, after reaching the age of majority, has had ample opportunity to consider the nature of the contractual obligations he or she entered into as a minor and the extent to which the adult party to the contract has performed. As one court put it, "the purpose of
174-492: A " corporation , partnership , association, joint-stock company , trust , fund , or organized group of persons , whether incorporated or not, and (in an official capacity) any receiver, trustee in bankruptcy, or similar official, or liquidating agent , for any of the foregoing". Less common types of companies are: When "Ltd" is placed after the company's name, it signifies a limited company, and "PLC" ( public limited company ) indicates that its shares are widely held. In
232-404: A business entity becomes insolvent , an administrator , receiver, or other similar legal functionary may be appointed to determine whether the entity shall continue to trade or be sold so that the creditors may receive all or a proportion of the money owing to them. During this time, the capacity of the entity is limited so that its liabilities are not increased unreasonably and to the detriment of
290-597: A company is a body corporate or corporation company registered under the Companies Acts or under similar legislation. Common forms include: In the United Kingdom, a partnership is not legally a company, but may sometimes be referred to (informally) as a "company". It may be referred to as a "firm" . In the United States , a company is not necessarily a corporation. For example, a company may be
348-404: A disturbance in the functioning of, the mind or brain". Where an individual lacks capacity on grounds of mental illness or senility, a relative or other responsible person may obtain a lasting power of attorney to make decisions concerning the "personal welfare" of the person lacking capacity, the "property and [financial] affairs" of the person, or both. Questions as to whether an individual has
406-455: A fair opportunity to gain value. This system worked well until social and commercial mobility increased. Now persons routinely trade and travel across state boundaries (both physically and electronically), so the need is to provide stability across state lines given that laws differ from one state to the next. Thus, once defined by the personal law, persons take their capacity with them like a passport whether or however they may travel. In this way,
464-838: A jurisdiction is regarded as offshore is often a question of perception and degree. Classic tax haven countries such as Bermuda , British Virgin Islands and the Cayman Islands are quintessentially offshore jurisdictions, and companies incorporated in those jurisdictions are invariably labelled as offshore companies. Thereafter, there are certain small intermediate countries or areas such as Hong Kong , Singapore and Mauritius (sometimes referred to as "mid-shore" jurisdictions) which, whilst having oversized financial centres, are not zero tax regimes. Finally, there are classes of industrialised economies which can be used as part of tax mitigation structures, including countries like Ireland ,
522-552: A managerial hierarchy". The company, as an entity, was created by the state which granted the privilege of incorporation. Companies take various forms, such as: A company can be created as a legal person so that the company itself has limited liability as members perform or fail to discharge their duties according to the publicly declared incorporation published policy. When a company closes, it may need to be liquidated to avoid further legal obligations. Companies may associate and collectively register themselves as new companies;
580-428: A number of high-profile companies have ceased using offshore entities in their group structure as a result of public campaigns for such companies to pay their "fair share" of Government taxes. Detailed information in relation to the use of offshore companies is notoriously difficult to come by because of the opaque nature of much of the business (and because, in many cases, the companies are used specifically to preserve
638-427: A person will not gain or lose capacity depending on the accident of the local laws, e.g. if A does not have capacity to marry her cousin under her personal law (a rule of consanguinity ), she cannot evade that law by travelling to a state that does permit such a marriage (see nullity ). In Saskatchewan Canada, an exception to this law allows married persons to become the common law spouse of other(s) prior to divorcing
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#1732757903837696-529: A potentially penal status on the individuals affected. During times of war or civil strife, a state will limit the ability of its citizens to offer help or assistance in any form to those who are acting against the interests of the state. Hence, all commercial and other contracts with the "enemy", including terrorists, would be considered void or suspended until a cessation of hostilities is agreed. Loss of mental capacity occurs in individuals may have an inherent physical condition that prevents them from achieving
754-411: A role of protector to the weaker and more vulnerable members of society. In public policy terms, this is the policy of parens patriae . Similarly, the state has a direct social and economic interest in promoting trade, so it will define the forms of business enterprise that may operate within its territory, and lay down rules that will allow both the businesses and those that wish to contract with them
812-764: A situation where they can no longer pay their debts, they lose their status as credit-worthy and become bankrupt. States differ on the means whereby their outstanding liabilities can be treated as discharged and on the precise extent of the limits that are placed on their capacities during this time but, after discharge, they are returned to full capacity. In the United States, some states have spendthrift laws under which an irresponsible spender may be deemed to lack capacity to enter into contracts (in Europe, these are termed prodigality laws) and both sets of laws may be denied extraterritorial effect under public policy as imposing
870-531: Is a specific function of the Court of Protection , and all matters concerning persons who have lost, or expect soon to lose, mental capacity are regulated under the Mental Capacity Act 2005 . This makes provision for lasting powers of attorney under which decisions about the health, welfare, and financial assets of a person who has lost capacity may be dealt with in that person's interests. In Ireland,
928-431: Is often necessary to petition a court, such as a probate court , that the afflicted person lacks legal capacity and allow a legal guardian to take over their financial and personal affairs. Procedures and court review have been established, dependent on the area of jurisdiction, to prevent exploitation of the incapacitated person by the guardian. The guardian periodically provides a financial accounting for court review. In
986-413: Is often set at 21 years by U.S. state law . Some laws, such as marriage laws, may differentiate between the sexes and allow women to marry at a younger age. There are instances in which a person may be able to gain capacity earlier than the prescribed time through a process of emancipation . Conversely, many states allow the inexperience of childhood to be an excusing condition to criminal liability and set
1044-464: Is subject both the U.S. taxation and to financial regulation by the U.S. Securities and Exchange Commission . Another common characteristic of offshore companies is the limited amount of information available to the public. This varies from jurisdiction to jurisdiction. At one end of the scale, in the Cayman Islands and Delaware, there is virtually no publicly available information. But at
1102-505: The British Columbia Infants Act ( RSBC 1996 c.223) declares all contracts, including necessities and beneficial contracts of service, are unenforceable against an infant. Only student loans and other contracts made specifically enforceable by statute will be binding on infants in that province. In contracts between an adult and an infant, adults are bound but infants may escape contracts at their option (i.e.
1160-752: The British Virgin Islands , but the model was copied widely. However, in the early 2000s the OECD launched a global initiative to prevent "ring fencing" of taxation in this manner, and many leading jurisdictions (including the British Virgin Islands and Gibraltar ) repealed their International Business Companies legislation . But IBCs are still incorporated in a number of jurisdictions today including Belize, Seychelles, BVI Anguilla and Panama . Separately from IBCs, there are countries which operate tax regimes which broadly achieve
1218-463: The Criminal Law , the traditional common law M'Naghten Rules excused all persons from liability if they did not understand what they were doing or if they did, that they did not know it was wrong. The consequences of this excuse were that those accused were detained indefinitely or until the medical authorities certified that it was safe to release them back into the community. This consequence
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#17327579038371276-584: The Netherlands and particularly the United Kingdom , in commentary relating to corporate inversion and the use of British Overseas Territories for this purpose. Furthermore, in Federal systems, states which operate like a classic offshore centre can result in corporations formed there being labelled as offshore, even if they form part of the largest economy in the world (for example, Delaware in
1334-673: The Old French term compagnie (first recorded in 1150), meaning "society, friendship, intimacy; body of soldiers", which came from the Late Latin word companio ("one who eats bread with you"), first attested in the Salic law ( c. AD 500) as a calque of the Germanic expression gahlaibo (literally, "with bread"), related to Old High German galeipo ("companion") and to Gothic gahlaiba ("messmate"). By 1303,
1392-480: The United Kingdom operates on broadly similar principles in relation to taxation of companies. Separately, there are offshore jurisdictions which simply do not impose any form of taxation on companies, and so their companies are de facto tax-exempt. Historically the best example of these countries were the Cayman Islands and Bermuda , although other countries such as the British Virgin Islands have now moved to this model. These could arguably fit into either of
1450-428: The United States ). Historically, offshore companies were broadly divided into two categories. On the one hand were companies which were statutorily exempt from taxation in their jurisdiction of registration, provided that they did not undertake business with persons resident in that jurisdiction. Such companies were usually called International Business Companies , or IBCs. Such companies were largely popularized by
1508-517: The age of criminal responsibility to match the local experience of emerging behavioral problems (see doli incapax ). For sexual crimes, the age of consent determines the potential liability of adult accused. As an example of liability in contract, the law in most of Canada provides that an infant is not bound by the contracts he or she enters into except for the purchase of necessaries and for beneficial contracts of service. Infants must pay fair price only for necessary goods and services. However,
1566-425: The age of majority , marriageable age , voting age , etc. In many jurisdictions , legal contracts , in which (at least) one of the contracting parties is a minor, are voidable by the minor. For a minor to undergo medical procedure , consent is determined by the minor's parent(s) or legal guardian (s). The right to vote in the United States is currently set at 18 years, while the right to buy and consume alcohol
1624-713: The constitutive documents of incorporation. The general rule is that anything not included in the corporation's capacity, whether expressly or by implication, is ultra vires , i.e. "beyond the power" of the corporation, and so may be unenforceable by the corporation, but the rights and interests of innocent third parties dealing with the corporations are usually protected. In American law, limited liability companies (LLCs) are legal persons. Some legal scholars have argued that they can be used to give legal capacity to software programs , including artificial intelligence . In some states, trade unions have limited capacity unless any contract made relates to union activities. When
1682-413: The personhood itself in regard to an entity other than a natural person (in this sense also called legal personality ). Capacity covers day-to-day decisions, including: what to wear and what to buy, as well as, life-changing decisions, such as: whether to move into a care home or whether to have major surgery. As an aspect of the social contract between a state and its citizens , the state adopts
1740-564: The Assisted Decision-Making (Capacity) Act was passed in 2015. This Act addresses the capacity of people with intellectual disabilities. The general principles are set out in section 8 of the Act. Under Singapore's Mental Capacity Act 2008, "a person lacks capacity in relation to a matter if at the material time the person is unable to make a decision for himself or herself in relation to the matter because of an impairment of, or
1798-582: The Minors' Contracts Act 1987 as applicable in Singapore and in England and Wales provides that a contract entered into by a minor is not automatically unenforceable and that a "court may, if it is just and equitable to do so, require the [minor] defendant to transfer to the plaintiff any property acquired by the defendant under the contract, or any property representing it". If individuals find themselves in
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1856-456: The OAC must have a representative (registered agent) and office address (registered office) in the county of the incorporation. (4) The OSC must be managed and governed by (an employee of) a local trust or law office. (5) There is an instance of elements that benefit anonymity such as bearer shares and no or limited filing obligations. Although all offshore companies differ to a degree depending upon
1914-416: The afflicted person has prepared documents beforehand about what to do in such cases, often in a revocable living trust or related documents, then the named legal guardian may be able to take over their financial and other affairs. If the afflicted person owns their property jointly with a spouse or other able person, the able person may be able to take over many of the routine financial affairs. Otherwise, it
1972-811: The capacity to make decisions either generally or with regard to a particular matter or class of matters are generally resolved by a judicial declaration and the court making the declaration may appoint one or more individuals to act as deputies for the person lacking capacity. This sort of problem sometimes arises when people suffer some form of medical problem such as unconsciousness, coma , extensive paralysis , or delirious states, from accidents or illnesses such as strokes , or often when older people become afflicted with some form of medical/mental disability such as Huntington's disease , Alzheimer's disease , Lewy body disease, or similar dementia. Such persons are often unable to consent to medical treatment but otherwise handle their financial and other personal matters. If
2030-451: The common themes, a number of jurisdictions have also enacted special corporate provisions to try to attract business through offering corporate mechanisms that allow complex business transactions or reorganisations to occur more smoothly. Offshore companies are used for a variety of commercial and private purposes , some legitimate and economically beneficial, whilst others may be harmful or even criminal. Allegations are frequently made in
2088-502: The confidentiality of a transaction or individual). It is a commonly held view that most uses of offshore companies are driven by tax mitigation and/or regulatory arbitrage , although there are some suggestions that the amount of tax structuring may be less than commonly thought. Other commonly cited legitimate uses of offshore companies include uses as joint ventures financing SPVs , stock market listing vehicles, holding companies and asset holding structures, and trading vehicles. In
2146-418: The contract is voidable). Infants may ratify a contract on reaching age of majority. In the case of executed contracts, when the infant has obtained some benefit under the contract, he/she cannot avoid obligations unless what was obtained was of no value. Upon repudiation of a contract, either party can apply to the court. The court may order restitution, damages, or discharge the contract. All contracts involving
2204-477: The corporate law in the relevant jurisdiction, all offshore companies tend to enjoy certain core characteristics: The absence of taxation or regulation in the home jurisdiction does not exempt the relevant company from taxation or regulation abroad. For example, Michael Kors Holdings Limited is incorporated in the British Virgin Islands, but is listed on the New York Stock Exchange , where it
2262-474: The existing creditors. Offshore company The former use (companies formed in offshore jurisdictions) is probably the more common usage of the term. In isolated instances, the term can also be used in reference to companies with offshore oil and gas operations. In relation to companies and similar entities which are incorporated in offshore jurisdictions, the use of both the words "offshore" and "company" can be varied in application. The extent to which
2320-502: The first spouse. This law is not honored amongst other Canadian provinces. Standardized classes of person have had their freedom restricted. These limitations are exceptions to the general policy of freedom of contract and the detailed human and civil rights that a person of ordinary capacity might enjoy. For example, freedom of movement may be modified, the right to vote may be withdrawn, etc. As societies have developed more equal treatment based on gender, race and ethnicity, many of
2378-510: The infancy doctrine is to protect 'minors from foolishly squandering their wealth through improvident contracts with crafty adults who would take advantage of them in the marketplace. ' " In Singapore , while individuals under the age of 21 are regarded as minors, sections 35 and 36 of the Civil Law Act 1909 provide that certain contracts entered into by minors aged 18 and above are to be treated as though they were adults. Additionally,
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2436-488: The law does not generally allow any defense or excuse to be raised to any actions taken while incapacitated. The most generous states do permit individuals to repudiate agreements as soon as sober, but the conditions to exercising this right are strict. There is a clear division between the approach of states to the definition of partnerships. One group of states treats general and limited partnerships as aggregate. In terms of capacity, this means that they are no more than
2494-597: The legal context, the owners of a company are normally referred to as the "members". In a company limited or unlimited by shares (formed or incorporated with a share capital), this will be the shareholders . In a company limited by guarantee , this will be the guarantors. Some offshore jurisdictions have created special forms of offshore company in a bid to attract business for their jurisdictions. Examples include segregated portfolio companies and restricted purpose companies. However, there are many sub-categories of company types that can be formed in various jurisdictions in
2552-403: The normal levels of performance expected from persons of comparable age, or their inability to match current levels of performance may be caused by contracting an illness. Whatever the cause, if the resulting condition is such that individuals cannot care for themselves, or may act in ways that are against their interests, those persons are vulnerable through dependency and require the protection of
2610-581: The older incapacities have been removed. For example, English law used to treat married women as lacking the capacity to own property or act independently of their husbands (the last of these rules was repealed by the Domicile and Matrimonial Proceedings Act 1973 , which removed the wife's domicile of dependency for those marrying after 1974, so that a husband and wife could have different domiciles). The definition of an infant or minor varies, each state reflecting local culture and prejudices in defining
2668-870: The other end of the scale, in Hong Kong companies file annual returns with particulars of directors, shareholders and annual accounts. However, even in jurisdictions where there is relatively little information available to the public as of right, most jurisdictions have laws which permit law enforcement authorities (either locally or from overseas) to have access to relevant information, and in some cases, private individuals. In relation to flexible corporate law , most offshore jurisdictions will normally remove corporate fetters such as thin capitalisation rules, financial assistance rules, and limitations on corporate capacity and corporate benefit . A number have also removed or watered down rules relating to maintenance of capital or restrictions on payment of dividends . Beyond
2726-503: The press about offshore companies being used for money laundering , tax evasion , fraud , and other forms of white collar crime . Offshore companies are also used in a wide variety of commercial transactions, from generic holding companies, to joint ventures and listing vehicles. Offshore companies are also used widely in connection with private wealth for tax mitigation and privacy. The use of offshore companies, particularly in tax planning , has become controversial in recent years, and
2784-590: The previous two categories, depending on the fiscal point of view involved. To the Offshore Company definition, applies five (non-cumulative) limiting conditions: (1) The government in the country of incorporation does not levy an indirect tax on the OAC (however, the OSC must pay an annual fee to the government). (2) Separate laws and regulations apply. (3) The OSC doesn't have its own physical office (address), personnel, means of communication etc. This means that
2842-423: The reputation of the exchange or particular market of an exchange. Private companies do not have publicly traded shares, and often contain restrictions on transfers of shares. In some jurisdictions, private companies have maximum numbers of shareholders. A parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors;
2900-440: The resulting entities are often known as corporate groups . A company can be defined as an "artificial person", invisible, intangible, created by or under law, with a discrete legal capacity (or "personality"), perpetual succession , and a common seal . Except for some senior positions, companies remain unaffected by the death, insanity, or insolvency of an individual member. The English word, " company ", has its origins in
2958-450: The same effect: so long as the company's activities are carried on overseas, and none of the profits are repatriated, the company is not subject to taxation in its home jurisdiction. Where the home jurisdiction is regarded as an offshore jurisdiction, such companies are commonly regarded as offshore companies. Examples of this include Hong Kong and Uruguay . However, these tax regimes are not limited to conventional offshore jurisdictions:
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#17327579038373016-438: The second company being deemed a subsidiary of the parent company. The definition of a parent company differs by jurisdiction, with the definition normally being defined by way of laws dealing with companies in that jurisdiction. Legal personality Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity ), or altogether
3074-462: The state against the risks of abuse or exploitation. Hence, any agreements that were made are voidable, and a court may declare that person a ward of the state and grant power of attorney to an appointed legal guardian . The UK's Mental Capacity Act 2005 or MCA sets out a two-stage test of capacity: The MCA states an individual is unable to make their own decision, if they are unable to do at least one of four things: In England and Wales, this
3132-404: The sum of the natural persons who conduct the business. The other group of states allows partnerships to have a separate legal personality which changes the capacity of the "firm" and those who conduct its business and makes such partnerships more like corporations. The extent of a juridical person 's capacity depends on the law of the place of incorporation and the enabling provisions included in
3190-441: The transfer of real estate are considered valid until ruled otherwise. A minor (typically under 18) can disaffirm a contract made, no matter the case. However, the entire contract must be disaffirmed. Depending on the jurisdiction, the minor may be required to return any of the goods still in his possession. Also, barter transactions such as purchasing a retail item in exchange for a cash payment are generally recognized through
3248-539: The word company referred to trade guilds . The usage of the term company to mean "business association" was first recorded in 1553, and the abbreviation "co." dates from 1769. According to the Company Law of the People's Republic of China , companies include the limited liability company and joint-stock limited company which founded in the mainland China. In English law and in legal jurisdictions based upon it,
3306-406: The world. Companies are also sometimes distinguished for legal and regulatory purposes between public companies and private companies . Public companies are companies whose shares can be publicly traded, often (although not always) on a stock exchange which imposes listing requirements / Listing Rules as to the issued shares, the trading of shares and future issue of shares to help bolster
3364-478: Was felt to be too draconian, and so statutes have introduced new defenses that will limit or reduce the liability of those accused of committing offenses if they were suffering from a mental illness at the relevant time (see the insanity and mental disorder defenses). Although individuals may have consumed a sufficient quantity of intoxicant or drug to reduce or eliminate their ability to understand exactly what they are doing, such conditions are self-induced and so
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