Glossary Of Term

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 the payment or failure to pay the fee. 

Anonymous Debit Card

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

Asset Protection

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

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.  

Beneficiary/Beneficial owner

A natural person or a legal entity enjoying the right to receive 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 issuer to pay interest and repay principal of a loan. 

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 the their respective heads of government. 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. Bahamas, Britain, Cyprus, Mauritius, St. Kitts and Nevis.

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. 

Certificate of Good Standing

A Certificate of Good Standing (CGS) is issued by the authorities of 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 law (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 authority 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.) 

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. 

Company/Corporation

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 and other securities, hold titles to property, borrow and loan money. A company bears liabilities, but exists and act separately from its owners. Same as corporation. 

Company limited by guarantee

A company in which members’ liability 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 the 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. 

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. 

Debit Card

A plastic card with a magnetic strip on it reverse side. A Debit Card (DC) holder is entitled to purchase goods or services when accepted technically by a Seller. A DC does not 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 place where one intends to return after the purposes of his/her absence are attained.  

Double Taxation Agreement

A Double Taxation Agreement (DTAA) 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 DTAA 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 DTAA 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. 

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, Hungry, Lativa, 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 or 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, Hongkong, 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.

Founder (of a Private Foundation)

The person who actually creates a Private of the world: Canada, France, Germany, Italy, Japan, United Kingdom, and USA. 

Goodwill

An intangible asset representing the value of long-term clienteles, solid reputation among partners and customers, and connections. 

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 evidence 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 bearers shares. An IBC is exempted from all or the most part of taxes in jurisdiction of incorporation. As rule such companies have low profile owing to the lack of requirements to register their Director’s Shareholders’ details with the local authorities. 

Jurisdiction

It’s a country or a territory. Each jurisdiction has adopted its peculiar legislation, which concerns incorporation/formation of offshore legal entities and their further activities. 

Legal Entity (Legal Person)

A legal entity (LE), e.g., an International Company, Panamanian Private Foundation, 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 natural persons, and be responsible in a court for its acts and deeds.

Member

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

Money Laundering

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

Nominal Director

A Director holding its position only formally, while the real powers on administering and managing the company rests with the Beneficiary or its agent. 

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. 

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.

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. 

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 harmonies development of the world economy and improve the lot of developing countries, particularly the poorest.” 

Private Foundation

It is a Panamanian legal entity combing 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 the 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 form of organization. 

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 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 interest.  

Settlor

The person who actually creates a trust by donating property to the managed and administered by a trustee but which all benefits ad profit would go to a beneficiary.  

Shelf Company

A company, which has been incorporated 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/self/herself appoints the initial Director(s) of the SC and decides on issuance of the shares. 

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 consideration tax exemptions for non-residents.

Tax Planning

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

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.