When you first approach incorporation of an offshore company in your business you start with tax planning and legal matters to insure you are not breaking any laws and so on. But even when you are done with that part, you are still not safe, as now you have to choose the proper provider or registered agent to serve your offshore structure during its lifetime.
We don’t speak about good and bad providers. We speak about what you should pay attention to before engage in business relations with your registered agent for incorporation of an offshore company and what to do if one day you realize that you are not happy with your choice.
The Internet is speckling with online incorporation services and all of them are so welcoming. You are tempted to arrange your business as soon as possible and can miss very significant details. This, in fact, may lead you to unnecessary headache in the future. Make sure you read below notes and apply them in practice.
Incorporation and First Year Fees
You established a contact with an agent ready to incorporate your company. Check carefully what is included in the first year fees invoice. Even if they call it “all-included”, some items you may need can be omitted. This is often the case of a company seal or a set of documents legalized with Apostille. And vice versa, items like nominee or business office service, you may not need them at all.
Pay attention that what many providers offer as “bank accounts” is only bank introduction service. That means, first, they do not guarantee opening of the account, second, you are to make quite a lot yourself to get the account opened. This is normal practice, though. You are just to be aware of this. No one, even the bank itself, can guarantee the account opening with no issues. Besides, as you are the beneficiary to the funds on this account in the future, you better be in control of this strictly confidential issue from the very beginning.
Probably you know what is the main purpose of nominee director service. However, did you have a chance to think over what you really expect from your nominee director? Have in mind that nominee director service offered by default is absolutely nominee. The person, corporate body or individual, is merely giving his/her/its name as the director of the company. This normally does not cost much. But any real act of administration by the director is charged on a time-rate basis. And what’s more important not every director is able to provide any administration service at all. If you have specific requirements to what the director is to be able to do, ask about it in advance and in as many details as you can.
Some jurisdictions still allow for bearer shares option. On the face of it the latter seems to be a good one for the purposes of confidentiality. However, you should be aware that many of such jurisdictions require immobilization of bearer shares, i.e. they are to be kept by an authorized agent. In practice you will receive only a notarized copy of it. It also means that you are not able to transfer the shares anonymously as probably was desired. Besides, even if you have got your original bearer share certificate in hands, as soon as you approach any respectable banker to open an account, most probably you will be requested to deposit your bearer share certificate with the bank. In this regard, a nominee shareholder option might appear to be more reasonable.
Should you be looking for more confidentiality, you are offered a nominee shareholder service. This instrument proved to be rather reliable in years. Many providers offer it free upon incorporation and then during the lifetime of the company. But if you don’t take it upon incorporation and decide to switch to the nominee shareholder sometime later the charges can be quite substantial.
Whether you have dealt with that before or not, you should know that any legal entity needs ongoing maintenance in terms of reporting and paying fees and taxes. It is normally done once a year. Some offshore jurisdictions do not require financial reporting and get by with a flat governmental fee; others want the company to provide audited accounts. Anyway, once a year, either on anniversary basis or following the calendar year, you will be receiving annual renewal reminder notes from your registered agent. If you didn’t get the proper information on how much you are to pay the figures in the invoice amount might appear to be a surprise. Many providers conduct a policy to incorporate cheaply but charge expensive annual fees. Many clients having received shocking invoices for annual services that they cannot sustain or never planned in their budgets, they are just simply lost in what to do next.
Below are some tips how to reduce your annual renewal invoice.
- Check the items included in the invoice, whether you need some of them at all. In most jurisdictions the required minimum is the annual governmental fee and report filing, registered office/agent service. Add accounting and audit fees where reporting is required. But that is it. Anything else is optional: nominee director/shareholder service, business office facilities, phone answering, fax/mail/email forwarding, virtual office facilities. If you don’t really need them, make the according changes with the registered agent to adjust the invoice amount.
- Another option is that you can change your registered agent for your company within the same jurisdiction. This is a requirement of the law to have a licensed registered agent in that jurisdiction providing a registered office service for your company, but there are many licensed companies that might offer you better prices. The procedure to file changes is normally very simple, but it is important to take care about this in advance, before the renewal fees are due. Request your annual renewal invoice and take a decision whether you would like to go on with your current agent. With a new agent the only real change for the company’s business is the new registered office address.
- Besides that, you can change the jurisdiction itself. In fact some jurisdictions are generally more expensive in maintenance than others. But luckily, most of them recognize change of domicile. If you realized that your current jurisdiction is really expensive and the nature of your business is not really particular about it, go ahead and choose something more suitable. The process of re-domiciliation is generally simple, but, again, you have to think about it in advance, as certain formalities are to be done in the current jurisdiction before the renewal date comes.