Offshore Company Law

Transcription

1 Offshore Company Law BY DR. E. EDWARD SIEMENS, C.D., J.D., LL.M. FOREWORD BY PHILIP MARCOVICI Academy & Finance Geneva

2 Table of Contents FOREWORD PREFACE SUMMARY ACRONYMS AND ABBREVIATIONS GLOSSARY OF TERMS BIOGRAPHY vn xi xm xv xvn xxxv PART I - OFFSHORE CONSIDERATIONS 1 i INTRODUCTION History Multi-national Corporations Use of Offshore Jurisdictions 6 2 SELECTED MAJOR OFFSHORE JURISDICTIONS Overview The Bahamas n 819

3 Offshore Company Law 2.3 Belize Bermuda British Virgin Islands Cayman Islands Guernsey Isle of Man Jersey Gibraltar Cook Islands Samoa Vanuatu Mauritius Seychelles Panama Uruguay Liechtenstein Switzerland Dubai Labuan Delaware HongKong 30 3 INTERNATIONAL LEGAL ENVIRONMENT OECD Financial Action Task Force Other Regional International Organizations CFATF International Monetary Fund (IMF) Financial Stability Forum or FSF World Bank

4 Table of Contents 4 OFFSHORE CORPORATE FORMS Introduction International Business Company (IBC) Companies Limited by Shares Companies Limited by Guarantee Hybrid Company Companies with Unlimited Liability Limited duration company Limited Liability Company-LLC Cell Company Not for Profit Companies 55 5 ENHANCED OFFSHORE INCORPORATION REQUIREMENTS Introduction Name Capitalisation and Share Structure Share Register Redemptionof Shares by the Company Dividends and Distributions Directorships Know Your Client Cell Companies e-filings Other Provisions 63 6 MANAGEMENT AND CONTROL Introduction Who may serve as a director Committees of Directors Managing Limited Liability Companies Managing Cell Companies

5 Offshore Company Law 6.6 Registered Office and Agent Records of the Company Shareholder Agreements Treasury Shares Exempt Status Corporate Formation Agents Company Residency 70 DUTIES AND LIABILITIES OF OFFSHORE DIRECTORS Introduction Definition of a Director Fiduciary duties of Directors Duty to Govern Duty of Diligence Business Judgment Rule Duty of Loyalty Self-dealing Corporate Opportunity Duty of Compliance Financial Assistance Maintaining Share Capital Purchasing Shares Dividends Insolvent Trading In liquidation Liabilities for Breach Personal Liabilities Relief from Liability Piercing the Corporate Veil Overview Groups and Parent & Subsidiary Companies 85 Case Study: Adams v. Cape Industries pic

6 Table of Contents Fraud Agency Taxation Misuse of Company Name Membership Requirements Onshore Personal Liabilities of Directors of Offhore Companies ONSHORETAX &REVENUE AUTHORITIES Overview Labeling as a Tax-haven Profit Laundering Transfer Pricing or Offsite Pricing United States Reporting EU Reporting 99 9 COMPLIANCE WITH ADDITIONALREGULATORY PROVISIONS Accounting Standards USA Patriot Act of EUDirective Anti-Money Laundering Anti-terrorism Financing Proceeds of Crime ASSET PROTECTION PROVISIONS Introduction Legislation Use of Cell Companies Litigation Enforcement of Foreign Judgments

7 Offshore Company Law Forum Non-Conveniens Confidentiality Bank Accounts Use of Offshore Trusts CRIMINALLIABILITIES Corporate Crime Corporate Legislation Company Residency Inspections for Suspected Fraud Money Laundering Financing of Terrorism Proceeds of Crime Anti-Corruption Computer Crimes DUTIES OFDIRECTORS OFINVESTMENTFUNDS Closed-end Funds Open-end or Mutual Funds Investment Management Duties & Liabilities of Directors Tax Implications INTERNET Li ABILITIES Civil & Criminal Liabilities Database Protection Privacy Intellectual Property Patents Copyright Trademarks Industrial Designs

8 Table of Contents Geographical Indications Libel and Slander Encryption!5i 13.7 Jurisdiction Legal Notices Internet Gambling Consumer Protection Taxation Internet Crimes Fraud Phishing &Pharming Spam Identity Theft 162 PARTII-CHOOSING AJURISDICTION CONSIDERATIONS Introduction Geographical location Reputation Taxation Practicalities Banking Communications Costs Legal and Accounting Infrastructure Social and Economic Stability Political Situation History Foreign Policy Currency and Exchange Controls World Trade Organisation (WTO) DosandDon'ts

9 Offshore Company Law 1.7 Legal Environment Types of Companies Company Names Capital Directors Filings Company Administration Shareholders Confidentiality Service Providers DETAILED VIEW OFMAJORSELECTED JURISDICTIONS Bahamas Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Annual returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities Belize Introduction Legislation Legislative Changes Types of Companies

10 Table of Contents Registered Office & Registered Agent Capital xgz Shareholders Directors Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities Bermuda Legislation Legislative Changes Types of Companies Registered Office and Registered Agent Capital Shareholders Directors Annual Returns Books of Account Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities British Virgin Islands Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors

11 Offshore Company Law Records and Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities Cayman Islands Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Reports and Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities Guernsey Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Annual Returns Taxation Asset Protection

12 Table of Contents Service Providers Banking and Exchange controls Criminal Liabilities Jersey Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Annual Returns Registers and Accounts Taxation Asset Protection Service Providers Banking & Exchange Controls Criminal Liabilities Isle of Man Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Records Reports and Annual Returns Taxation Asset Protection Service Providers

13 Offshore Company Law Banking and Exchange Controls Criminal Liabilities Gibraltar Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Accounts, Reports and Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities Cook Islands Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Annual Returns Taxation Asset Protection Service Providers Banking & Exchange Controls Criminal Liabilities

14 Table of Contents 2.11 Samoa Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Annual Returns Accounts Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities Vanuatu Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Accounts & Records Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Gambling Criminal Liabilities

15 Offshore Company Law 2.13 Mauritius Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Secretary Registers andrecords Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities Seychelles Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Registers and Accounts Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities

16 Table of Contents 2.15 Panama Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Registers and Accounts Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Gambling Criminal Liabilities Switzerland Introduction Legislation Legislative Changes Types of Companies Registered Office and Registered Agent Capital Shareholders Directors Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities

17 Offshore Company Law 2.17 Dubai Introduction Legislation Legislative Changes Types of Companies Registered Office and Registered Agent Capital Shareholders Directors Annual Returns Records and Accounts Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities Labuan Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Annual Returns Records and Accounts Taxation Asset Protection Service Providers Banking and Exchange controls Criminal Liabilities

18 Table of Contents 2.19 Delaware Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Incorporation Requirements Members Managers Annual Returns Taxation Asset Protection Service Providers BankingandExchangeControls Criminal Liabilities Hong Kong Introduction Legislation Legislative Changes Types of Companies Registered Office & Registered Agent Capital Shareholders Directors Registers and Accounts Annual Returns Taxation Asset Protection Service Providers Banking and Exchange Controls Criminal Liabilities

19 Offshore Company Law PART III-REDUCINGLIABILITY RISKS INTRODUCTION Considerations before accepting a position Check the following list of personal considerations before accepting a directorship or officership Make the following considerations about the offshore company AVOIDING LIABILITY DueDiligence Directors in Action Attendance Preparation Conduct of Meetings Decisions Methodology Proper Reports Proper Records Between Meetings Controversial Matters Dissent Exoneration Resignation Directors Officers and Service Providers DosandDon'ts Ensure that your general conduct after assuming office meets the requirements of due diligence Avoid actions that might be considered criminal conduct

20 Table of Contents Avoid any conflicts of interest situations Avoid share trading that may expose you to accusations of insider knowledge INDEMNIFICATION Legislation Public Policy Actions by or in the Right of the Company Settling a Claim DosandDon'ts Ensure that you are familiar with the applicable indemnity provisions of thecompany DIRECTORS & OFFICERS LIABILITYINSURANCE Defining Key Terms Legislation TheD &O Liability Insurance Policy Term Deductibles Exclusions Endorsements Disclosures Severability NoticeofClaim Reporting Subrogation Confidentiality Defense costs Cost of Insurance What to look for in a policy Applying for D & O Liability Insurance Who Uses D & O Liability Insurance?

21 Offshore Company Law 4.7 Primary Insurers DosandDon'ts Ensure that your company has obtained D & O liability insurance to the full extent that is permitted at law 381 CORPORATE GOVERNANCE Overview Mandate of the Board Composition of the Board Invitation to the Board Orientation &Education Size of the Board Agenda for Board Meetings Materials for the Board Access to Senior Management Compensation of Directors Number of Committees Composition of Committees Rotation of Committee Members Committee Meetings Corporate Governance Responsibility Selection of Managing Director Responsibilities and Goals of Managing Director Independence of the Board Managing Director Succession External Communications

22 Table of Contents APPENDICES 39i Appendix 1: Indemnity Provisions [Articles of Incorporation] 393 Appendix 2: Indemnity By-law 395 Appendix 3: Corporate Indemnity Agreement 399 Appendix 4: Appendix 5: AIG American International Companies Executive and Organizational Liability Insurance Policy 403 Chubb - Executive Liability and Indemnification Coverage 423 Appendix6: AIG - Application for D & O Coverage 439 Appendix 7: Chubb - Application for D & O Insurance 449 Appendix 8: US Treasury Report on Foreign Bank and Financial Accounts 455 Appendix 9: Offshore Jurisdictions 461 Appendix 10: Anti-Money Laundering Authorities 463 Appendix 11: Websites of Interest 465 Appendix 12: Excerpts from Directives of the European Union 471 Appendix 13: Excerpts from the Statutes of the United Kingdom 479 Appendix 14: Excerpts from the Statutes of the United States of America 489 Appendix 15: Excerpts from the Statutes of The Bahamas 497 Appendix 16: Excerpts from the Statutes of Belize 523 Appendix 17: Excerpts from the Statutes of Bermuda

23 Offshore Company Law Appendix 18: Excerpts from the Statutes of the British Virgin Islands 557 Appendix 19: Excerpts from the Statutes of the Cayman Islands 571 Appendix 20: Excerpts from the Statutes of Guernsey 591 Appendix 21: Excerpts from the Laws of Jersey 599 Appendix 22: Excerpts from the Statutes of the Isle of Man 609 Appendix 23: Excerpts from the Laws of Gibraltar 629 Appendix 24: Excerpts from the Statutes of the Cook Islands 643 Appendix 25: Excerpts from the Statutes of Samoa 663 Appendix 26: Excerpts from the Statutes of Vanuatu 679 Appendix 27: Excerpts from the Statutes of Mauritius 691 Appendix 28: Excerpts from the Statutes of the Seychelles 717 Appendix 29: Excerpts from the Statutes of Panama 727 Appendix 30: Excerpts from the Statutes of Switzerland 735 Appendix 31: Excerpts from the Statutes of Dubai 743 Appendix 32: Excerpts from the Statutes of Labuan, Malaysia 753 Appendix 33: Excerpts from the Statutes of the State of Delaware United States of America 765 Appendix 34: Excerpts from the Laws of Hong Kong

24 Table of Contents LIST OFCASES &BOOKS 791 LIST OFSTATUTES 797 SUBJECT INDEX 807 TABLE OF CONTENTS