Guernsey in Offshore
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Guernsey Company Formation
A limited liability is the usual structure of company in Guernsey. The company may be limited by shares, or limited by guarantee. If a business is limited by guarantee, members are liable only to the amount they guarantee to contribute if the company is wound up. Members of a business limited by shares are liable to the extent of the amount paid or unpaid on their shares.
There is no distinction between private and public companies. However, in practice, the majority are essentially private companies.
The Partnership Law was legislated in 1995. A partnership is made through private agreement, commonly in writing by the partners. But because a partnership is a contractual agreement, there is much liberality to alter the structure of the organisation in order to meet the specific requirements of the partnership. Each partner has the same rights, liabilities and authority, unless specifically outlined.
A partnership is not legally recognised as an entity disparate from its partners. Its profits, distributed or not, are taxable to the individual partners. Additionally, its tax deficits are delegated to its partners. The law does not order for the auditing of partnerships.
The Limited Partnerships Law was legislated in 1995, too. The main reason for such partnerships was in the field of collective investment schemes. It allows the liability of specific partners to be limited, but necessitates at least one partner (a general partner) to continue to have unlimited liability. The limited partners are not permitted to be involved in the management of the partnership; that is the sole responsibility of the general partner.
Branches of foreign companies
A branch of a foreign corporation does not necessitate the filing of documents at the registrar, although permission will be required if any banking, trustee, investment or insurance operation is foreseen. A local branch trading in Guernsey will be accountable to local taxation, and must submit a return to the local tax office.
Registering your company
A business can only be incorporated by an Act of the Royal Court. Therefore, you will need to hire a professional (lawyer / advocate) to prepare and present your documents to the Court. Before incorporation can take place, details of the promoters and aims of the business must be submitted to government officials. Their consent must be given to process the registration. This review process is in place to make sure that Guernsey preserves a high reputation. Incorporation will commonly be processed between seven and ten days from receipt.
Company names must be submitted to the government for approval before registration. However, it is possible for names to be reserved if you seek the appropriate consent. There are limitations imposed on the use of such words as bank, insurance and trustee and terms that connote the Royal Family.
It will be possible for you to alter both the Memorandum and the Articles of Association by a special resolution. An alteration to the Memorandum can be contested by application at the Royal Court. However, no shareholder who elected to change to the Memorandum can then be involved with the application.
Every business must have a registered office within Guernsey to which all notices affecting it will be sent.
By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.
The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:
- Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
- Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
- Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
- Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability
Characteristics of an offshore company:
- Memorandum and Articles of Association
- Certificate of Incorporation
- Registered Office/Agent
- Shareholders / Members
- Directors / Managers
- Company secretary
- Statutory Register
Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.