Also known as non-resident company, an offshore company is a business entity that does not conduct any or a significant part of its business in the country it is incorporated in.

Often, an offshore company comes with a big list of financial, personal and trade benefits. The benefits could be in terms of reduced tax liability, asset protection, secrecy and anonymity, simplicity and financial support.

Depending on the country of incorporation, your taxes could even be reduced down to zero. However, in most such jurisdictions, you may be required to pay an annual duty as a fee. Also, yearly account maintenance charges may apply. Incorporating an offshore company helps you in maintaining confidentiality of transactions and usage of funds.

It is relatively easier and quicker to set up & operate an offshore company, than to incorporate a business in the home country. This happens in the wake of attracting foreign investment and other such reasons that have a positive impact on the offshore country.

The Trouble with Offshore Companies

Many countries do not allow offshore companies to conduct business or hire workforce in their jurisdictions. Although the regulations levied are low, some restrictions are imposed on offshore companies, especially if the offshore companies are involved in banking or insurance.

To protect you, the bank’s reputation and the country’s image from being linked with or accused with charges related to money laundering, the bank that helps you open an account for your offshore company may require a lot of paperwork and corporate documentation; and hence the administrative cost involved is a little higher. The cost of opening and maintaining a bank account for an offshore company further increases, when your information has to be kept confidential.

The Features

Memorandum of Association - These are the fundamental documents required for the existence of a company. It contains information regarding the number of members, their names, addresses and their rights, etc. It also contains information regarding the company’s business processes.

Incorporation Certificate - This certificate is your proof that the offshore company you claim to have registered, actually exists. This is obtained from the Registrar of Companies, located in the respective country of incorporation.

Registration Agent - You will need one such person, who will hold most of the communications, regarding the incorporation of your offshore company, with the respective authorities.

Registered Office - A registered office will be the mailing address of your company. All legal notices and official documents will be communicated via postal mail using this address.

Apart from the above mentioned few features, your offshore company will have profiles and detailed information about the members or the owners of the company, the directors of the company who will run the business, the company secretary who provides legal and statutory advice, etc.

Types of Offshore Companies

Although there are many variations with this, three types of Offshore Corporations are commonly found in many offshore jurisdictions. They are:

- Company having Share Capital.
- Limited Company (guarantee-wise).
- Bearer Share Corporations.