| This Glossary covers only the specific
meaning of the words in the context of this Web Site and
our services. Its definitions do NOT represent tax and/or
legal advice.
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 late payment
or failure to pay the fee. See more details in
OUR SERVICES - ANNUAL RENEWAL SERVICES
Anonymous Debit Card
A Debit Card, which does not bear any personal details about
its holder. See more details in
OFFSHORE TOOLS - CREDIT & DEBIT CARDS.
Apostille
A special form attached to a public document (e.g. Certificate
of Good Standing) issued in accordance with the standards
of the Le Hague Convention of 1961. Documents issued in a
convention country, which have been certified by an Apostille
are entitled to recognition in any other convention country
without any further authentication. Authentication of a foreign
legal entity's documents submitted is often requested e.g.
when forming a subsidiary or opening an account with a bank
or a brokerage.
See more details in
OUR SERVICES - DOCUMENTS AUTHENTICATION
Asset protection
The legal steps a natural or legal person undertakes to protect
his/her/its assets from possible seizure by creditors. Such
offshore tools as Private
Foundations,
International Business Companies,
Delaware Limited Liability Companies, and Trusts are being
used by our clients for the above purpose. See more details
in the appropriate sections of OFFSHORE
TOOLS.
Assets
From the accounting point of view, assets of a
legal entity are the entries on a balance sheet showing
all properties (cash, inventories, securities, property rights,
and goodwill) and claims against others. The assets may be
applied to cover the liabilities of a person or business.
Similarly, the assets of a natural person make up the entire
property owned by him/her that can be used to settle creditors'
claims.
Association
Within the context of our site it's an organization established
by legal entities that have an interest, activity, or purpose
in common.
ATM
An acronym, which stands for Automatic Teller Machine. It's
a fully automatic electronic machine providing some banking
services (i.e. cash withdrawal) to the owners of credit and
debit Cards. See information regarding Anonymous Debit Card
to be used worldwide with ATMs in
OFFSHORE TOOLS - CREDIT & DEBIT CARDS.
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.
Beneficial owner
Same as Beneficiary
Beneficiary
A natural person or a legal entity enjoying the right to receive
benefits 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 the issuer to pay interest and repay principal of
a loan.
Branch
A division of a company.
As opposed to a subsidiary,
a branch is not a separate
legal entity.
British Common Law
See Common Law
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 by their
respective heads of governments. 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.
Brokerage
A corporate broker/dealer.
Brokerage Account
An investment account opened by a buyer/seller of securities
with a brokerage. See
OFFSHORE TOOLS-BROKERAGE ACCOUNTS for more details.
Captive (Re)insurance Company
Such a company is a specialized subsidiary
of a non-insurance "parent": a
parent company, holding
or association. Its primary
goal is to improve risk management of the parent's business
while optimizing cash flows and tax-planning
issues. See
OFFSHORE TOOLS-CAPTIVE (RE)INSURANCE COMPANIES for more
details.
Certificate of Formation
The document of a Delaware LLC
corresponding to the Certificate of Incorporation
for a corporation.
Certificate of Good Standing
A Certificate of Good Standing (CGS) is issued by the authorities
of the 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 laws (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 authorities 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.)
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.
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.
Common Law Trust
See Trust
Company
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, hold titles to property,
borrow and loan money. A company bears liabilities,
but exists and acts separately from its owners. Same as corporation.
Company limited by guarantee
A company in which members' liability is limited 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 be
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.
Corporation
See Company.
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. See more details
in OFFSHORE TOOLS -
CREDIT & DEBIT CARDS.
Daughter company
A company with some of its shares being
owned by another company, which is called a parent company.
Debit Card
A plastic card with a magnetic strip on its reverse side.
A Debit Card (DC) holder is entitled to purchase goods or
services when accepted technically by a Seller. A DC doesn't
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. See
more details in OFFSHORE
TOOLS - CREDIT & DEBIT CARDS. Related topic:
Anonymous Debit Card.
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 the place where one intends to return
after the purposes of his/her absence are attained.
Double Taxation Agreement
A Double Taxation Agreement (DTA) 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
DTA 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 DTA 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.
Such sophisticated offshore tools as
Cyprus IBCs or Mauritius offshore
companies are purchased by our clients to use to their
benefit the exemptions of DTAs, respectively Cyprus or Mauritius
have entered into. British
Private Limited Companies and
Delaware Corporations and Limited Liability Companies
use relevant DTAs as well when applicable.
Double Taxation Treaty
See Double Taxation Agreement
(DTA)
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, Hungary, Latvia, 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 on 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, Hong Kong, 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.
Forced heirship
A provision of the law stipulating how a natural person may
bequeath (pass on) his or her assets to another persons after
his/her death.
Private Foundations
or Trusts are used as lawful designs
to avoid or circumvent undesirable forced heirship procedures.
Fortune 500
A listing of the top 500 U.S. companies, ranked by revenues,
in accordance with Fortune magazine's list.
Founder (of a Private Foundation)
The person who actually creates a
Private Foundation by transferring some property in its
assets.
Foundation Council
The top administrative body in a
Private Foundation providing administration and management
of the foundation's assets and their further distribution
among the beneficiaries.
G-7
A forum of the seven most economically powerful countries
of the world: Canada, France, Germany, Italy, Japan, United
Kingdom, and USA.
Goodwill
An intangible (immaterial) asset representing the value of
long-term clientele, solid reputation among partners and customers,
and connections.
Grantor
See Settlor.
Holding
A parent company which
holds shares (interest) in another company or other companies.
Holding company
See Holding.
Immigration Planning
The legal steps a natural person plans and/or undertakes in
view of his/her (and family members') future immigration.
IP often includes tax planning and
asset protection components.
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 evidences 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 bearer
shares. An IBC is exempted from all or the most part of
taxes in jurisdiction of incorporation. As a rule such companies
have low profile owing to the lack of requirements to register
their Directors' and Shareholders' details with the local
authorities. See more details in
OFFSHORE TOOLS - INTERNATIONAL BUSINESS COMPANIES.
Jurisdiction
Within the context of our site it's a country or a territory,
where we provide incorporation and other services. Each such
jurisdiction adopted its peculiar legislation which concerns
incorporation/formation of offshore legal entities and their
further activities. See OFFSHORE
FINANCIAL CENTERS for the details.
Jurisdiction of the incorporation/formation
A jurisdiction where the company
or corporation was incorporated/formed.
Legal Entity (Legal Person)
A legal entity (LE), e.g., an
International Business 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 a natural person, e.g.
it may hold property, suit other legal and natural persons,
and be responsible in a court for its acts and deeds.
Liability
Any current or future legal obligation, e.g. debt, duties
under a contract or a position.
Limited Liability
Within the context of our site it's limited liability of shareholders
or members in a Company Limited by Shares or Company Limited
by Guarantee.
Member
A holder of an interest in a Delaware
Limited Liability Company or same as a
shareholder in some other types of
legal entities.
Minor
A person who has no attained full age under the law of his
domicile.
Money Laundering
The process and technology of disguising, investing, and/or
hiding the proceeds of criminal activities coupled with their
"legitimization".
Natural person
An individual as a subject of legal and/or business relations.
Nominal Director
A Director holding its position only formally, while the real
powers on administering and managing the company rest with
the Beneficiary or its agent. See more details in
OFFSHORE TOOLS - NOMINEES.
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.
See more details in OFFSHORE TOOLS
- NOMINEES.
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.
Non-resident alien (NRA)
The person who is neither a resident in nor a citizen of the
country, esp. in the USA.
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.
Please see OFFSHORE FINANCIAL CENTERS
for description of the OFCs carefully selected for our precious
clients.
Operating Expenses
The amount paid for assets maintenance or the day-to-day costs
of running and maintaining a business.
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 harmonious development
of the world economy and improve the lot of developing countries,
particularly the poorest."
Parent Company
A company in relation to
its subsidiaries, branches, or daughter companies.
Partnership
A for-profit organization in which two or more persons (partners)
furnished a part of the capital and labor. They share agreed
proportion of profit and losses. A typical partnership does
not create a legal entity separate from the partners, and
is tax transparent. On the other hand, the partners' liability
is not limited and may extend to their personal property.
Private Foundation
In the context of our services, it is a Panamanian legal entity
combining 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 and 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 tool. See the
detailed description of a Private Foundation in
OFFSHORE TOOLS - PRIVATE FOUNDATIONS.
Private unlimited company
A company with unlimited liability of its members.
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 Liability 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 Internet.
Settlor
The person who actually creates a trust by donating property
to be managed and administered by a trustee but from which
all benefits and profits would go to a beneficiary.
Share
Part ownership in a company limited by shares.
Share Certificate
A document signifying part ownership in a company. Same as
a "Stock Certificate".
Shareholder
The owner of one or more shares in a company.
Shelf Company
A company, which has been incorporated by
us 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/herself appoints the initial Director(s) of the SC and
decides on issuance of the shares.
We always keep in stock several Shelf Companies available
for the immediate disposal by our precious clients. Here you
can look through the current SHELF COMPANIES
LIST and place a relevant order
for a SC.
Shipping Company
A company, which owns a ship or ships. One of the preferable
jurisdictions for registration of SC is Cyprus.
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 considerable
tax exemptions for non-residents.
See as well OFFSHORE FINANCIAL CENTERS
for the details on such handpicked jurisdictions.
Tax planning
The legal steps a natural or legal person plans and/or undertakes
to minimize lawfully his/her/its tax liabilities. Such offshore
tools as Private Foundations,
International
Business Companies, Delaware
Corporations and Limited Liability Companies, and Trusts
are being used by our clients for the above purpose. See more
details in the appropriate sections of
OFFSHORE TOOLS.
The Statute of Elizabeth
It was enacted in 1576 by the Queen Elizabeth I. The Statute
voids a transfer to a trust if the transfer could be interpreted
as intention to hinder, delay, or defraud creditors, including
potential future creditors. Some Offshore Financial
Centers (i.e. Nevis) declared
The Statute of Elizabeth null and void in their trust legislation.
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.
You may see the more detailed description of Trusts and their
sample practical applications in OFFSHORE
TOOLS-TRUSTS.
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.
Unlimited Company
See Private unlimited company.
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