WHY
INCORPORATE OFFSHORE Because of the litigation explosion in Canada
and elsewhere, professionals and small business owners are forced
to focus on ways to protect their savings, investments and other
accumulated assets that may be attractive targets for hungry trial
lawyers.
In the Canadian Legal System, the deck is often
stacked in favor of plaintiffs and against defendants. Because this
observation encourages the filing of spurious lawsuits, the average
business owner or professional may be sued several times during
his or her lifetime, thereby facing the possibility of being on
the receiving end of a ruinous judgment. Failure to plan for such
a situation can result in the instant loss of a lifetime's accumulated
wealth. Once a lawsuit has been filed, or one is anticipated, the
Canadian Legal System will not allow assets to be moved. Acting
now while the waters are calm is imperative.
FINDING YOUR ASSETS Lawyers for plaintiffs only prosecute cases they believe
will pay off, not cases against judgment proof defendants. How does
a lawyer find out if you have something of value? Very easily. Many
services are available that can provide a detailed account of personal
and/or business bank accounts, property ownership, investment holdings,
income, savings and many other facts relating to your financial
well being. The only hope of getting the plaintiff's lawyer to accept
a token settlement is to convince the lawyer that the defendant's
assets are truly beyond the lawyer's reach.
CORPORATE OWNERSHIP How can you minimize the chances of losing assets? By becoming
a smaller target. How can you become a smaller target? By shrinking
the size of your estate so that you are no longer the legal owner
of the assets to be controlled and enjoyed. How can you shrink your
estate? By getting as many assets out of your personal name as possible.
One of the best ways to do this is to transfer money, investments
and assets into a corporation, a legal entity that you control.
CANADIAN CORPORATION VS. OFFSHORE CORPORATION Most trial lawyers will tell you that forming a Canadian
corporation for liability protection and privacy is not worth the
certificate it is printed on. Canadian corporate formation documents
are public information and any good search firm can find bank accounts,
investments, real estate and other assets held by the corporation.
The Canadian corporate veil is routinely ignored and lawsuits are
filed against the corporation and any of its beneficial owners.
By forming a corporation offshore you have a legal entity to hold
assets of which only you know the beneficial owner. The information-gathering
agencies and services that help trial lawyers, ex-spouses, ex-business
partners and creditors will be unable to find your accounts and
assets, therefore, making you a poor prospect for a lawsuit. This
is how you become a smaller target.
CANADIAN JUDGMENTS ARE NOT RECOGNIZED OFFSHORE An offshore corporation can conduct any type of business
in Canada that a Canadian corporation can. You sacrifice nothing
by having complete privacy and a corporate veil with real teeth
in it. Even if your offshore Bahamian International Business Company
(IBC) becomes involved in a lawsuit, the Bahamian Supreme Court
does not recognize Canadian judgments against a company incorporated
in its jurisdiction. A plaintiff would have to hire a Bahamian attorney
(there are no contingency fees) and try to convince the Bahamian
Court to hear the case. Historically, the Bahamian Courts will not
rule in favor of a plaintiff if it can be shown that the assets
were moved before the judgment was filed. Once the plaintiff sees
the uphill battle involved plus the enormous cost out of his/her
own pocket, he/she may either reevaluate the merits of filing a
lawsuit or settle for a fraction of the settlement he/she may have
received in a Canadian Court. More and more doctors, professional
business people and small businesses are going offshore to lower
their liability insurance coverage. This alone can be a savings
of tens of thousands of dollars each year in premiums. Small businesses
also go offshore to reduce or eliminate state income (franchise)
taxes and to give them other alternatives to insurance coverage
that have become too expensive to carry.
OFFSHORE
BANKS
BARCLAYS BANK, BAHAMAS
/ B.V.I.
Barclays Bank PLC has been established in the Bahamas for over 45
years. It is a member of the Barclays Group, one of the world’s
oldest and largest banking institutions, whose history can be traced
back to the reign of Queen Elizabeth I of England. Barclays is one
of the world’s leading international banks and together with
its associated companies, is represented in some 70 countries, spanning
six continents.
Company Barclaycard
/ Corporate Secured MasterCard
Minimum credit line for MasterCard: $5,000—Interest bearing
deposit required for security: 200% (Example: $10,000 deposit required
for $5,00 line of credit on corporate card) Maximum credit line:
$100,000
SWISS AMERICAN BANK,
ST. JOHN’S, ANTIGUA
Swiss American Bank Ltd. was established in 1981, and offers a full
range of commercial and private banking services through five branches
in Antigua. Swiss American Bank is protected by Antigua’s
International Banking Act and thereby offers a high degree of confidentiality
over the banking affairs of clients.
SwissAmericard /
Corporate Secured Visa
With the SwissAmericard, transactions and records of cards issued
by Swiss American are protected by Antigua’s Offshore Banking
Secrecy Act. As SwissAmericard accounts must be backed by an interest
bearing time deposit at Swiss American Bank, you can set your own
credit limit. SwissAmericard accounts offer flexible repayment terms
with minimum monthly payments as low as 10% of the outstanding balance.
You pay no interest on purchases if you pay your balance in full
each month. Minimum credit line for Visa: $1,000-Interest bearing
deposit required for security: 150% (Example: $1,500 deposit required
for $1,00 line of credit.) Minimum credit line for Visa Gold: $5,000
BELIZE BANK VISA
Membership fee is US $100. Additional Cards can be issued to your
family or business partners on your credit card account at a fee
of $25 per card, and charges made by these persons will be included
in your monthly statement. You pay no interest on purchases if you
pay your balance in full each month. Minimum credit line: $2,000—Interest
bearing deposit required for security: 150% (Example: $3,000 deposit
required for $2,000 line of credit.
Corporate Bank Account vs. Personal Bank
Account
Offshore bank accounts may be opened in either a personal name or
a corporate name.
Most individuals looking for asset protection or
privacy should not open offshore accounts in personal names. Wire
transfers, credit card transactions and checks will identify you
as the person holding this asset. Forming a corporation and opening
a corporate bank account on the other hand, will give you more privacy
and more options for transacting your business. For instance, wire
transfers carry the company name and credit card transactions go
through the system in the company name. Typically the company's
bank accounts are the only places the owner and the corporate relationship
meet, that is if the owner chooses to be the signer of the accounts.
For this reason, the banking and other financial institutions you
deal with will be a far more important decision and privacy concern
than the jurisdiction of your company's incorporation.
Most all of the offshore banks require a very simple
reference letter from your the bank of the signer of the account.
Anyone signing the signature card and having access to the account
is required to provide a bank reference letter. The letter must
be an original. The banks will not accept fax or photocopies. Some
banks, such as Barclays Bank, will spot check references by contacting
your bank to verify that the letter was actually issued by your
bank. A reference letter is fairly easy to obtain and most banks
do them every day. If you wish, and to simplify the process, hand
write your letter before going to your local bank. Usually you can
ask the person in New Accounts or Customer Service to type the letter
for you while you wait. The reference letter does not require a
bank officer's signature.
Even though the reference letter is simple in form,
it must contain specific information. For example, do not address
the letter "To Whom It May Concern". The offshore bank
requires that the letter be addressed to it. If you are concerned
about your privacy, or a nosey bank employee, simply leave the jurisdiction
out of the letter. Instead of addressing the letter to "Barclays
Bank, Nassau, Bahamas", address the letter to "Barclays
Bank, Attention: Manager". The letter must also state the date
the account was established. The reference letter can be from a
business account so long as the letter identifies you as a signatory.
Often, banks fear or may hesitate issuing a reference letter because
of the potential liability that is common in the lawsuit environment,
especially in Canada. However, this letter is simple and is general
enough that your local bank should have no objection to providing
the letter for you.
The offshore bank requires a photocopy of a picture
identification such as a passport or driver's license. Such picture
i.d. reassures the bank that either the person personally appearing
and presenting the bank application is the same person signing and
making the application, or if your bank application was mailed to
the offshore bank, the bank will have a tool to verify the correct
signatory, should such verification be necessary. Most banks provide
a form in the initial bank application documents that allow them
to accept fax instructions from you. You will be able to make wire
transfers and other banking transactions from a distance.
Most offshore banks require a minimum deposit of
$1,000. Most have the same bank products that Canadian banks offer
such as time deposits, savings accounts, etc. Offshore banks will
hold the accounts in the most common currencies such as U.S. dollar,
Swiss Franc, D.Mark, Yen, Sterling and Canadian dollar. A common
perception is that offshore savings accounts in U.S. dollar pay
a much higher rate offshore. The truth is that U.S. dollar rates
are about the same or maybe a little less than what you see advertised
at your local bank. If you have been told that you can get 12 %
on your offshore account, you need to find someone else to deal
with. Remember, once you get out from under the Canadian regulatory
authorities, you will be fair game for any unscrupulous offshore
operator. Offshore banks have no Deposit insurance or equivalent,
so make sure you stay with the banks recommended. Most offshore
banks are capitalized better than Canadian banks since they do not
rely on the deposit insurance. Also, many offshore banks are bigger
and stronger financially than Canadian banks.
HOW
TO GET STARTED
To get started, please contact us for a confidential consultation.
A typical order would be an International Business Company (IBC),
a bank account (bank does not have to be in same jurisdiction as
company) and mail forwarding. Our prices include all first year
fees. Initial bank deposits should be submitted later with the bank
application package.
You will be billed annually for the registered agent and government
fees. For payment, we accept any form of a USD check, wire transfer
or cash. The bank application for the bank you have selected will
accompany your corporate documents. There will be instructions with
the bank forms. You will be asked to return the forms to our office.
We will put certified corporate documents with the bank forms, complete
all the corporate information, seal the documents and courier them
to the bank along with your initial deposit. Depending on which
bank you have chosen, the account number will be issued approximately
7 days after the bank receives the documents, if we are using Swiss
American Bank in Antigua, and up to one month for Barclays either
in the Bahamas or British Virgin Islands. All other banks will fall
within this time period for issuing account numbers.
