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Offshore Company Set Up Q&A

Q1:	Any restriction on company name?
A1:	Most company names are ended with “Limited (Ltd.)”, “Corporation (Corp.)”, Incorporated (Inc.)”. Sensitive words such as University, Insurance, Bank, Trust, Royal and Fund Management are prohibited.

Q2:

What are the merits of offshore Personal Holding Company (PHC)?

A2:

The advantage of Personal Holding Company (PHC) is to bear limited liability. PHC is not only tax free, but also no paid-up capital, annual return, tax return and dividend declaration requirement. Therefore, there will be no immediate tax issue. On the other hand, using a domestic parent company as holding company is required to prepare Consolidated Annual Returns and it will arise Alternative Minimum Tax and income tax issues.

Q3:	What are the required documents as the offshore company director and shareholder?
A3:	Passport (with at least 6 months of validity), ID card copy, address proof (e.g. utility bill, tel bill or bank statement) and KYC signature form.

Q4:	Can a company shareholder subscribe for shares by the other ways rather than cash?
A4:	The company may issue shares in exchange of cash or cash equivalents: intellectual property, service, shares in other company, etc.

Q5:

Will the information of directors/shareholders be disclosed to public?

A5:

In USA, Singapore, Hong Kong, the companies’ registration information is disclosed in public. In most offshore jurisdictions, director/shareholder information is highly confidential and kept at local registered agent office. Company Registry will conduct annual inspection irregularly of companies to ensure the compliance of information kept by registered agent. The information will not be disclosed unless it is involved in money laundering or criminal.

Q6:

Why does every director/shareholder must sign KYC form?

A6:

According to the Int'l Anti-Money Laundering Acts, the KYC (Know Your Client) form is required by all offshore companies' Registry, and the purpose is also to protect the interest of director/shareholder. The signature must be the same with the passport (can be English or Chinese). The KYC forms are kept at registered office and are not disclosed in public. The local government has annual inspection of companies according to a certain proportion to ensure the compliance of KYC filings. Companies that fail to provide KYC forms will be fined, or may have their registration revoked.

Q7:	Will the annual government fee be varied depending on the registered capital or not?
A7:	Annual government fee of Seychelles and Labuan company is fixed regardless of its registered capital. But for BVI company, it is varied according to its number of registered shares (50,000 shares), whereas Cayman and Belize company annual government fee is different due to its registered capital amount.

Q8:	Is offshore company required to submit annual report and tax return?
A8:	Seychelles and Anguilla companies are not required to submit annual report or tax return. Hong Kong, Singapore, Labuan and Ireland company must submit the annual report and tax return annually regardless of its business activity. Dormant Singapore, Hong Kong company is required to submit audit report certified by CPA.

Q9:	Should transaction documents of offshore company need to be kept or not?
A9:	To enhance the Int’l Anti-Money Laundering inspection by OECD, most offshore jurisdictions (e.g. BVI, Cayman, Panama etc.) have revised the regulation to keep the transaction document, accounting book, bank statement and others to prevent to be blacklisted. The data can be kept at any location and the keeping address should be informed to local registered agent.

Q10:	Can offshore company issue bear shares?
A10:	To comply with the Int’l Anti-Money Laundering regulations, bearer shares are seriously concerned by most banks and jurisdictions. It might be rejected by bank for opening bank account. Bearer shares are required to be kept by certified lawyer. Therefore, prohibition of bearer shares is stated in company M&A.

Q11:	How to use offshore company for overseas investment?
A11:	Double-tier holding structure should be applied in overseas investment to ensure confidentiality and tax-free share transfer. Seychelles has good reputation and the annual government fee is fixed regardless of the amount of registered capital.

Q12:	Why set up offshore same name company(SNC)?
A12:	Offshore SNC (Anguilla, Seychelles, Samoa…) act as a representative to collect payment for domestic and foreign parent company (China, Vietnam, Thailand, Malaysia...) to eliminate international accounting and tax issues and maintain the brand image of domestic parent company.

Q13:	What are the functions of offshore Different Name Company (DNC)?
A13:	The function of DNC is to facilitate in the int’l trading among domestic, offshore and foreign SNC. The 3 SNCs should not have any direct transaction to prevent the increasingly stricter related party transaction inspection. Seychelles and Anguilla offshore companies are suitable to be offshore DNC.

Offshore Company Set Up Q&A

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