What is an "offshore company"?

An offshore company refers to a limited liability company or a joint stock limited company established in an offshore legal area. The local government does not levy any taxes on such companies, but only charges a small amount of annual management fees. At the same time, major international banks recognize such companies to facilitate their bank account opening and financial operation. It has three characteristics: high confidentiality, tax relief and no foreign exchange control. What is an offshore company? A: Offshore companies are legally recognized organizations registered overseas. Independent, with limited liability. Offshore companies can sell shares, have the right to sue and be sued, and exist forever. Many state-owned enterprises (such as Bank of China, China Electric Power, China Mobile, China Unicom, China Netcom, China Petroleum and China Offshore Oil). ) and almost all international venture capital and private M&A funds (IDG, Softbank, SAIF, Sequoia, Dinghui, Huaping, Goldman Sachs, Morgan Stanley, Walden International, Baring, Gifford, Intel, Intellectual Property and Lenovo Investment). Blackstone and so on. ) and many private enterprises (such as Yuxing, AsiaInfo, Sina, Netease, Sohu, Shanda, Baidu and recently Country Garden, SOHO, Alibaba, Giant Group and other famous private enterprises) have almost achieved their great success and leap by setting up offshore holding companies in offshore jurisdictions. The main purposes of establishing offshore companies in offshore jurisdictions are as follows: (1) conducting overseas red chip private placement, and then listing in the United States, Hong Kong, Singapore or the United Kingdom; The curve circumvents the restrictions of foreign-restricted industries to conduct domestic operations, especially the Sina model adopted by foreign capital to enter the Internet value-added telecommunications industry (TMT), that is, the contract arrangement/agreement control model (VIE structure, that is, the variable interest entity) is all designed through the offshore company structure; Cross-border mergers and acquisitions; Establish a holding company to carry out capital operation; Tax planning, global trade, joint ventures, etc. On September 8, 2006, the Regulations on Merger and Acquisition of Domestic Enterprises by Foreign Investors (Ministry of Commerce, State-owned Assets Supervision and Administration Commission of the State Council, State Taxation Administration of The People's Republic of China, State Administration for Industry and Commerce, China Securities Regulatory Commission, State Administration of Foreign Exchange, known as document 10 in the industry) was promulgated and implemented, and overseas private placement and red chips were carried out through contractual arrangement/agreement control mode designed by offshore companies (VIE structure, that is, changing stakeholders).

trait

Strictly speaking, offshore company is not a very accurate legal term. An offshore company refers to a limited liability company or a joint stock limited company established in an offshore jurisdiction. As a form of enterprise organization, offshore companies are not limited to companies (limited, unlimited, holding, exemption, international business companies, shares, public companies, etc.). ), but it also includes trust funds and partnerships. These offshore companies have different names according to the laws of the place of registration. For example, it is called a commercial company in the British Virgin Islands and an exempted company in the Cayman Islands. In the context of China, it is also called Overseas Special Purpose Company (SPV).

1. Legitimacy: The so-called offshore company means that the registration and operation of the company are not in the local area, and the handling of the offshore company is completely in accordance with the formal procedures for the registration of the local company, so its registration is completely legal;

(1) As offshore companies are under the jurisdiction of the place of registration, they also enjoy the preferential tax policies of the place of registration;

(2) In terms of import and export, the role of offshore companies is more entrepot trade and its bank account collection;

(3) The determination of company name needs to be registered according to some local laws and regulations. Some countries will avoid using certain words, such as bank, royal or the place names of some countries.

2. Cost-effective ratio: Compared with general limited companies, offshore companies mainly differ in taxation. Unlike the usual practice of taxation based on turnover or profits, the governments of offshore jurisdictions only levy annual management fees on offshore companies, and do not levy any taxes.

classify

As mentioned above, an offshore company is a company established by a non-local investor in an offshore jurisdiction according to the local offshore company law, and can only conduct business activities outside the offshore area. According to different classification standards, offshore companies can be divided into the following categories:

According to the way the company is established

Newly established offshore company: refers to a company established in an offshore jurisdiction by way of capital injection in accordance with the offshore company law.

Surviving offshore company: refers to a company established under the laws outside the offshore jurisdiction and approved by the company registrar of the offshore jurisdiction to obtain the status of offshore company.

By investment destination

Typical offshore company: the parent company of nail country invests in country C in its name through an offshore subsidiary established in country B.

Abnormal offshore company: In order to reinvest in China, the domestic parent company set up an offshore subsidiary in country B and then returned to China to invest, thus effectively avoiding the legal restrictions on reinvestment of domestic enterprises or enjoying the treatment of foreign investors.

According to the different founders of the company

Personal offshore companies: from the reality of offshore registration, the founders are mainly high-income groups, mainly entrepreneurs, businessmen, senior managers, actors, writers, inventors, engineers, intellectual property owners, wealth inheritors, lawyers, doctors and so on. Individuals register offshore companies mainly for investment, taxation and immigration planning, and offshore companies meet privacy and security requirements when dealing with these matters.

Internal characteristics of offshore companies

(1) One-person shareholder;

(2) One-person director;

(3) A legal person may be a shareholder or a director;

(4) Shareholders' directors can be legal persons and natural persons of any country, nationality and domicile;

(5) There is no limit on the number of the highest shareholders;

(6) Authorized capital system, without capital verification requirements;

(7) There is no maximum capital limit;

(8) There is no annual report requirement;

(9) The legal registered agent initiates the establishment of the company and collects and pays the registration fee and annual fee on behalf of the government;

(10) The company shall not trade or purchase any real estate at the place of registration or with the residents of the place of registration, except for the purpose of keeping company files and contacting shareholders;

(1 1) The convening procedure of shareholders' meeting and board of directors is simple, and attendance and voting can be in electronic form;

(12) The time and place of annual general meeting, special general meeting and board meeting shall be decided by shareholders or directors;

(13) The establishment, dissolution and governance of the company are governed by the laws of the place of nationality (place of registration), and the operation is governed by the laws of the place of conduct;

(14) There are many choices for company name except the franchise name restricted by law;

(15) The establishment and dissolution procedures are simple and the time is short;

(16) Accounting and auditing are decided by the board of directors;

(17) The information of shareholders and directors has not been filed in the government, and can only be disclosed with the authorization of directors;

(18) Shareholders are free to transfer their shares. Some laws stipulate that the approval of the board of directors is an effective requirement for the transfer;

(19) The laws of some countries and regions prohibit the public offering of shares;

(20) the principle of territorial jurisdiction is implemented, and income from overseas is completely tax-free;

(2 1) You can open accounts in international and local banks (the situation varies from country to country);

(22) The nature of foreign investment.