GLOSSARY
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 PRICE
LIST- 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.
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.
Britain
,
Cyprus
etc
.
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.
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.
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,
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.
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.
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 nonresidents.
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
International
Business Companies
,
Delaware
Corporations and Limited Liability Companies, and Trusts are being used by our clients for the above purpose.
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.
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
.
Copyright Asset Protection s.r.o. © 2007, All rights reserved.
Asset Protection s.r.o. is not a law firm and does not provide legal advices or legal services.
We recommended to consult licensed professionals with regards to local tax and legal matters.
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