How to Set Up an Offshore Shell Company?

How to Set Up an Offshore Shell Company?

A person who is even minutely interested in the financial world must have heard of the Panama Papers record. It was a massive leak of the tax and financial documents uncovering the tax evasion and money laundering done by the wealthy people.

Panama papers exposed the negative aspect of shell companies, which created a negative stereotype about shell companies. The truth, however, is not even remotely in the vicinity of the stigma established in society.

In actuality, setting up an offshore shell company is entirely legal and is an accepted practice by various jurisdictions worldwide. There will always be people who exploit the legal mechanisms for their benefit but looking at the flipside is very important to get the whole picture.

Opening a shell company can prove to be a very advantageous financial move from a business viewpoint.

Shell companies can be established domestically, but to take full advantage of the benefits it has to offer, setting a company in an offshore tax haven is the way to go because offshore shell companies can help the investors avail lower taxes, deeper privacy, and access to different foreign markets.

What is a Shell Company?

A Shell Company, also commonly known as phantom firms, mailbox companies, and letter-box companies, is a type of company that does not take active participation in the day-to-day business operations or holding assets.

They are generally utilized in the strategy to develop confidentiality, store funds, access funding, and reduce taxes.

Despite the image that shell companies have built over the past years, it is a perfectly legal business entity like any other company type. When measured against other corporate entities or different types of holding companies, shell companies do not partake in the production or sales of products and services; they do not recruit employees or generate revenue independently.

How do Shell Companies Work?

The popularity of shell companies arose due to the high level of anonymity it provides, ergo meaning that the owners' identities are hidden, which helps them participate in financial activities without blowing their privacy.

Features of a shell company:

  • Shallow operation activities;
  • Almost non-existent operational assets;
  • Mainly used as a channel for some other purposes;
  • Eligible to transfer funds and open bank accounts; and
  • Can purchase and sell a property and some other assets.

So, a shell company in practice is a company that exists only on paper.

How to Create an Offshore Shell Company?

Now that we know the specific purposes of a shell company and how it operates let's take a look at how to proceed with creating a shell company.

Seeking the help of an advisor to help with the legalities and formalities is highly recommended to avoid the burden and red tape. Offshore company registration can be a swift process with the help of experts.

The procedure for setting up an offshore shell company is as follows:

1. Selection of jurisdiction and name of the company

The selection of names while setting up an offshore shell company should be done keeping in consideration the trade name laws if any of the particular jurisdiction is being opted. Choosing the optimal offshore jurisdiction can be done by assessing the jurisdiction's laws and regulations that will suit your purpose.  Some of the popular offshore jurisdictions are:

  • Nevis
  • Panama
  • Seychelles
  • Delaware
  • Wyoming
  • Hong Kong
  • Singapore
  • Belize

2. Appointing a nominee director

To maintain privacy, appointing a nominee director is the best approach. The nominee's name will appear on all the official documents and records, but you will enjoy actual control and ownership over the company. While some jurisdictions may require a local registered agent, it is quite uncommon.

3. Complying with the documentation

The registration process will vary from one jurisdiction to the other, but generally, the standard documents required by the authorities are:

  • Registration form;
  • Articles of Association;
  • Memorandum of Association;
  • Identity proof and copies; and
  • Residential Proof.

Along with the above-mentioned documents, a registration fee must be submitted.

Apart from the registration process, a shell company can also be purchased. Purchasing will help you skip all the formalities and enable you to utilize the already functioning shell company instantly. The period for which the company has existed will also give you a good standing and foundation of trust in the market.

Availing of the services of experts will not just help you with the registration. Still, on top of that, you can also opt to choose from a catalogue of services that they provide, like the creation of an offshore bank account, accounting, and bookkeeping services, etc. 

Where We Fit In?

Understanding the complications and legalities of setting up a company can be an arduous task. With our help, you can ascertain whether or not you should go for an offshore shell company.

We here at Business Setup Worldwide can help you by providing customized business solutions. Contact us; we would be more than happy to help you with your queries.

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