Offshore 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 from the Register of Companies of the relevant jurisdiction due to late payments.

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.

The United Arab Emirates is not a signatory to the Hague Convention governing Apostille of Documents. As such, a document bearing an apostille still requires to undergo the chain of legalizations (up to the UAE Consulate of origin) before it may be accepted in the UAE.

Asset protection: The legal steps a natural or legal person undertakes to protect his/her/its assets from possible seizure by creditors. This is one of the primary functions of an Offshore Company.

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.

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. This type of shares is not allowed in UAE offshore jurisdictions.

Beneficial owner/ 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)

Branch: A division of a company. As opposed to a subsidiary, a branch is not a separate legal entity.

Certificate of Formation/ Incorporation: A document that certifies that a company has been formed and registered provides for the law under which the registration has been made, the jurisdiction where the company has been incorporation, the registration number and the date of registration. This is one of the basic statutory documents of a company.

Certificate of Good Standing: A Certificate of Good Standing (CGS) is issued by the authorities of the jurisdiction where a company has been incorporated. 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 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.

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 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.

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.

Holding Company: Parent company which holds shares (interest) in another company or other companies.

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.

Jurisdiction of the incorporation/formation: A jurisdiction where the company or corporation was incorporated/ formed.

Liability: Any current or future legal obligation, e.g. debt, duties under a contract or a position.

Member: A holder of an interest in a Limited Liability Company or same as a shareholder in some other types of legal entities.

Money Laundering: The process and technology of disguising, investing, and/or hiding the proceeds of criminal activities coupled with their “legitimization”.

Nominee 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.

Nominee 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.

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.

Operating Expenses: The amount paid for assets maintenance or the day-to-day costs of running and maintaining a business.

Parent Company: A company in relation to its subsidiaries, branches, or sister companies.

Registered Agent: A registered agent represents an International Business Company in the jurisdiction of incorporation. A Registered Agent normally provides a Registered Office address, provides liaison with local authorities and receives all legal 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.

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.

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 non-residents.

Tax planning: The legal steps a natural or legal person plans and/or undertakes to minimize lawfully his/her/its tax liabilities. An Offshore Company is one of the primary tools currently used worldwide for tax planning purposes.

Trust (doesn’t exist in the UAE): 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 (doesn’t exist in the UAE): A company properly licensed by the authorities to provide services of a Trustee.

Trustee (doesn’t exist in the UAE): 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.

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Affiliated Sites

  • The Legal 500
  • Judicare
  • Egyptian Junior Business Association
  • HG.org
  • Chartered Institute of Arbitrators (CIArb)
  • International Chamber of Commerce (ICC)
  • London Court of International Arbitration (LCIA)