You can use an offshore corporation like you can a domestic legal entity. It can hold a bank account. It can hold investments. You can use it to conduct nearly any type of legal business. So, you can use it to expand internationally. In addition to limited liability from business debts, incorporating offshore in certain jurisdictions can offer financial privacy, lawsuit deterrence, and asset protection. Moreover, it can give you diversification options through increased international investment opportunities.
Offshore business entities also offer features that are not available in most U.S. states. One example is the ability to have another company as a corporate officer rather than a person. This enhances privacy. Another example is the laws protecting owners, officers and directors is much stronger than in the US where the attorneys routinely pierce the corporate veil.
Naturally, to combat money laundering and the funding of terrorism there are due diligence requirement. For the formation of almost any offshore company, the one forming the company needs to provide proper identification and other due diligence.
Offshore Corporation & LLC Privacy
You can own your offshore corporation or LLC privately, out of the public eye. Some of the most popular offshore jurisdictions have strict privacy laws whereby they cannot disclose the corporate or LLC officers, directors or managers. Naturally, there are exceptions for criminal issues such a money laundering, terrorism and drug trafficking. For maximum privacy an individual can establish a new business entity and opt to have nominee officers and directors. The nominee stands in so that personal names do not appear on company documents.
In order to sue an offshore business entity many jurisdictions require a separate initiative must initiated in the foreign jurisdiction. Even if a court domestic to the owner issues a judgment, countries such as Nevis and the Cook Islands require a completely new lawsuit; a fresh lawsuit that does not take the original into consideration. This is one of the biggest deterrents for frivolous lawsuits. That is, the additional effort and costs foreign courts require in order to sue a company offshore. Between the corporation and the LLC, the LLC offers far superior offshore asset protection services than the corporation. This is because, in a personal lawsuit, a creditor can take corporate shares. There are provisions in the law, however, such that a creditor cannot take a member’s interest in an LLC. In addition, the offshore LLC protects the assets inside of the company.
Offshore Asset Protection extends a myriad of benefits to foreign investors seeking to shield their wealth from creditors, lawsuits, divorce and judgments.
Offshore LLCs and Asset Protection
For even greater protection, offshore LLCs offer asset protection statutes that surpass corporations. For example, with a Nevis LLC, a creditor must post a $100,000 bond before they can file legal documents to enforce a judgment on those with interest in the company. In recent times the legislature amended the law so that the courts can require a bond of any amount, including more than $100K. If the funds have been in the company for two years or more, the courts will not hear the case. Even a creditor obtains a charging order there is nothing that forces a Nevis LLC owner to distribute company funds. Any charging order against a member’s interest disappears after three years, and a creditor cannot renew the order.
Do you want even greater asset protection from lawsuits? Put your Nevis LLC inside of an offshore trust. An offshore trust service includes a trustee located outside of the jurisdiction of your local court. Thus, a court order to bring back the funds and give them to your enemy falls on deaf ears. During good times, you are the manager of the LLC and signatory on all bank accounts. When under legal duress, your trustee can step in to protect you. The trustees that we utilize are licensed, bonded attorneys who we have known for over 20 years.
Offshore Legal Barriers
For a plaintiff suing an offshore business the legal hurdle is extremely high. First, it is expensive and there is no guarantee that a judge will even see the case. As state above, some of the most protective jurisdictions require plaintiffs to post bonds in order to have a case reviewed by a board. They will decide if it will be allowed to proceed. On top of this, the case must be pursued using local legal counsel and cannot be on a contingency basis. This process nearly eliminates frivolous lawsuits and predatory legal battles. In order for a creditor to repatriate assets, the must win a lawsuit in the foreign country. Nevis and Cook Islands, for example, do not recognize foreign judgements. Most countries do recognize and enforce judgments of foreign courts.
With a privately owned business you can establish a new bank account in the name of the business. Opening the account in the name of an offshore corporation or LLC greatly magnifies the privacy. In this case all financial transactions would be in the name of the offshore business.
Moreover, let’s compare offshore banking in one’s personal name compared to holding the account in an offshore LLC. If Pat Smith has a judgment, a judge can simply order Pat to wire the funds to his legal adversary. However, when Pat holds the funds in a Nevis offshore LLC, the courts cannot automatically force repatriation. There are asset protection provisions in LLC statutes that keep an outside party from taking an LLC member’s interest in the company.
So, the opponent must file a separate action to attempt to pursue the assets of the company. If they win, then they will have to file an entirely new lawsuit offshore. When filed offshore, they will likely need to file a sizable bond. Moreover, there will be a sizable uphill battle as the laws have been crafted to ward off legal predators.
In addition, one can combine favorable laws of multiple jurisdictions. For example, form the business in one country. Then hold the bank account in another. Thus, individuals can take advantage of the strength of multiple jurisdictions strengths in a single offshore service plan. Moreover, many offshore banks typically offer higher interest rates and more investment opportunities than those available domestically.
When using an offshore business entity as part of a complete protection plan one can use the company to transfer control of assets in a time of legal duress. This allows the creator of the plan to have hands-on control of the assets and day-to-day operations when times are good. Then, in the event of a lawsuit or court orders, they can removes themselves as company manager. When assets are controlled by a licensed, bonded offshore manager the foreign jurisdiction will not recognize judgments from abroad. Therefore, even a court order cannot compel a manager to turn over assets.
Offshore companies can be used in a similar fashion as domestic legal vehicles. The owner can enjoy the additional asset protection services, privacy, and investment benefits that many foreign jurisdictions offer. Additionally, this can simplify conducting business in multiple states and/or internationally.