Introduction
Our last white paper (The Idea of the Offshore Management Company) discussed the reasons for setting up an offshore management company and touched upon some of the main elements of how such a company should be managed from an operational and fiscal point of view. We noted that “to ensure the proper operations of the offshore management company and so as to keep it outside of the tax framework of the onshore entity, — the offshore management company should have substance. This essentially means it should not operate as a so-called ‘shell’ or a ‘mailbox company’.”
We also pointed out that the following factors are commonly considered by tax authorities with regard to what conduct is sufficient evidence that the central management and control of a company is in the country of incorporation and not onshore where some principals may be living:
– where the actual activities of the company take place;
– where meetings are convened and decisions for day-to-day operations are carried out;
– where the directors are tax resident or located normally;
– whether the directors operate independently or at the request of a person onshore;
– where the shareholders holding a majority stake are tax resident or located.
This white paper will look in more detail at the operational practices that all offshore companies should follow in order to mitigate any tax risks.
Please download our white paper here.
The white paper series on How to Run Offshore Management Companies and Funds with Substance and Corporate Governance is produced by Laven Financial Services, a consultancy providing substance and control services in the Caribbean across traditional hedge fund structures, such as management companies in the Cayman Islands and the British Virgin Islands.
Laven Financial Services offers corporate governance, international compliance and operational support services, as well as directorships to offshore management companies.
The series draws on the Laven group’s experience in corporate governance and fund formation but also its expertise through compliance and tax specialists and operational due diligence consultants. The white paper series is also offered as useful guidance for any investors on how they may view corporate governance of offshore fund structures when carrying out any operational due diligence or manager selection.
