Nominee services are usually provided by an intermediary in order to hide the beneficial owner’s business. Nominee services are related to nominee shareholder and nominee director. In the regular situation the nominee services should also involve a post box service (office address for correspondence purposes). Nominee services are suitable for large corporate structures for tax planning purposes and frequently involve international element. For instance, the ultimate beneficiary is based in other country rather than the company itself.
Nominee shareholder services are usually carried out basing on declaration of trust, whereas the nominee declares that he holds shares on behalf of other person and he is not entitled to make decisions in the company, to neither vote at a meeting of shareholders, nor receive dividends, unless specifically instructed by the client. The nominee has no rights to sell shares unless required by the client. However, the client and nominee may agree on specific duties that the nominee should carry out. Such duties are often assigned to lawyers and attorneys at law that are professionals in the field and may protect the client`s interest.
Nominee director also called 'shadow director', who usually appears only for official records, whereas the company is virtually governed by the client by power of attorney. On the basis of authorization the client may open a bank account and acquire full company management and control.
Advantages of nominee services The advantages of using nominee services appear in cases when a businessperson wants to keep his privacy and decreases the visibility into official records or does not want his name to be associated with the concerned company. Moreover, there can be a situation, when a person has restrictions to exercise the planned activity or when the law requires a local management, for example, a local secretary in Hong Kong.
When a quick action is necessary to register a company abroad, in case the client cannot travel, it is often more convenient to temporarily appoint a local company manager. If the intention is to open a company in overseas jurisdiction, such as BVI, Belize, Hong Kong, it might be physically complicated to arrive in person.
Nominee services usually guarantee confidentiality and anonymity. However, a disclosure sometimes happen at bank or in investigation authorities during court proceedings.
The nominee services are widely used for tax planning and asset protection purposes. If ultimate beneficiary of completely corporate structure is based in low tax countries, he should enjoy the benefits of low tax system for the received dividends from the earned profits.
Other advantage derives from the registration country and is often referred to financial statements and reports. In some tax haven jurisdictions there is no need for submitting the annual, therefore, low auditing and bookkeeping requirements that provide certain advantages, if the person is willing to increase privacy and confidentiality and hide his/her assets.
An examination of the financial report of a company is called an audit. It is usually presented in the company’s annual report prepared by auditors. It usually relates to a specific past accounting period. Audit report based on selective testing of company’s performance is the obligatory requirement once the audit is completed. The report includes an income statement, a balance sheet, statement of changes in equity as well as cash flow statement and explanatory notes with a summary of significant accounting policies attached.
An audit reflects the financial position of the company at a given date, including information with regards to whether everything what is owned by a company and what it owes is correctly recorded in the balance sheet and are its losses and profits properly assessed. The financial report must be prepared according to certain legal requirements. When the report is prepared, it must be approved by company’s executives (e.g. Board of directors) by making a judgment towards its accuracy.
Audits may also include: asking formal and informal questions, examining tangible items owned by a company such as mechanical and electrical equipment, obtaining written confirmations, testing and monitoring certain procedures being performed in the company’s premises.
Auditing standards The standards used for proper examining the financial report are set by a government. There are International Standards on Auditing (ISAs) available on the Internet, containing clear statements which should be addressed by auditors. They consist of introduction, objectives, definitions, requirements expressed by the phrase „the auditor shall”, application and other explanatory material.
There is also an e-Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements released in December, 2016 available on the Internet with translations in English, Arabic, Bulgarian, Danish, French, Georgian, French, Kazakh, Italian, Serbian, Russian, Spanish and Thai. It includes Consideration of Laws and Regulations in an audit of financial statements and amendments and other international standards, consisting of new requirements which address non-compliance with laws and regulations (NOCLAR) in the IESBA Code of Ethics for Professional Accountants.
Core principles of auditing There are general principles and responsibilities when it comes to General Auditing Standards as well as functions of the independent auditor AS 1001. For example, consideration of materiality in planning and performing an audit, having a direct effect on the determination of financial statement amounts. AS 1005 stating independence in mental attitude is to be maintained by the auditor or auditors. AS 1010, specifying training and proficiency of the independent auditor and stating that an independent auditor represents a person who is proficient in accounting and auditing. AS 1015, explaining due professional care requirements in the performance of work. Other divisions of auditing standards include general concepts. They give a detailed description of audit risk, audit evidence and relationship of auditing standards to quality control standards. General activities describe supervision of the audit engagement, audit documentation, using the work of a specialist and engagement quality review. Auditor communications describe communications with audit committees and communications about control deficiencies in an audit of financial statements. Audit procedures include audit planning, reporting and risk assessment. Auditor reporting includes requirements of reports, financial statements and dating. Matters relating to filings under federal securities laws as well as other matters associated with audits include a view on responsibilities and reviews of financial information.
Audits help to understand and evaluate company’s activities, consider company’s economic issues which may affect its business, identify risks, having an impact on company’s financial state and performance and afterwards generate a business plan which will help the company to improve all the collected data.
Confidus Solutions deals with not only offshore companies and banking, but also provides all necessary business support services. Our professional team is much more than traditional bookkeeping agencies or company formation agents. We can ensure all required support, including legal framework and personal assistance, and these are things that provide our clients with comfort they deserve.
Our business support services include following offers, but are not limited to:
Legal address; Mail forwarding; Bank accounts opening; Translation services; Document legalization and verification; Business due diligence; Representation during negotiations; Consultations regarding insurance; Real estate purchase and due diligence; Legal advice on commercial law; Virtual office; Management office; Contract law. We highly value needs of our clients, so we can offer you more services on case-to-case basis. Even though our central office is located in Europe – our numerous co-operation partners around the globe can help us find unique solution in any part of the world!
Limited Liability Corporations (LLC) are referred to as corporations with corporate structures where the members (shareholders) cannot be held personally liable for the debts or liabilities of the corporation, meaning only the assets of the corporation itself are at risk. For this reason, this corporate form is considered “limited liability”, while the combination of the characteristics of a corporation and a partnership as a characteristic of limited liability is similar to that of a corporation, and the availability of flow-through taxation for the partners is a characteristic of partnerships. LLC as a viable option if the person wants to incorporate a commercial corporation or small business locally or internationally within certain limits.
The nature of a joint stock company In the case of a joint-stock company (JSC), the shareholders of such business entities are fully liable for the debts of their companies. This means that the shareholders of the public company have limited liability or liability limited by guarantees or shares. Normally, the shares of a JSC are transferrable and can be traded on a legal exchange between private parties (private JSC) or publicly (public JSC). A public company can raise large amounts of capital by issuing its shares. As a rule, joint-stock companies are formed by one or more persons for the purpose of large-scale business operations. It is represented by a board of directors, which consists of at least one person and can also be represented by an authorized representative.
Differences between LLC and JSC JSC and LLC are the two most common company types these days. There are some key differences between these two forms of legal entities.
JSC issues stocks and bonds per procuration of stocks that may be offered to the public, unlike LLC, which does not issue stocks or bonds. JSC share transfer can be executed upon consent of both parties, if it is LLC, they can be transferred under an agreement certified by a notary public provided that this agreement is executed with the consent of 75% of the shareholders 75% of capital. In LLC, the capital is not divided evenly, but in JSC, the capital is divided evenly.
The fields of activity of companies can also vary. LLC does not engage in business fields such as banking and insurance and other fields determined by specific laws, unlike JSC, which can operate in all fields. For this reason, financial institutions find the structure of a JSC more credible and influential. Another formal difference between JSC and LLC is that the former can be formed for an indefinite period of time as opposed to the latter which is only intended to be formed for a period of 99 years. At JSC, the minimum number of shareholders is 5 and there is no provision as to the maximum number of shareholders. In contrast, the minimum shareholder number for LLC is 2 and the maximum is 50.
However, these two types of businesses have something in common. There are some similarities between JSC and LLC. Both can be registered by filing a memorandum of association with the state registry. Both may be foreign-owned and have foreign shareholders. In both cases, shareholders' liability is limited to their contributions. Both require that at least one investor is a natural or legal person. The investor can be both a resident and a non-resident. The annual financial statements, consisting of the balance sheet, profit and loss account and annual report, must be approved by the shareholders within 6 months of the end of the financial year.
Corporate documents required for company formation In order to incorporate a company, two basic incorporation documents are required:
Social contract It contains the basic conditions under which the company may operate. The document consists of information such as the company name, information on the founders, information on the equity of the company, the permissible amount of the formation costs and their disbursement order, etc.; social contract It generally defines the responsibilities of the board, the nature of the business to be conducted, and the means by which the owners exercise control over the board. With the consent of the founders, the Articles of Association may contain specific resolution-making provisions, limitations of the Board of Directors, powers of the Council and other specific terms relating to the procedure of transfer of shares. Other secondary documents may be requested. These are as follows:
An application from the local company register – each state has its own form that must be submitted for changes to be made; Statement of each board member / approval of board member; List of shareholders / division of the register of shareholders (in the case of a limited liability company); Specification of the company address / notification of an office address; bank statement on the payment of the share capital; Receipt of payment of state fee; To learn more about the company incorporation process, click here.
Corporate documents required for a change of ownership This type of change is very common in limited liability companies as it is a closed company, meaning stocks are not subject to public trading. In principle, the following documents must be submitted to the local commercial register when there is a change of shareholder:
An application form; Updated share register; Evidence of the transfer of shares, such as a share purchase agreement. In the register of shareholders, it is usually necessary to state the total number of shares in the company, the total value of the shares and the number of shares paid up.
Company documents required for director change For a change of managing director, the following documents must be submitted to the local commercial register:
An application form; Minutes or an extract from the minutes of the general meeting – this document must include the corresponding resolution; Written acceptance of the appointed director; In some states, the amount of documents required is minimized. Also note that the list and names of required documents may vary from country to country.
Company documents required for change of registered address If you have moved your registered office to another address, it is imperative that you make changes in the commercial register. Otherwise you will miss all your correspondence. The following documents must generally be submitted to the commercial register for a change of address:
An application form; consent of the property owner; It is important to note that a company cannot rely on the fact that the company's actual address differs from the registered address. If a correspondence is sent to the registered address, the company is deemed to have received the correspondence.
The following jurisdictions are most common for company incorporation procedures due to the simple legal framework, quick registration as well as other advantageous factors.
A registered office is an official address of a legal entity assigned by every entrepreneur in the incorporation process. It can also be referred to as the legal seat, registered office or domicile. Along with a registration number, a registered office is a mandatory attribute for any type of legal entity, creating the necessary public records in most jurisdictions.
The purpose of the office address is to be accessible through state institutions and to receive official correspondence there. A registered physical address is required to receive official correspondence from tax authorities, banks, partners, customers, shareholders, etc. However, the registered office is not necessarily linked to a post office box. Therefore, entrepreneurs must ensure that their correspondence reaches them when it is necessary.
Legal requirements for the address The registered address must be in the same country where the company is incorporated. The documents that confirm your registered address are: certificate of incorporation for most types of company or memorandum of association for most types of partnership. In most jurisdictions, you are not allowed to use a PO Box as your registered office, as it must be an actual and publicly available address. You can only use it if it is attached to the full address with house number and zip code.
If necessary, the address of the registered office may be changed by the director or other officer of the company in accordance with the company documents. Make sure you get a properly executed confirmation of such a change (protocol or minutes) to present to your bank, auditor, partners, etc. upon request.
Renting a legal address You can always opt for a rental service of your registered address, or in other words – to use a third party address. There are many advantages to renting a legal address. First, it offers you privacy by shielding sensitive information of your private home address. Second, it's a cost-saving option when you don't need to rent office space, especially abroad.
There are several aspects to consider when choosing a registered address for your business. For example, in some countries (Latvia, Lithuania) an actual rental agreement may be required for the tax authorities. Or some addresses are heavily overused or even blacklisted by banks or tax authorities. You might want to look up the information provided on Google Maps for the location of your company headquarters and scan some articles on the web related to the address offered to you.
Some business people find that virtual offices are an easy and inexpensive way to go global. Others think it offers an opportunity to maintain the most important thing required for successful e-commerce and marketing today - a business presence that can be established in any market.
According to Wikipedia and Investopedia, the virtual office offers address and communication services for a fee without the provision of dedicated office space, as it is a business location that only exists in cyberspace and allows employees and business owners to work from anywhere using technological means to work – personal computer, laptop, notebook or tablet.
Benefits of using a virtual office A full application of a virtual office term can include live professional communication. This means that all business appointments can be conducted online via telephone and video conference. Business documents can be shared, signed and sent electronically. There are some significant benefits of doing business in cyberspace.
Most important might be the fact that if the company has several or more employees, each of them can do their work from the place that is most convenient for him or her, having the right to his or her own lifestyle, sleeping and resting is maintained habits and other requirements that can be customized. This means the company is not limited to hiring by expanding employee employment opportunities and corporate hiring opportunities.
This way of transacting and arranging business is creating new professional fields as professional as remote receptionists who can use high tech computer phone integration software to communicate with customers, virtual assistants who don't have to meet their customers in person and assist them instead virtual and other members of the virtual team.
Virtual teams can offer services such as answering machines and call centers operating from a central location to receive and transmit large numbers of inquiries over the phone, voicemail, which is basically a low-cost technology service that stores voice messages electronically , Voicemail messages can also be converted to e-mail letters to ensure high virtual mobility, virtual office space, ensuring a chance to have a high-profile, respected address in a city of the employee's own choice, telephone answering service, the bridges the gap between the employee and his or her customers.
In general, the creation of virtual offices aims to increase and increase efficiency while combining home and work together. It saves money, increases mobility and allows for cost-effective expansion without long-term commitments, keeping office costs to a minimum.
Disadvantages of using a virtual office The other side of a virtual office is that it lacks centralization, which creates difficulties when daily work meetings and appointments are reduced. Employees have to be very proactive here in order to maintain the existing structure. The lack of interaction can also increase when there is no planned everyday communication. These are the interactions that come with a traditional work environment, like lunch breaks and conversations with coworkers about work, life, and relationships. When working remotely, communication in general can also be difficult.
The lack of a face-to-face meeting increases the likelihood of misunderstandings and misinterpretations, since in this case words sent via email or written may lack the non-verbal cues and tone of voice that could make it easier to understand what the person said and how he said it or she feels.
There is also a lack of opportunities to plan and schedule meetings, for example to meet a client at short notice, as it is not possible to arrange meetings in a specific location called an office space or office building.