Offshore financial centers deliver an efficient framework for corporate establishment. These jurisdictions allow international business corporations to utilize an environment for growth and prosperity. Many of the more traditional jurisdictions wish to avoid an unequal level playing field. Accordingly, the rules for penetration into a foreign market may impose some further requirements on offshore companies. For tax authorities, the principles of substance and presence help to define and establish corporate tax residency.
Nominee services are provided by corporate service providers and further the local presence of an offshore company. The position of an offshore company is fortified by the provision of domestic activities making it logical that the company is incorporated offshore. Alongside the incorporation of the company and the registered address in the offshore jurisdictions, the appointment of local directors strengthen its position in the country of registration.
Company laws emphasizes the separation between the corporate legal entity and its ownership and control. As such, the limited liability of the shareholders is maximized to their invested share capital. Company directors are often natural persons. Some jurisdictions allow legal persons to act as a company director. Yet, directors responsibility is easier to impose on natural persons. Consequently, foreign jurisdictions may restrict market access to offshore companies with corporate directorships.
To enhance discretion or enforce substance and presence, nominee directors may act as the front of the organization. In a civil agreement between the ultimate beneficial owner of the company, the authority of the nominee director is defined and limited.
Alongside the traditional nominee services, beneficial owners may also utilize the cost-efficient environment of incorporation. This can be done by outsourcing several important business activities to the country of incorporation. As such, virtual arrangements, administration, marketing activities, and IT and telecom, are the most common offshore nominee services. In an era where offshore financial centers are criticized and scrutinized, owners of offshore companies benefit from playing by the rules. Nominee services contribute to this objective.