Most business people have heard about offshore companies. However, very few are aware of what these companies are used for and how they differ from other more common corporate entities. First and foremost, it is essential to define the term Offshore. Offshore means something is a country other than the one in which you operate. So if you open a company in overseas location it will become an offshore company for you.
However in practical sense the term is more applied to companies registered in offshore locations like BVI, Seychelles, Cayman Islands and so on. This is typically pursued to realize various financial, legal or tax benefits.
A typical IBC is effectively a corporation with a limited liability. This liability is limited only by company’s shares. Shares are owned by one or more shareholders while the company is managed by director(s).
Such a company can open bank account, enter into contracts, sue other parties or can be sued. It can buy or sell products and services and can do all activities that a typical corporate is allowed to do.
Offshore incorporation can be carried out in a number of jurisdictions, including Anguilla, BVI, Belize, Seychelles, Panama and Nevis. The main decision criteria are price, reputation of the jurisdiction and time to incorporate. BVI and Seychelles are the popular destinations currently for offshore incorporation.