"It is perfectly elementary that a foreign government cannot come here - nor will the courts of other countries allow our government to go there - and sue a person found in that jurisdiction for taxes levied and which he is declared to be liable in the country to which he belongs."

Viscount Simonds (Government of India, Ministry of Finance (Revenue Division) v Taylor and Another [1955] 1 All ER 292 at 293, citing with approval Rowlatt J. in King of the Hellenes v Brostrom ([1923] 16 Lloyd's Rep at p 193).


The selection of the most suitable jurisdiction for either international trade or investment can often be difficult and requires very careful consideration.

Most offshore jurisdictions are free from foreign exchange controls and have introduced company legislation to cater for a diverse range of international business requirements. It is important to select a jurisdiction that is well suited to specific corporate and personal needs.


The pre-requisite requirement for anyone wishing to establish their business or private interests offshore is to select a jurisdiction that provides political and economic stability, so that business can be conducted with certainty, confidence and corporate security.


There are now more than 50 jurisdictions world-wide providing offshore company legislation. Some jurisdictions have introduced new and modern suites of corporate legislation, specifically designed for international business whilst others have amended existing domestic legislation to cater for offshore requirements.

The most essential criteria are that the legislation is modern, flexible and well proven. Furthermore, the legislation should preferably provide confidentiality and complete privacy regarding a client's business dealings.


Many offshore and "tax planning" jurisdictions have made efforts to ensure that their company law provides the following features:

1. Limited liability.

2. Minimisation of directors liability - directors are generally responsible for the acts of a company however in certain jurisdictions directors may seek indemnities from both the company and its beneficial owners.

3. Minimal or optional statutory filing obligations.

4. Nominee shareholders allowed.

5. The availability of bearer shares.

6. Disclosure of beneficial ownership either not required or limited to special bodies, such as offshore authorities or central banks.

7. Minimal or optional statutory filing obligations.

8. Broad range of permitted company names and suffixes to denote limited liability.

9. Low capital requirements.

10. The ability to hold directors and/or shareholders meetings anywhere in the world.

11. The absence of or the optional requirement for the audit of accounting records.


The ongoing administration of all offshore entities demands both legal and accounting services. Therefore, it may be important to select a jurisdiction that provides a comprehensive selection of legal and accounting firms, which can provide cost-effective services to an international standard.


It is important for a jurisdiction to have state of the art communication facilities; to include air travel, mail services and telecommunication systems in order that business can be conducted in an expeditious manner.


Whilst offshore providers are able to provide multilingual services, the ability to conduct business in English is useful. This may assist in ensuring that client requirements are fully understood without the risk of mistakes.


Whilst offshore companies are able to bank anywhere in the world, some clients prefer to open corporate accounts in the jurisdiction where a company is domiciled. In such case, the availability of a comprehensive range of banking services and access to international banking facilities is of importance.


The jurisdictions around the world can be categorised as follows

  • Treaty jurisdictions.
  • Non-Treaty jurisdictions.

Clients seeking to take advantage of double tax treaty relief need to establish a company situated in a treaty jurisdiction. This is essential for the minimisation of withholding taxes on the payment of dividends and royalties from contracting states. Treaty jurisdictions also portray a non-offshore image and thus provide cosmetic appeal.

Non-treaty jurisdictions are mainly used because of the absence of corporate taxes on the profits of the company and usually only require companies to pay a fixed annual licence fee.

It is; therefore, important to assess the taxation implications of the business that is to be conducted, and decide whether or not a treaty jurisdiction is required. Under normal circumstances, a treaty jurisdiction would not be required for the international movement of goods and most services. Inward investment in to certain countries, however, may require a treaty jurisdiction to minimise the impact of taxation.


Company law generally follows three different models:

  • English Law.
  • European Civil Law.
  • US Law.

Company law based on English Law is the most frequent model for the classic offshore jurisdictions, such as the BVI, the Bahamas, Hong Kong and Belize. Company law in this type of jurisdiction is typically modelled on the UK Companies Act 1948.

The Companies Act 1948 draws from 1844, 1855, 1862, 1897, 1900 and 1929 Acts and many concepts, such as the acceptance of nominee shareholders, are based on 19th Century Acts. The Joint Stock Companies Act 1856 introduced the Memorandum and Articles of Association and provided for incorporation by registration.

European corporate law is often based on French Law of 1864 and usually differentiates between the "share" company and the public company. The former is usually characterised by a lower initial capital and a smaller number of subscribers whilst the latter is allowed to issue securities that are publicly negotiable.

Incorporation procedures in Civil Law jurisdictions are different from those in Common Law countries, e.g.:

  • An amount of paid-up capital must be subscribed before incorporation.
  • A company's statutes are essentially a contract between the subscribers.
  • Procedures are more onerous than in Common Law countries.
  • Incorporation is facilitated by a notary.
  • Corporate law in Civil Law countries often splits the responsibility of boards of directors between an executive and a supervisory board.
  • Powers of directors may be curtailed.
  • Liquidation procedures are time consuming and complex.
  • A legal reserve may be required.

US Corporate Law has been influenced by both English and Civil Law. Apart from differences in language, terminology and interpretation US Company Law differs from English Law in significant ways, including:

  • US Corporations have officers in addition to directors.
  • By-laws are often adopted after incorporation.
  • Directors are often empowered to change by-laws.

Company law in Liberia, Panama and Nevis has been influenced by US Law.


In 1997, some 60,000 or so offshore companies were incorporated in the various Caribbean centres. The most popular jurisdiction is the BVI whose registrar has incorporated approximately 200,000 IBC companies in the last ten years. Some 35,000 IBC's were incorporated there last year.

It is estimated that 15,000 companies a year are incorporated in Hong Kong for offshore purposes and another 50,000 or so in the other offshore jurisdictions.

This means that the total number of companies formed for offshore purposes exceeds 130,000 per annum.

The British Virgin Islands are not shown on these charts, but as of the end of 1998 there are over 200,000 companies incorporated there!

If you are interested in our international professional corporate services please contact us.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.