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Please note that Tai Pan provides an execution only service in respect of the formation of companies, opening bank accounts and related services.
Therefore comments or suggestions made by us should not be considered as formal advice.
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Residency is often used to determine where a company (or person) is liable to pay tax. For example, a Cyprus non-resident company is not subject to Cyprus taxes as, by definition, it is managed and controlled from outside Cyprus. There are however many countries (probably the majority) that determine that simply act of being registered in that country makes them resident for tax purposes. Great care needs to be taken when using ‘non-residency’ to reduce a company’s tax bill.
This is a variation on residency. For example, Hong Kong companies are taxed only on profits earned in the territory e.g. a Hong Kong company buys from Singapore and sells to the USA. In most cases this will be ‘non-territorial’ and thus exempt from tax. Again, great care needs to be taken when using a company in this way. In this example we would suggest NOT having a bank account in Hong Kong (so that no part of the transaction passes through Hong Kong). We would probably also suggest that the company’s directors are not based in Hong Kong.
Simply, this is where the decisions of the company are taken, and also by whom. There are two decisions (90 years apart which form the basis of common law “thinking” on this question).
1. De Beers Consolidated Mines Ltd v Howe 5TC198, 1906
2. Untelrab Ltd v McGregor (Inspector of Taxes) ; Unigate Guernsey Ltd v McGregor (Inspector of Taxes), 1996
Simply, if you are running a company from Cyprus but you live in the UK, you should be seen to be running the company from Cyprus. For this reason all resident Cyprus companies formed by us have a Cypriot resident professional director. We would also suggest meeting the director in Cyprus once a year to hold a formal board meeting.
The standard form is “Limited” as in limited liability and abbreviated to ”Ltd.” Some jurisdictions (eg Singapore) add “Pte” (for private) thus ABC Pte. Ltd.
LLP is initially from 2001 in the UK, later in other jurisdictions e.g. Singapore, generally to allow professional firms (accountants, lawyers etc) who were previously obliged to operate as (unlimited) partnerships, to incorporate. An LLP may of course be incorporated for any purpose. It differs from a Limited company in that it enjoys ‘pass-through’ taxation (as a partnership it is not taxed, rather it’s members are).
Inc., GmbH, AG, SA etc., - respectively the US, German and French abbreviations suggesting a company with limited liability. Certain jurisdictions particularly in the Caribbean allow companies to have any one of these suffixes at will.
BASIC COMPANY REQUIREMENTS
(see also registered agent). All companies must have a registered office in the jurisdiction where they are formed. This is to enable receipt of official correspondence and to provide an address for service of legal processes. In most cases (unless separate arrangements have been made), this is not a trading address and should not be used for general trade correspondence.
Not always required (e.g. the UK Companies Act 2006 abolished the requirement for a company secretary, also companies formed under IBC legislation based on the Delaware model which use Registered Agents to fulfil the same function). Where appointed, (by the directors) the company secretary is not an employee, but rather an officer of the company with specific responsibility for convening & minuting board meetings etc.
This combines the role of registered office & company secretary in IBC (International Business Company) jurisdictions where it is compulsory to have one. RA’s generally file annual returns and pay taxes etc on behalf of the company.
In most cases the Registered Agent is licensed in the jurisdiction in which it operates.
For example, TMS FZE, the owner of this website, holds a licence in RAK (Ras Al-Khaimah) in the UAE.
Every company must have at least one director. Using the words of the UK Inland Revenue: ‘A director must try to make the company a success, using his skills, experience and judgment, follow the company’s rules, shown in its articles of association, make decisions for the benefit of the company, not himself and ensure the company’s accounts are a ‘true and fair view’ of the business’ finances’.
A "member" denotes a person whose name appears on the Register of Members whereas a "shareholder" denotes a person who holds or owns the shares. For all practical purposes the words "shareholder" and "member" are used interchangeably to mean the (part) owner(s) of the Company.
GLOSSARY OF TERMS
In general terms it is the same as country. However, it’s meaning is a little more specific e.g. in the USA each state determines its company’s registration procedures therefore “The jurisdiction of Delaware, the jurisdiction of Florida etc.” are used, whereas as the country is the USA.
A registry issued document that confirms that the company is fully up to date in its government filings. In some cases this document will also confirm the directors and shareholders, thus obviating the need for a Certificate of incumbency.
This document is normally issued by the company secretary or registered agent and confirms the current directors & shareholders. Banks, on an annual basis, frequently request this document.
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