Monday, 13 January 2014

PRO Services in Dubai/UAE Immigration Law

The laws governing immigration requirements are mainly contained in Federal Law No. 6 of 1973 regarding the

entry & residence of expatriates as amended by Federal Law No. 13 of 1996, the Immigration Law. Other

immigration regulations have been issued in various ministerial decrees and orders, the most relevant of which,

in terms of procedure, is Ministerial Decree No. 360 of 1997 to Issue the Executive Bylaw of Federal Law No. 6

of 1973 (the Decree).

The general rule regarding foreign visitors to the UAE is that all visitors require visas except transit passengers

who do not leave the airport, citizens of GCC countries (Qatar, Kuwait, Saudi Arabia, Bahrain, Oman and the



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Friday, 8 November 2013

BVI Case Studies Notes, October 2013

Below is a summary of recent cases out of the British Virgin Islands (BVI) Commercial Court, compiled by Harneys' Litigation team.

Ruling on the use and status of ancillary relief proceedings and forum non conveniens issues.

 VTB Capital plc v Nutritek International Corp and ors BVIHC (Com) 103 of 2011, 18 September 2013

 Following the dismissal of the English proceedings in the VTB v Nutritek litigation by the Supreme Court earlier this year on forum non conveniens grounds, the BVI Commercial Court has refused to lift a stay of the related BVI proceedings and has held that the BVI is not, in any event, the appropriate forum for the claim.

 The BVI proceedings had initially been issued predominantly for the purpose of obtaining injunctive relief in support of the English proceedings, following the procedure commonly used prior to the Black Swan decision Following that procedure, the BVI proceedings were issued in the form of a substantive claim but were immediately stayed in favour of the English proceedings.  Bannister J described such ancillary relief proceedings as a device which "should not be used in future in cases where orders are sought in aid of foreign proceedings.  It has no secure legal foundation and is calculated only to cause confusion". It was therefore not appropriate for such proceedings to be converted into substantive proceedings after the foreign proceedings had been dismissed.
 Bannister J then ruled on a hypothetical jurisdictional challenge brought by the non-BVI defendants on forum non conveniens grounds.  After considering the circumstances of the case, the Judge found that Russia, and not the BVI, was clearly the most appropriate forum for the claim.  A major issue that followed from that was whether Russia was an "available" forum - Bannister J held that it was, despite some evidence that the Claimant may not be able to bring fraud claims there on technical grounds due to the interplay between the Russian Civil and Criminal Codes.  However, most significantly for the purposes of BVI jurisprudence, Bannister J held that the mere fact that two out of the five parties were incorporated in the BVI was not sufficient to make the BVI the most appropriate forum, ruling that the existence of BVI companies as defendants to an action should only lead to a presumption that the BVI was the most appropriate forum where the proceedings related to the ownership or control, constitution or administration of those companies.  An allegation that a BVI entity was involved in an alleged fraud was "neutral for forum purposes".  This was particularly the case where the "real target" of the claim was a non-BVI resident.

"Wishful thinking: intention versus construction": BVI Court rules on the Construction of Trusts

 The BVI court recently considered the construction of the Trust Deed of a BVI administered trust (the Trust).  The Trust Deed listed a number of beneficiaries under the Trust defined as Specified Beneficiaries.  Each Specified Beneficiary was listed with a percentage figure that purported to indicate their entitlement under the trust fund of the Trust (Percentage Entitlements).  Harneys acted for the trustee (the Trustee) and brought an action for the court's assistance with interpretation of the Trust Deed and a declaration from the court that the Trustee is within its powers to amend the list of Specified Beneficiaries and the related Percentage Entitlements.  The Trustee is in possession of a Letter of Wishes from the now deceased settlor, indicating his wish to amend the list of Specified Beneficiaries by deleting one name and adding two more, the Additional Beneficiaries, and to vary the Percentage Entitlements accordingly.
 Mr Justice Bannister found that the Percentage Entitlements did not create a fixed interest in the trust fund of the Trust for the Specified Beneficiaries and that the trustees had a legitimate power to vary, amend and delete persons from the list of Specified Beneficiaries and the related Percentage Entitlements under the Trust Deed.  Mr Justice Bannister made further comment on the construction of the Trust Deed considering the status of superadded terms and definitions in relation to those that exist in a typed precedent document.  The Judge found that although the Specified Beneficiaries and Percentage Entitlements were "undoubtedly" unique to the Trust Deed, it did not follow that "those words of entitlement are to be accorded any special status of priority over the other provisions of the trust deed".  The Judge found that it was not possible to infer the settlor's intention from this addition to the Trust Deed and that, because this Trust Deed is not a standard form commercial document in common use between merchants requiring completion or adaptation to conform it to the particular transaction in question, the typed/printed distinction therefore did not arise.

Exercising caution in the pleading of oral agreements – summary judgment: 
Clearlie Todman-Brown v The National Bank of the Virgin Islands Limited, BVI HCV 64 of 2013, Byer J.

 This case follows the recent line of BVI authority clarifying the scope of the Court's discretion in deciding whether to grant summary judgment under CPR 15. The Applicant was the defendant bank which sought to argue that the cause of action, as pleaded against it, was based on a bald assertion of an obligation owed by the bank and disclosed no viable claim.

 The Court held that in making the requisite assessment for summary judgment, all of the evidence and pleadings as filed had to be taken into account. Having examined these in depth, the Court concluded that the lack of specificity in the pleadings surrounding the nature of the relevant agreement was a fatal flaw. In particular, any oral agreement must have pleaded specifics so the party against whom it is alleged can know the case against it. There would need to be an indication somewhere in the pleadings of when, where, in what manner, and the subject matter of nature of the agreement.
 Approving the wording of the Saunders CJ(Ag) in Bank of Bermuda Ltd v Pentium, Civ App no 14 of 2003 BVI, at paragraph [18], the Court recognised that in exercising its discretion a judge should not allow a matter to proceed to trial where a party has produced nothing to persuade the court that there is a realistic prospect of success. Speculative claims should not be fostered or encouraged by the Court.
 The application for summary judgment was therefore granted.

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.

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Saturday, 7 September 2013

Franchise In Dubai Business Guide Operations

Dubai describes itself as the fastest-growing metropolis on the planet and there is no disputing the fact that it is one of the world's most desirable business centers, with very low or zero taxation, attractive investment incentives, a stable economy, superb communications, well-educated workforce, state-of-art infrastructure, robust economic cluster of technology, media, finance and healthcare hubs. All these make Dubai a viable and attractive proposition for any business and providing investors with a unique and comprehensive value added platform.

Legal Structures for Business

The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisation, which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. The seven categories of business organisation defined by the Law are:

• General partnership company

• Partnership-en-commendam

• Joint venture company

• Public shareholding company

• Private shareholding company

• Limited liability company (LLC)

• Share partnership company

 Out of these seven activities LLCs are more commonly used by the foreign investors.

 Apart from these seven categories, FDIs are encouraged through Branches and representative offices of foreign companies and 100% foreign owned professional firms. 100% foreign ownership is permitted in the Free Trade Zones too.

 Limited Liability Company

 A Limited Liability Company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the Company's capital. Most Companies with expatriate partners have opted for this Limited Liability Company, due to the fact that this is the only option which will give maximum legal ownership i.e. 49% to the expatriates for a trading license.

 51% participation by UAE nationals is the general requirement for the Limited Liability Companies. Therefore the normal shareholding pattern for an LLC will be:

 Local sponsor - 51% and

 Foreign Shareholder (s) - 49%

 The minimum capital requirement is AED 300,000 (US$ 82,000), contributed in cash. While foreign equity in the Company may not exceed 49%, profit and loss distribution can be mutually agreed. Responsibility for the management of a Limited Liability Company can be vested in the foreign or national partners or a third party.

 The time required to form a company will be approximate 1-2 weeks from the date of receipt of all the documents. The procedure and cost break up will be given upon request.


Except for foreign companies operating under special licences within duty-free areas in the State, foreign companies shall not practice their main activities or establish offices or

Branches thereof in the State until permit to this effect be obtained from the Ministry after prior approval of the Concerned Authority had been obtained. The issued permit shall specify the activity which a company is authorized to carry out.

Such permit shall be issued if the company engages an agent to be a natural person holding the state nationality or a company fully owned by natural citizens, and whose entire partners be nationals too.

The Agent's responsibilities towards the company and third parties shall be limited to rendering necessary services to the company without his h\bearing any financial liabilities or obligations related to the company or its branches and offices inside and outside the State.

Foreign Companies licensed to operate within the state, under the preceding para, shall not start their business except after registration at the Ministry in the Foreign Companies

Commercial Register.

Entries in the said Commercial Register as well as control of same Foreign Companies' accounts & balance-sheets shall be regularized vide a ministerial decision to be issued in this respect.

 The Foreign Company's officer or branches shall be governed by the laws applied within the State.


- 90 -

A foreign company or its offices or branches referred to in the preceding Article shall not

commence their activities in the State except after entry in the Register of commerce.

They shall have a separate balance-sheet, a separate profit a-and loss account and shall appoint auditors.

Now what happen if you need to trade in UAE while you are a foreign entity?

 Say you are a foreign entity trying to relocate your Commercial Business in Dubai; only companies who are into professional activities can only get a license in Dubai. But if you are a commercial trade company targeting Local exposure like DHL, Coco Cola, channel, Adobe to say the few you need to Franchise.

 A franchise acts like a license for rapid expansion, a brand’s recognition and provides a consistent method to deliver your brand‘s promise. Franchises are based on a financial relationship between the franchisor and franchisee.

This guide summary looks at what is franchising, how it works, why franchising is growing as a way of doing business and what makes a good franchise. Aside from a basic understanding of franchising, the guide considers the benefits given by a franchise and provides basic guidance to allow businesses to benefit from innovation.

Franchising is not restricted just to fast food outlets and gardening contractors. There are now franchises for mentoring managers and sportspeople and franchises for internet shopping.

In the future the Dubai economy will more likely be filled by innovative and creative franchises which seek to capitalize on their market lead and intellectual property advantage. Franchises fill a market need and therefore, are the fastest growing way of doing business.

The 1980’s and 1990’s brought radical changes to the employment market and the way people work. The oil-shocks and stock market corrections, the opening up of the world economy, reduction in subsidies, government deregulation and downsizing thrust into the job market capable, energetic and resourceful people who work on their own.

Franchisees are people who have been employed in the past by someone else and a franchise opportunity is seen as a more relaxed way of making the transition from working for an employer to being self-employed. The risk factor of a proven business is also seen as a better option than breaking totally new ground. Thus, franchises are taken up by people prepared to invest in themselves, their personality and their skills who look for freedom and the rewards of hard work. Franchises are a personal investment, in the equity invested in the business, in the time and energy required to achieve success. Therefore, it is important to take a few commonsense precautions when selecting a franchise.
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Friday, 6 September 2013

Common Customs Law of the GCC States

Common Customs Law of the GCC States

The GCC was established in accordance with an agreement concluded in 1981 in Riyadh, Saudi Arabia between: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE. These countries declared that the GCC is established in view of the special relations between them, their similar political systems based on Islamic beliefs, joint destiny and common objectives.

The geographic proximity of these countries and their general adoption of free trade economic policies are factors that encouraged them to establish the GCC.

The objectives specified were the achievement and enhancement of coordination in the different areas between the member countries and their people and the adoption of similar systems in economic and financial matters, commerce and customs, education and culture, social affairs and health, information and tourism, legislation and administration, science, technical, industrial, mining, agriculture, the establishment of joint project in these areas and the encouragement of private sector activities for the general benefit and welfare of their people.


In 1982 the GCC countries concluded the joint Economic Agreement granting specific privileges and advantages to nationals of member countries to perform economic and trading activities in other member countries. This was followed by similar other agreements to encourage economic relations, trade and practice of professions in the member countries.

Common Customs Law of the GCC States

Unification of the Customs laws and procedures in the Customs Administration of the GCC states is one of the main objectives that the GCC States seek to achieve. The adoption of a common Customs law, which unifies Customs procedures in all GCC Customs administrations and enhances cooperation among member States in the Customs field, is one of the envisaged objectives.

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GCC Common Customs Law English.pdf

File Size: 322KB

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Thursday, 25 April 2013

Cayman Creates Incorporated Cell Companies

A framework for incorporated cell companies in the insurance sector was created in the Cayman Islands on 25 March, when the Legislative Assembly passed an amendment to allow the registration of portfolio insurance companies, or PICs, within segregated portfolio company insurers (SPCs).

PICs offer four main advantages over existing SPCs, which also are offered in the Cayman Islands, said the Minister for Financial Services, the Hon. Rolston Anglin, who presented the Insurance (Amendment) Bill 2013 to the Legislative Assembly.

1. A PIC is a separate legal entity, whereas a segregated portfolio of an SPC is not. This means the PIC may have greater ease in dealing with counterparties than a segregated portfolio of an SPC.

2. Unlike a segregated portfolio of an SPC, a PIC can contract with another cell of its controlling SPC, or with the SPC itself.

3. Because each PIC is a separate legal entity, there should be less risk of inadvertent comingling of assets.

4. A single PIC can be wound up without affecting its controlling SPC or other PICs; this is not possible within an SPC structure.

Minister Anglin said that PICs compete with incorporated cell companies (ICCs) that are offered in other captive domiciles, and with structures such as the Delaware Series LLC. The PIC model is also more efficient and cost-effective than introducing standalone ICC legislation. And since PICs were created through an amendment to the Insurance Law, 2010, Cayman has positioned this vehicle to operate within fundamental and well-understood principles of corporate law, and to meet international standards.

‘PICs do not involve the highly creative and untested jurisprudence involved in an ICC’, Minister Anglin said. ‘Furthermore, because they will take on the form of an exempted company they will be subject to the same legal requirements as any exempted company’. The Bill also creates new class of insurer known as Class B(iv).

Minister Anglin thanked the Cayman Islands Monetary Authority, which regulates the country’s financial services industry; and the joint public-private sector Financial Services Legislative Committee, for their work on drafting the amendment.Cayman Islands Government Press Release 26 March 2013, George Town, Grand Cayman.

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Wednesday, 10 April 2013

What are types of Business license entities in Dubai/UAE?

What are types of Business license entities in Dubai/UAE?

The principal forms of business structures are:

   ·         -Limited Liabilities Company.
   ·        - Professional License.
   ·         -Industrial License

The main key differences between LLC License & Professional License

The difference between the two forms of license is as following:-

a)  L.L.C.: Owners have limited personal liability for the debts and actions of the LLC. Other features of LLC are more like a partnership, providing management flexibility and the benefit of pass-through taxation. A Limited Liability Company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the Company's capital. The time required to form a company will be approximately 1-2 weeks from the date of receipt of all the documents. and procedures and the breakdown of the cost can be given upon request.

 b)  Professional License: A Professional License is a type of company formation structure in Dubai whereby the foreign investor or foreign owner has 100% ownership of the company. It is compulsory to appoint a local UAE agent not the sponsor for this type of company also, with the only exception being that the local UAE sponsor does not own any equity in the company. Professional firms are those which consist of professionals and practitioners and practice non-commercial activities. In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. The firms, which are registered as professional companies or firms may only practice specific activities and not extend that to any commercial business.

These activities include the following services:-

·        - Legal practice and consultancy
·         -Auditing, Organizing and keeping accounting records and books
·         -Civil engineering and architecture consultancies.
·         -Managerial and economic consultancies and studies
·         -Technical services
·        -Medical and curative services
·        - Educational services

No, limited liabilities companies are restricted to trading and industrial activities, and civil business companies are established for practicing professional activities.

What are the formalities for registration of the Business?

·         Initial approval from economic department
·         Trade name approval
·         Court Document (depend on company share capital)
·         Typing LLC contract (Arabic & English)
·         Ministry of economic fees
·         Sponsorship Fee

Do I need a local sponsor?

Yes, to operate any kind of business we need local sponsor for commercial license and Agent for Professional license in U.A.E.
How many partners can we have in the Company?
We can have minimum of 2 partners and maximum of 42 partners in the co. (U.A.E. Sponsor 51% + Expat 49%

Do I need an office for registration?

Yes, to operate any type of business and to get trade license, tenancy contract of the office is required

Why Sponsor have 51% Shares in the Company?

 Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organizations which can be established in the UAE. It categorises and defines the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.

The seven categories of business organizations defined by the law are:

·         General Partnership Company
·         Joint venture Company
·         Public Shareholding Company
·         Private Shareholding Company
·         Limited liability Company
·         Share Partnership Company

Of the entities listed above, most foreign businesses choose the limited liability company
as foreigners can exert significant control over them and it requires a relatively small
amount of minimum capital to start up. Previously limited liability companies in Dubai
were required to have a minimum share capital of AED 300,000 and those in other
Emirates required a minimum of AED 150,000. However, following an amendment to
Article 227 of the Companies Law,8 shareholders now have the right to determine the
share capital of their limited liability companies, provided that such company will have
sufficient capital to achieve its objects.9 Such an entity may, however, be inappropriate to
achieve certain business goals. For example, businesses involving banking, insurance
or investment activity on behalf of third parties may only be conducted by a public joint
stock company, and limited liability companies may not offer their shares for public
subscription, which is a central feature of the public joint stock company.

The key limitation on entities incorporated under the Companies Law is that 51 percent
of the capital of a company must be owned by a UAE national.10 However, it is possible
for the constitutional documents of a limited liability company to contain the following
provisions designed to protect the interests of a foreign minority shareholder:

• the foreign shareholder may appoint all of the directors;

• the foreign shareholder may appoint the general manager;

• the foreign shareholder may veto major decisions of the company;

• the foreign shareholder may be entitled to all of the assets of the company on winding
   up; and

• the foreign shareholder may be entitled to more than 49 percent of the company’s profits.11

How much time does it take to establish a Company?

It takes approximately 5-7 working days depending on the availability of required documents from you.
You need to renew your trade license after every one year based on Annexure-2. Normally the license is issued for one year and the same has to be renewed every one year. But if you have a tenancy contact valid for to 2 year you can also get your license valid for 2 years.

What is the Benefit of registering the L.L.C. COMPANY from A Free Zone Company?

·        You are eligible to trade any were comparing to Free Zone you can only trade with the free zone its self, if you trade out of free zone you are subjected to 5 % of the custom duty

·        You can operate without the interference of the local ?

All business activities carried out in Dubai are tax free at corporate and personal level. Docs, required for formation of Co.

-Passport Copy of the investors.
-Min 3 names to be provided for registering Trade name.
-Tenancy contract of the Office which need to be attested from the Land department 

What are the benefits of business setting up in Dubai?

United Arab Emirates       0% 

Income Tax Rate

United Arab Emirates      0%
Corporate Tax Rate

United Arab Emirates       0%
Sales Tax / VAT Rate

No taxes of any sort and no tax department

No filing of accounts

No tax exchange agreements with ANY country

No public record of directors or shareholders

Highly flexible banking system geared to the requirements of high net worth international investors

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Tuesday, 2 April 2013

Offshore financial structures

Offshore financial structures

The bedrock of most offshore financial centre is the formation of offshore structures – typically:

·         offshore company
·         offshore partnership
·         offshore trust
·         private foundation
     Offshore structures are formed for a variety of reasons.

Legitimate reasons include:

Asset holding vehicles.  Many corporate conglomerates utilize a large number of holding companies, and often high-risk assets are parked in split companies to prevent legal risk accruing to the main group (i.e. where the assets relate to asbestos, see the English case of Adams v Cape Industries). Similarly, it is quite common for fleets of ships to be separately owned by separate offshore companies to try to circumvent laws relating to group liability under certain environmental legislation.

Asset protection.  Wealthy individuals who live in politically unstable countries utilize offshore companies to hold family wealth to avoid potential expropriation or exchange control limitations in the country in which they live. These structures work best when the wealth is foreign-earned, or has been expatriated over a significant period of time

Avoidance of forced heirship provisions. Many countries from France to Saudi Arabia (and the U.S. State of Louisiana) continue to employ forced heirship provisions in their succession law, limiting the testator's freedom to distribute assets upon death. By placing assets into an offshore company, and then having probate for the shares in the offshore determined by the laws of the offshore jurisdiction (usually in accordance with a specific will or codicil sworn for that purpose), the testator can sometimes avoid such strictures.

Collective Investment Vehicles. Mutual funds, Hedge funds, Unit Trusts and SICAVs are formed offshore to facilitate international distribution. By being domiciled in a low tax jurisdiction investors only have to consider the tax implications of their own domicile or residency.

Derivatives trading. Wealthy individuals often form offshore vehicles to engage in risky investments, such as derivatives trading, which are extremely difficult to engage in directly due to cumbersome financial markets regulation.

Exchange control trading vehicles. In countries where there is either exchange control or is perceived to be increased political risk with the repatriation of funds, major exporters often form trading vehicles in offshore companies so that the sales from exports can be "parked" in the offshore vehicle until needed for further investment. Trading vehicles of this nature have been criticised in a number of shareholder lawsuits which allege that by manipulating the ownership of the trading vehicle, majority shareholders can illegally avoid paying minority shareholders their fair share of trading profits.

Joint venture vehicles. Offshore jurisdictions are frequently used to set up joint venture companies, either as a compromise neutral jurisdiction (see for example, TNK-BP) and/or because the jurisdiction where the joint venture has its commercial centre has insufficiently sophisticated corporate and commercial laws.

Stock market listing vehicles. Successful companies who are unable to obtain a stock market listing because of the underdevelopment of the corporate law in their home country often transfer shares into an offshore vehicle, and list the offshore vehicle. Offshore vehicles are listed on the NASDAQ, Alternative Investment Market, the Hong Kong Stock Exchange and the Singapore Stock Exchange. It is estimated that over 90% of the companies listed on Hong Kong's Hang Seng are incorporated in offshore jurisdictions. 35% of companies listed on AIM during 2006 were from OFCs.

Trade finance vehicles. Large corporate groups often form offshore companies, sometimes under an orphan structure to enable them to obtain financing (either from bond issues or by way of a syndicated loan) and to treat the financing as "off-balance-sheet" under applicable accounting procedures. In relation to bond issues, offshore special purpose vehicles are often used in relation to asset-backed securities transactions (particularly securitisations).

Illegitimate purposes include:

Creditor avoidance. Highly indebted persons may seek to escape the effect of bankruptcy by transferring cash and assets into an anonymous offshore company.

Market manipulation. The Enron and Parmalat scandals demonstrated how companies could form offshore vehicles to manipulate financial results.

Tax evasion. Although numbers are difficult to ascertain, it is widely believed that individuals in wealthy nations unlawfully evade tax through not declaring gains made by offshore vehicles that they own. Multinationals including GlaxoSmithKline and Sony have been accused of transferring profits from the higher-tax jurisdictions in which they are made to zero-tax offshore centres

Ship and aircraft registrations
Many offshore financial centres also provide registrations for ships (notably Bahamas and Panama) or aircraft (notably Aruba, Bermuda and the Cayman Islands).

Aircraft are frequently registered in offshore jurisdictions where they are leased or purchased by carriers in emerging markets but financed by banks in major onshore financial centres. The financing institution is reluctant to allow the aircraft to be registered in the carrier's home country (either because it does not have sufficient regulation governing civil aviation, or because it feels the courts in that country would not cooperate fully if it needed to enforce any security interest over the aircraft), and the carrier is reluctant to have the aircraft registered in the financier's jurisdiction (often the United States or the United Kingdom) either because of personal or political reasons, or because they fear spurious lawsuits and potential arrest of the aircraft.

E.g., in 2003, state carrier Pakistan International Airlines re-registered its entire fleet in the Cayman Islands as part of the financing of its purchase of eight new Boeing 777s; the U.S. bank refused to allow the aircraft to remain registered in Pakistan, and the airline refused to have the aircraft registered in the U.S.

Insurance,A number of offshore jurisdictions promote the incorporation of captive insurance companies within the jurisdiction to allow the sponsor to manage risk. In more sophisticated offshore insurance markets, onshore insurance companies can also establish an offshore subsidiary in the jurisdiction to reinsure certain risks underwritten by the onshore parent, and thereby reduce overall reserve and capital requirements. Onshore reinsurance companies may also incorporate an offshore subsidiary to reinsure catastrophic risks.
Bermuda's insurance and re-insurance market is now the third largest in the world.[46] There are also signs the primary insurance market is becoming increasingly focused upon Bermuda; in September 2006 Hiscox PLC, the FTSE 250 insurance company announced that it planned to relocate to Bermuda citing tax and regulatory advantages.

Collective investment vehicles

Many offshore jurisdictions specialise in the formation of collective investment schemes, or mutual funds. The market leader is the Cayman Islands, estimated to house about 75% of world’s hedge funds and nearly half the industry's estimated $1.1 trillion of assets under management,  followed by Bermuda, although a market shift has meant that a number of hedge funds are now formed in the British Virgin Islands. As at year end 2005, there were 7,106 hedge funds registered in the Cayman Islands, 2,372 hedge funds in the British Virgin Islands and 1,182 in Bermuda. These figures do not include other collective investment vehicles. See also the recent survey by Deloitte in Hedgeweek.

But the greater appeal of offshore jurisdictions to form mutual funds is usually in the regulatory considerations. Offshore jurisdictions tend to impose few if any restrictions on what investment strategy the mutual funds may pursue and no limitations on the amount of leverage which mutual funds can employ in their investment strategy. Many offshore jurisdictions (Bermuda, British Virgin Islands, Cayman Islands and Guernsey) allow promoters to incorporate segregated portfolio companies (or SPCs) for use as mutual funds; the unavailability of a similar corporate vehicle onshore has also helped fuel the growth of offshore incorporated funds.[citation needed]

Banking Traditionally, a number of offshore jurisdictions offered banking licences to institutions with relatively little scrutiny. International initiatives have largely stopped this practice, and very few offshore financial centres will now issue licences to offshore banks that do not already hold a banking licence in a major onshore jurisdiction. The most recent reliable figures for offshore banks indicates that the Cayman Islands has 285 licensed banks, the Bahamas has 301. By contrast, the British Virgin Islands only has seven licensed offshore banks.

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