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.

Winston Wambua

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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

Winston Wambua

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Mobile +971553350517


Skype: Winston.wambua

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.

Winston Wambua

For more information please contact me on

Mobile +971553350517


Skype: Winston.wambua