International Business Corps.
Offshore business and investment activity is usually conducted with an entity known as the International Business Corporation. The IBC may be used to hold and segregate Dangerous Assets, located overseas, that we would not own directly in the APT or Offshore Trust.
Also, it is sometimes more convenient to open a bank or brokerage account in the name of the corporation rather than in the trust. Corporations are recognized and permitted by law in every country. There is a standard set of rules which govern the operation and management of a corporation, and all banks have proper account opening procedures already in place.
Although it is getting to be less of a problem, for a number of years many of the major banks were not familiar with or knowledgeable about the APT structure and preferred that the accounts be opened in the name of a corporation. This is partially due to the fact that except for the British Commonwealth countries, the prevailing civil law in Europe does not recognize the legal entity that we call a trust. Banks which do not have a previous relationship with the trust company or the settlor will often insist on the corporate account with well-established account opening and maintenance procedures. In these situations, an IBC can be formed with shares issued to or held by the APT. Most of the tax haven jurisdictions have enacted legislation enabling the formation of IBCs.
It is not necessary to bank or conduct business in the country where the IBC is formed. In fact, the major advantage of the IBC is its portability. An IBC formed in the Bahamas can open a bank account in Switzerland or any other country, including the United States. The bank will ask to see the articles of incorporation and a corporate resolution by the directors authorizing the opening of the account and appointing a person to act as signatory for the corporation on the account. With that information and proper identification for the signatory, an IBC account can be opened anywhere in the world.
The Cayman Islands, the Bahamas, and the British Virgin Islands are no tax jurisdictions which allow complete secrecy of ownership for corporations. To set up a company in these jurisdictions, one of the many local law firms or trust companies is contacted. It will file the necessary corporate registration to create the company. The firm can also serve as the sole member of the board of directors. If anonymity is required, the shares can be issued in bearer form. That means that no name is registered on the share certificate. Instead, whoever holds the certificate becomes the owner of the company.
To avoid the possible difficulties arising from lost or stolen shares, the certificates are registered in the name of the law firm or trust company. It then holds the shares under an agreement to serve as nominee for the true owner. Any necessary corporate documents or even bank accounts are signed by the nominee as instructed by the beneficial owner. If the APT is to hold the shares, it can maintain bearer shares or the shares can be registered in the name of the trust.
Contrast the IBC with a corporation established in the United States. In the U.S. the names and addresses of the officers and directors of the corporation must be publicly filed in the state where it is formed. Shares must be registered in the name of the true owner. A stock register is required to be maintained, listing the name and address of each shareholder. The stock register can be subpoenaed by any government agency or by the plaintiff in a lawsuit. The individuals behind any domestic U.S. company are readily identifiable to any third party investigating the matter. We can create privacy for a U.S. corporation by using a domestic Privacy Trust. But for those with funds or business interests overseas, the IBC is a popular approach.