Offshore fund

Offshore funds: essence and advantages

Services for opening offshore funds abroad, offered by the company “Finance Business Service”, will certainly be of interest to entrepreneurs who already have some experience in investing in foreign business. It is for those who are interested in increasing the profits from such investments by combining several assets that our offer to open an offshore fund is intended. Let’s consider what this form of organization is, what advantages it has for successful business, and also what types of foreign offshore funds are divided into.

General description of the investment fund

The Foundation is a separate form of business organization that has no analogues in Anglo-Saxon law. Its key distinguishing feature is the absence of owners. This means that although the creation of the fund is intended to benefit an individual or group of persons, in fact, the fund does not have any legal owners or co-owners, as is the case with a corporation. Moreover, when we talk about the structure of the fund, such terms as partners, shareholders or participants are not used here. All activities of the fund are regulated directly by the legislation of the state in which it is registered. At the same time, the investment policy of such an organization is practically not regulated by anyone, allowing participants to invest in a wide variety of tools that allow them to make a profit. Therefore, opening a fund in an offshore jurisdiction is a fairly profitable investment that allows you to significantly optimize tax payments.

Classification of offshore funds

In modern international financial practice, there are classifications of funds according to several criteria. Consider the most common among them. The first and main classification defines two major categories - open-ended and closed-end funds (Open-End Funds and Closed-End Funds, respectively). The difference between them lies in the way the fund is organized in terms of unit pricing. So, open-ended funds work with shares on demand. That is, depending on when the investor invests. At the same time, the open type does not limit the number of contributors. As for closed-end funds, a limited number of shares are issued here, which can subsequently be sold on the stock exchange. Moreover, their value is determined by market demand.

Another classification divides funds into the following categories:

• A private foundation that does not have an owner, but there are persons exercising control over its activities. The number of investors here is usually limited, and the shares, respectively, are offered in a limited number.
• A professional fund whose shares can only be offered to professional investors. In this case, we are talking about either persons investing in similar assets professionally, or simply wealthy individuals (the capital is at least $ 1 million) who agreed to be equated with professionals.
• A public fund offering its shares to an unlimited number of investors. This category is more stringent than the previous two.

All funds must be created on the basis of one of the following legal forms:

• Partnership.
• Unit Trust.
• Companies.

Most often, the fund is created in the form of a company. At the same time, opening a fund in an offshore jurisdiction means that the registration of such a company is carried out with a non-resident status and is subject to tax exemption, with the exception of fixed annual fees.

Structure of an offshore fund

The structure of the fund is quite specific. Like any company, the fund has a board of directors that makes strategic decisions. However, in addition to this, the fund assumes the presence of the following persons:

• Board Manager or Manager, which is a licensed natural or legal person who determines the fund's investment strategy and also makes investment decisions.
• The Administrator or Administrator, also a licensed natural or legal person who is the registered agent of the company, maintains the share register, contacts shareholders, is responsible for accounting and calculates the net asset value.
• Custodian (depository) or Custodian, which can be either an individual or a legal entity. He holds the fund's assets, carries out transactions with them, collects dividends on the company's securities and provides relevant information to the administrator.
• Auditor or Auditor, which is a person who checks the fund's accounting (note that for private and professional funds, this position is not mandatory).
• Investment Advisor or Investment Advisor, which can also be an individual or a legal entity. His responsibilities include providing investment advice to the manager. An advisor may be the creator of the fund, or he may be a member of the board of directors. This position is not mandatory.

But funds are also established to solve specific problems.

Benefits of opening funds

As emphasized earlier, the main direction in opening offshore funds is to reduce tax costs and, accordingly, increase the amount of net profit. However, there are several more tasks for which an offshore fund is opened:

• Confidential control over the company. Instead of an individual or legal entity, a fund that does not have a formal owner becomes a shareholder of a corporation.
• Opening corporate bank accounts without disclosing the identity of the beneficiary. In this case, the fund claims to be the owner of the corporation, which makes it possible to preserve the anonymity of the real owner.
• Transfer or receipt of funds with release from financial obligations. In this case, donation and/or charity schemes are used.

There are other ways to use an offshore fund for profit. You can always learn about them from our specialist, who will not only provide detailed advice, but also help you choose the optimal scheme for opening a foreign fund.