IBC FAQ - 2 of 5
What Can I Name an IBC?
There are certain restrictions in naming your IBC, most registrars do not allow anything that
suggests royalty, or anything that requires additionally licensing such as a Bank, Insurance,
or Trust company dealing with the public.
If you are in a hurry, you can select a "shelf" company from our available
inventory on a first-order basis. Here is the link to our email a request for:
SHELF IBC NAMES
Otherwise, you can submit your choice of regular or alpha-numeric names to us, and we will
order a government registrar search, then let you know which ones are open to use; your reply
back allows us to reserve your choice of names while payment is arranged., You must use an
approved designation, such as: Inc.; Corp.; Ltd.; S.A. (Society Anonyme), A.G; etc. Here is
our link to our
IBC NAME SEARCH FORM
What Is The Registered Office?
It is a requirement that a physical address be given in the Country of Incorporation that
represents your Company. Typically this is a lawyer, accountant, or preferably a Chartered Bank.
What Is The Registered Agent?
It is required that a local registered professional act as the person capable of receiving any
legal notice to your Company. (not to be an IBC mail address)
What Kinds of Shares Are There?
There are two categories of shares that may represent the ownership of your Company. The
traditional type we have domestically is the Registered Share, which is recorded with the
Government Registrar. The more popular (for tax saving and privacy purposes), is the Bearer
Share, which is not registered. The main advantage of Bearer Shares, is that there exists no
record of who the shareholder's are. The ownership of the Company rests with who has possession
of the Bearer Share Certificate.
To keep your Company a true foreign entity, you should not hold your Bearer Shares at home.
It is best to keep the Bearer Shares offshore, and preferably held by a Private Foundation so that
any Canadian regulator has difficulty arguing that you are the beneficial owner. Alternatively, an
offshore Trustee could render a private safeguarding service, that only you have access to the Bearer
Shares. Never leave IBC shares in a safety deposit box at a Canadian chartered bank or credit union.
How Should The Shares Be Held?
IBC shares should be held by a Private Foundation as the legal owner. A Foundation acts like
a Trust, but has superior capabilities for a Canadian resident. Trusts are still recommended by
many advisors, but are clearly reportable under new income tax foreign reporting rules. It is
possible for a Private Foundation structure to be exempt from the foreign asset reporting
rules, when the Foundation Charter is crafted specifically for the recent Canadian tax rules.
See Foundation Benefits for more details.
If the shares are not officially held by someone, you may be deemed to be the sole shareholder
by default if you cannot show who is. This means that you are responsible for the tax on world-wide
income earned by you and your company. We advise you to be aware of
Foreign Reporting Requirements, and make this article available for your study. We can
answer questions or refer experienced independent legal counsel to you on email request.
What Is A Nominee Director?
This is a professional you hired to serve as the management of the IBC. Their
name would appear in most documents acting as the management of the company. The
nominee Director may hold the Bearer Shares, since their name is used in all
correspondence and obligations for the company, they need to know that someone
is not out there putting the shares at risk in some way. For security reasons,
various methods exist to limit the powers of the Nominee Director.
What Are The Objects And Powers Of A Company?
The Memorandum of Association will generally and specifically categorize the
acts your Company may engage in. This will typically include pages of
descriptions relating to buying, selling, trading, holding, investing, services,
and many other purposes. Ideally your Company may engage in any activity that is
not specifically prohibited under the law for the time being in force in that
Country. Exclusions are listed, as mandated by the laws of that Country.
What Is The Memorandum and Articles of Association?
It is the written document, which is filed with a Government registrar detailing
the operating parameters of a newly formed and incorporated company. The
Memorandum and Articles of Association (M&AA), define the rules by which the
Company can exist, function, and change. Just as your Company can be governed by
the laws of your Province, so to can you choose a "tax-haven" jurisdiction that
has more accommodating and business friendly laws to operate under. Contents of
a M&AA may vary greatly from case to case, the necessary features are:
- Naming the Company.
- Defines the essential elements of a Registered Office, and Registered Agent.
- Defines the Company's powers and restrictions.
- Describes the type of shares issued, Registered or Bearer shares.
- Describes how meetings of members may happen.
- Defines how Voting and Proxies will be carried out.
- Defines the powers and proceedings of Directors and Officers.
- Defines how Company business is run on a day to day basis.
- Defines how Dividends, Audits, and Notices are issued.
- Describes how changes are done through Amendments and Resolutions.
Follow the link below to the next part of the IBC FAQ 3 for the continuation....
