The company offshore incorporation is the process of forming a new corporation in a particular country or jurisdiction where shareholders do not operate their business. In this way, they can avoid high tax rates, escape the commercial limitations imposed by their government, protect their assets from creditors and lawsuits, and enjoy confidentiality.
Shareholders and directors who have a high net worth are prone to lawsuits and claims—some of which are absurd or completely baseless. Fortunately, offshore companies can enjoy asset protection particularly from claims and lawsuits, creditors, and divorce.
According to business professionals, offshore financial centers including the British Virgin Islands, Mauritius, Marshall Islands, and Seychelles Islands provide asset protection that will serve as a supplement for a prenuptial agreement, offer shield from divorce claims, provide protection over anticipated inheritance, and reduce the financial profile of shareholders and directors.
Some offshore financial centers also provide coverage to uninsured risks (such as environmental hazards caused by flooding, storm, etc.) and give coverage to some risks in which the insurance companies are unwilling or unable to satisfy a claim.
Most financial experts believe that the money is also safer in offshore investing particularly when done through reputable companies than investing onshore due to the higher liquidity ratios in established offshore financial centers.
In addition, some offshore jurisdictions have been noted with their lower cost in operation, lower executive salaries and bonuses, lower taxation (or even tax exemption on the business and investment activities), stricter banking laws, and almost no pressure imposed on shareholders to maximize their profits (which may result to high-risked investments and applying loans even with high interest rates.)
This is one of the most common reasons why businessmen choose to have an offshore company. With a confidentiality protection, they are protected from claims and lawsuits by creditors and "estranged" spouses.
The shareholders and directors of an offshore company are not shown in any public record. But since this arrangement may be used in money laundering and other illicit activities, most banks nowadays scrutinize the business structure to determine if a certain company is compliant with the law.
Almost all offshore companies, except for regulated businesses such as banks and financial institutions, have less reporting requirements compared to the so-called onshore jurisdictions. With less requirements in documentation and reporting, an offshore company as a whole can enjoy more confidentiality.