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Officers of non-resident companies

The choice of the optimal management structure and persons responsible for the company’s operations are an important factor for the success of the entrepreneur. This section reviews the status and functions of the principal officers appointed by a non-resident company.

Shareholders of the company

In most cases a non-resident company is a joint-stock company which means that the owners of the company are its shareholders. These are the persons whose names are entered in the official register of members of the company which usually contains the following information:

  • name and address of the shareholder;
  • number of shares owned by the person;
  • type of shares owned such as whether they are ordinary or preference shares
  • nominal value per share;
  • total nominal value of shares held by a particular person;
  • the date when the property rights of the shareholder take effect.

The share capital of the company is usually divided into shares with a fixed par value or into shares without par value. Each country prescribes the minimum declared share capital required to incorporate a new legal entity. Simultaneously, often the company law of the country of incorporation does not regulate the matter of the actual payment of the share capital. In some instances, formal subscription for shares takes place such as in most Caribbean and Pacific jurisdictions, or a certain portion of the maximum possible number of shares for issue is paid up such as in Ireland or Hong Kong. In other instances, the declared share capital must be paid up in full to preserve the legal status of a company in such a country as Switzerland. The main part of the declared share capital must be paid up immediately in other countries of continental Europe as well.

Typically, the authorized share capital is not limited in size. However, most jurisdictions charge higher state duty on any increase of share capital. In some jurisdictions this duty may be expressed as a fixed amount. As an example in the British Virgin Islands, if the authorized share capital consists of less than 50,000 shares (with or without par value) the fixed duty is USD 350 per year. In the event that the share capital exceeds 50,000 shares the duty becomes USD 1,100 per year. In other jurisdictions, the duty may be expressed as a percentage of the share capital. As an example of this, when a company is registered in Cyprus the duty is 0.6% of the capital. Accordingly, upon incorporation companies usually announce the highest possible share capital corresponding to the minimum amount of registration and annual duties.

Directors of the company

Usually, in accordance with the constituent documents, the responsibility for management of the company lies with its directors. The procedures for appointment and removal of directors are set out in the bylaws of the company.

The requirements for the number and status of directors differs between jurisdictions. Less demanding of them such as the Caribbean and Pacific jurisdictions usually do not impose any restrictions on these issues. Alternatively, the minimum number of directors for a company registered in Ireland is two and in Panama it is three.

Certain jurisdictions such as Ireland, Denmark and Switzerland stipulate that the directors should be only individuals.

Other jurisdictions such as the United Kingdom and Hong Kong do not limit the appointment of legal entities as directors of the company but they do require that at least one of the directors should be an individual.

In most jurisdictions, a precondition for obtaining tax-exempt status of the company is that its directors are non-residents.

However, certain jurisdictions such as Singapore provide for the reverse condition in that at least one of the directors must be a resident of the country of incorporation. In this manner, these countries reserve the right to bring a local resident director of the company to immediate liability for any malfeasances of the company.

Additionally, only where a company has a director who is a resident of the country of incorporation, it may apply for a tax residency certificate. This is a precondition for obtaining benefits under the international double tax treaties.

Secretary of the company

The office of company secretary is not mandatory in all countries. However, such jurisdictions as Hong Kong or Gibraltar require that a company should have a person residing in this country acting as a secretary of a company. In addition to maintaining communication with the official authorities of the country of incorporation and performing the duties under the bylaws as imposed during the management restructuring or liquidation of the company, the secretary also monitors and controls issue of share certificates, as well as ensuring that the annual report of the company is filed with the state authorities in the event that this is required by the legislation of a particular country of incorporation.

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