What is the Advantage of an Offshore Foreign Shelf Corporation?

With so many emails asking  What is the Advantage of an Offshore Foreign Shelf Corporation,  I decided to write this post.  The answer is going to date me.

In the old days, before the internet, each state and country had cumbersome corporate laws.   The states had laws to protect shareholders even for a closely held corporation (used by small business).  The corporation had to be approved by the state’s secretary of corporations or the secretary of state.

Foreign countries had similar laws.    In the old days, forming a corporation would take weeks and longer if the state bureaucrat had a question.  In the U.S, the laws have changed.  You can get a corporation  or an LLC in just a few days? 

However, Most foreign countries continue to have outdated these laws. 

Entrepreneurs move fast.  To please their client, attorneys would form a few corporations just to keep on their bookshelf.   Last century, your attorney would give you a book, called the corporate kit.

The book included blank stock certificates, a stock ledger, a section to keep the corporate minutes and of course a corporate seal.   While in the U.S. with the use of LLCs and firms like LegalZoom, these formalities have disappeared.  Further, the states can approve a corporation in a day or so.

However, in most foreign countries the slow bureaucrat remains.   I was in Guernsey, Channel Islands with a local attorney at the Guernsey Government’s office that approves corporations.  At was about 4:56 when we started to hand the paper work to the trusted government employee.

He carefully read each line and then abruptly closed the window to his booth.  It was 5pm and time to go home.  Yep, we had to come back  and restart the process.  A few weeks, later the Government approved the corporation.

In most countries (other than the United States) law firms still have bookshelves with a few corporate kits on the shelf… thus  a shelf corporation.

Here is how a shelf-corporation works.

You meet with the attorney.  You need a corporation asap for an important transaction.   It is going to take weeks to get the name you want and for the  government to approve the corporation.  But, for a few hundred dollars more you can purchase a corporation (and its  corporate kit) from the attorney.

Yes, you can have a corporation right now.   The attorney walks over to his bookshelf, grabs the corporate kit and hands the kit to you.    The attorney applies for a name change to the name that you need.   

Here you have the answer to the question  “What is the Advantage of an Offshore Foreign Shelf Corporation?”  It is speed.    If you would like to learn more about U.S. international taxation, the please check out this link.

If you need help with your international business, then send me an email ([email protected]).


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