Chesterfield (London) - Headquarters
207 Old Marylebone Road
London
NW1 5QP
Tel: +44 (0) 203 771 3853
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Email: sales@groupchesterfield.com

Corporate Services Blog

Asset Protection

07/11/2012

Asset protection is one of the main reasons why people choose to incorporate offshore companies. This has become particularly highlighted in recent years where in the aftermath of the global recession many business owners have lost assets and equity in businesses that have taken years to establish.
This loss may have been mitigated with correct asset protection.

Increasingly, the financial environment makes our hard worked for assets vulnerable to new legislation and lawsuits.

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Using an offshore holding company may assist in helping to avoid the dangers of lawsuits, divorce, tax and any other unforeseen hazards. It may radically reduce the risks and in a significant number of thoughtful structures allows you to avoid them completely.
Chesterfield are highly experienced in the setting up of holding companies and ensuring that all the correct paperwork is in place to show that the assets and equity do in fact belong to the Offshore Holding Company (and not the individual or any trading company)

It may be necessary to increase your level of equity protection for your comfort and peace of mind. Chesterfield can offer more complex holding structures in this case. This offers strategic protection in the event that the ownership of the assets and equity come into question. These more complex structures often involve Trusts and more than one company registered in more than one jurisdiction. A system can be put in place so that any funds/assets are correctly transferred through this structure with little or no tax implications.

One of the most common ways to open a holding company is to incorporate an Offshore Limited Liability Company. Depending on the jurisdiction these are very easy and swift to open. Owners or members of a Limited Liability Corporation may be protected against being personally liable for the debts and obligations of the company, the courts often do not consider the personal home equity or investments of the owner as available assets. Without Limited Liability Business and Personal creditors often claim on business and personal assets. 

With Limited Liability business creditors often only reach business assets and personal assets may be safe guarded. LLC’s also have more flexibility than corporations in deciding to distribute profits and equity, not being confined by legal requirements to distribute profits equally among owners. An advantage to opening an LLC is the ‘charging order’ limitations and the legal and practical difficulties to collect against the Offshore LLC in a foreign jurisdiction. A ‘Charging Order’ has its roots in partnership law and was developed to provide relief when a partners personal assets were insufficient to satisfy his personal creditors. A ‘Charging order’ against an LLC membership interest gives the creditor the right to receive any actual distributions to the debtor member. This may not mechanically be of any help to the creditor, if no distributions are made to the debtor. It is difficult to compel the Offshore LLC or its manager to liquidate assets or distribute funds even when the collection litigation is attempted in the foreign jurisdiction where the Offshore LLC is formed.

The following are Typical of the types of structures that Chesterfield offers for Asset Protection;

Simple Structure


Typically with this structure the beneficial owner will establish through Chesterfield an Offshore company. Once the relevant compliance documentation has been acquired the company will be incorporated with Chesterfield’s Directors, Secretary and Shareholder. Once this has been set up a declaration of trust will be put in place between the Nominee Shareholder and the Beneficial Owner establishing the Beneficial Owner as the legal owner of the shares.

Complex Structure

This offers all the same benefits as the first structure being Directors, Secretary and Shareholder, but has added layers of protection. The only connection to the individual in this case would be that they would have instructed Chesterfield with regards to the set-up of the Trust, supplied the relevant compliance documentation and may have Settled the Trust. 
 



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