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English Case Study of Offshore Company Formation
There are lots of benefits to registry offshore company, such as running foreign business, improving international image of enterprise, bypassing tariff wall, avoid export restriction or foreign exchange control, oversea financing and listing, avoiding tax legally, etc. For your better understanding on the application of offshore company, we hereby illustrate some cases for your reference:
Case 1
In order to invest in country A, a company registered an offshore company to negotiate on a project with the company from country A instead of direct investment. The consideration is that the market of country A is not very stable and the government policy, economy and laws are in a transitory stage, which may bring some adverse changes to the company of investment. Furthermore, if any dispute occurs in future, the parent company will not be influenced because the investment is operated by the offshore company. Therefore, using offshore company to process foreign investment can add an extra shield of protection.
Case 2
A venture capital firm negotiated with a company in country A for establishing a joint venture, and planned transfer her shares to other foreign company after 3 years of investment. It would be a complicated procedure and long period to get permission from approval authority of country A if offshore company is not used. If so, it may miss the opportunity and good price to complete the share transaction. Hence, this venture capital firm choses to set up an offshore company to set up a new joint venture company with the foreign company in country A. It is now more flexible to sell the shares of offshore company to the acquiring company when necessary, while no permission from the approval authority of country A is required.
Case 3
A Chinese citizen or company can establish an offshore company to set a foreign investment firm in China, which can enjoy the preferential treatment of foreign investor, and can even enter Chinese market as a foreign brand.
The 3 cases listed above are only the common situation of establishing offshore company for your reference. Since the laws and requirements of different countries are various, it is hard to explain all cases. Please contact us to get more information on how to establish offshore company.
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