Most offshore jurisdictions provide the possibility for companies to re-domicile in and out of the state. A company registered in BVI, for example, can change its registered address and the applicable law to the Cayman Islands, Cyprus or any other offshore centre within the shortest period of time. Such a company retains all its property, rights and liabilities, and remains bound by contracts entered into prior to the redomiciliation of the company. In fact, the legal entity remains the same as it was before the redomiciliation of the company, according to the principle of continuity. Thus, the whole process is sometimes called the continuation to another jurisdiction.
Offshore jurisdictions have made provisions in their legislation for corporate redomiciliation of companies to attract international businesses and investments such as hedge funds. This procedure is very convenient. In many cases, it saves business owners a lot of hassle and administrative expenses when relocating their operations from one jurisdiction to another by simply having their company to move. As the name suggests, continuation has the advantage of continuity.
The redomiciliation definition can be outlined as the transfer of a legal entity from one jurisdiction to another with registration in the registrar of companies and retention of the same legal entity. Below we provide information on redomiciliation, meaning changing the place of registration and the laws regulating the corporation, in contrast to changing the jurisdiction where the company is a tax resident.
There can be many reasons for company redomiciliation. For example, a business owner has a company incorporated in Belize. Following changes in its operations, the owner decides that a company registered in Cyprus would make more sense for the business. The business owner has the option to incorporate a new company in Cyprus, transfer and re-register all the assets and real estate to the new company, reintroduce the new company to counterparties, enter into new agreements on behalf of the new company, open new bank accounts and finally dissolve the old company in Belize. Alternatively, the business owner can simply re-domicile his Belizean company to Cyprus without incorporating a new entity.
Generally, the most common reasons for corporate redomiciliation are as follows:
The redomiciliation service consists of two parts, namely outward re-domiciliation and inward re-domiciliation. Therefore, it requires careful, coordinated and timely actions in the jurisdiction of origin of the foreign company and the target jurisdiction to relocate. Before proceeding with the company’s migration, it is necessary to ensure that both jurisdictions allow the redomiciliation of the company and have the required legislative provisions in place. It is also necessary to plan exactly which corporate form the company will have in the new jurisdiction.
The migration process has two separate parts:
Each stage has its own pitfalls and potential problems. It’s important to note that the two processes are not actually connected. Once the company has been discontinued from its jurisdiction of origin, it is not automatically continued in the new jurisdiction and is effectively in limbo until the continuation is completed. A poorly planned corporate redomiciliation process can lead to a situation where not all the documents were completed or actions taken in the first stage before the company is struck off the register, resulting in the company being unable to complete the process in the new jurisdiction.
In addition, it is vital to work within the deadlines provided by the offshore regulations to continue the company after its discontinuation in order to avoid additional costs and other associated risks. Redomiciliation consultations with experts who have experience in both jurisdictions are vital for a successful and smooth process.
However, it should be noted that not all jurisdictions allow the redomiciliation of their corporations. For example, there is no possibility for the redomiciliation of UK companies. Despite the overall similarity of offshore BCs to the British limited company, in the UK the redomiciliation of corporations has not been adopted into the legislation. Therefore, in the case of the company incorporated in the UK, seeking views on alternatives to the redomiciliation process is necessary.
The list of documents required for offshore company redomiciliation from one jurisdiction to another varies significantly. In general, a summary list can be drawn up based on the common standard process of migration in offshore jurisdictions:
The real list of documents is much longer and may include, for instance, confirmation from a local legal professional that the laws of the jurisdiction allow continuation.
The CDD procedure must be completed before the transfer if the company is continued in a new jurisdiction to an agent other than the one in the original jurisdiction. The client must ensure that the new agent is ready to accept the company and that the company profile falls within the risk appetite of the agent in the company’s new jurisdiction.
In the case of an investment fund, the redomiciliation process is similar to that of a simple offshore company, with one difference. Companies that operate in capital markets are subject to licensing. Therefore, when answering the question of how to redomiciliate a fund, it is important to bear in mind that the investment fund must apply for and receive a licence in the new jurisdiction, in addition to completing the redomiciliation process. All popular fund jurisdictions, such as the Cayman Islands, Malta, Ireland, etc., allow redomiciliation. After relocating a fund, it may be necessary to relocate or change the fund managers to local ones.
Astra Trust team has vast experience of the offshore company redomiciliations in various jurisdictions. Contact us now through the contact form or via email: email@example.com, and our team will be happy to assist you with a free initial consultation on any matter related to offshore services