FBS Global Limited

Corporate Governance

Incorporation is the legal process used to form a corporate entity or company. A corporation is a legal entity that is separate from its owners, with its own rights and obligations and is the most widely used legal vehicle for operating a business.

Incorporation provides many advantages for a business and its owners: protection from personal liability for business debts, improved access to financing for business activities, simple transfer of business ownership through the disposal of shares and increased potential for tax planning through access to corporation tax rates and international tax treaties.

Companies can be formed in most countries in the world. The legal procedures for formation and organisation may differ from jurisdiction to jurisdiction, but most have certain elements in common – drafting the ‘Articles of Incorporation’ (which set out the primary purpose of the business), selecting the name and location, and, if appropriate, the number of shares and class of stock that are issued. Incorporation will also involve jurisdiction-specific registration information and fees.

A company itself may be viewed as a commodity but the necessary advice – how to use it and how to ensure that it is managed and structured correctly – is most certainly not. It may be relatively straightforward to set up or purchase a company but to gain and sustain competitive advantage and successfully manage growth, proper groundwork and execution are essential.

  • The type of company best suited to your commercial purpose
  • Arranging the ownership of that company
  • Administering the company correctly
  • Managing its commercial arrangements

FBS Global Limited (Cayman)

How can FBS Global Limited Help?

Every case is different and a high level of expertise is required to ensure that the process is up-to-date, effective and fully compliant. Failure to structure and manage a company correctly could mean that the intended objectives and benefits cannot be achieved. It could also result in unintended consequences and liabilities.

Where to Incorporate?

In today’s global marketplace, business success increasingly requires active trading participation in foreign markets. Emerging companies typically operate in rapidly evolving industries where expertise, speed and efficiency are rewarded.

Modes of entry may vary – Internet, exporting, licensing, commercial agents, distributors, strategic alliances, joint ventures, overseas manufacturing or sales subsidiaries – but international expansion will inevitably involve unfamiliar legislation, regulations and processes, as well as creating international legal and tax considerations.

Whether you are doing business in Europe, Asia, Africa, the Middle East, the Americas or elsewhere, Sovereign will set up the best trading structure for your business. We will assist you to select the most effective and efficient legal entity, and we will then form and register that entity in line with local laws and regulations.

Trading Companies

Companies wishing to expand their trading activities into new territories may consider establishing a Representative Office (RO) or Branch instead of incorporating a new company. An RO provides a limited presence in a foreign market with the ability only to engage in promotional activities, while a Branch will also permit core activities and sales to be undertaken. However neither is a distinct legal entity, so the parent company remains liable for any legal obligations.

If incorporating a new company is preferable, a Subsidiary or a Joint Venture (JV) may be appropriate. A Subsidiary is an entirely separate legal entity created specifically for business overseas. This is generally more tax efficient and offers legal protection between the overseas company and its parent company.

A JV is also a separate legal entity that requires a joint investment with a local company. It is not however a permanent structure and could be dissolved if the original agreements between the parties involved cease to have effect.

Holding Companies

Multinational entities may decide to establish a holding company as an efficient way of managing a group of subsidiaries in a particular region. This allows the financing, licensing and management activities to be centralised, preferably in a politically and legally stable environment. It may also offer tax advantages in relation to capital gains and withholding taxes on dividends.

Choosing a suitable location for a holding company will involve detailed consideration of business, logistical and operational requirements. The tax system will also be relevant in respect of:

  • The effective tax rate for income and gains
  • The ‘economic substance’ requirements
  • The withholding tax rates for dividend, interest and royalty payments
  • The size and quality of the tax treaty network.