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Offshore Company Formations Have Slowed

Wednesday, August 7, 2013

The majority of offshore jurisdictions experienced a decline in company incorporation activity in the second half of 2012 compared with the first half, according to legal services consultancy the Applebly Group. However, company registrations in certain jurisdictions offered signs of optimism.

Despite tough economic conditions, levels of new company registration activity in one major offshore jurisdiction continued to increase, according to Appleby's latest "On the Register" report, which provides insight and data on company incorporations in offshore financial centers. Bermuda reported a 7 percent increase in activity compared to the first half of the year, according to the report, which looks primarily at the data for the last six months of 2012.

"There are signs that 2013 will be a watershed year in terms of seeing a universal return to pre-2009 activity levels across the offshore jurisdictions," said Farah Ballands, partner and global head of fiduciary and administration services at Appleby.

Nonetheless, the on-going weakened economic conditions continued to impact the overall market in the second half of 2012. There were 37,881 new offshore company formations in the jurisdictions covered by the report, a decrease of 3.6 percent from the second half of 2011, and a deeper decrease of 11 percent on the preceding six months in 2012.

Taking the entire year into account, the overall number of new company incorporations for the majority of jurisdictions stayed flat in 2012, which proved to be a year of consolidation following large increases in annual new incorporations between 2009 and 2011.

"Continued uncertainty in some markets and the shift in focus from China/Asia to Africa for jurisdictions such as Mauritius and the Seychelles are preventing a speedy return to the numbers of company formations recorded prior to the global economic crisis," Ms. Ballands said. "Add to this several major international events during the second half of 2012 including the US Presidential Elections, continued economic uncertainty in the Eurozone and the once-in-a-decade change in leadership in China, and it's hard to be surprised at the company registrations barometer struggling to quickly improve," she added, "but we are seeing growth in some markets."

The story is similar for the total number of active companies, with most jurisdictions showing little movement from the previous year as new company formations cancelled out the numbers leaving the registries. Hong Kong, as a comparator, saw a 9 percent increase in the total number of active registered companies, with the local register there breaking through the one million mark for the first time. The Mauritius and Cayman registries are steadily returning to their pre-recession peaks, experiencing a 3 percent and 1 percent rise respectively.

Among the report's key findings is that in the second half of 2012:

  • Overall volumes of new offshore companies being registered were 11 percent lower in H2 2012 than the preceding six months. After a busy first half of the year, jurisdictions including the Isle of Man, Mauritius, Cayman and the British Virgin Islands were approximately 10 percent down in the latter half.
  • The jurisdiction that continues to dominate offshore new company registration activity by volume is the British Virgin Islands, which has consistently maintained a six-fold lead ahead of its nearest comparator, the Cayman Islands.
  • The UK and Hong Kong, as comparators, continue to show signs of recovery. Hong Kong in particular showed significant growth between H1 and H2 2012 with a 7 percent increase in registrations. Both Hong Kong and the UK registrations are now well above those recorded in 2009.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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