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OFFSHORE INTERNATIONAL BANKING
The emergence of The term "offshore
banking" arises because offshore banks may only transact business with
non - residents and in foreign currencies, and in general satisfy the
conditions for an offshore business. The establishment of OBU's, in addition to the Exchange Control and the
Companies Laws, is subject to the Central Bank of The Central Bank of Applications for establishing
an OBU must be made in writing to the Governor of
the Central Bank of Applicants are expected to have
a good reputation internationally and have an established track record of
growth and profitable operations. The Central Bank favors
applications by existing foreign incorporated banks for the establishment of
branches, as opposed to locally incorporated banking subsidiaries or
associated companies. Before a decision is reached by
the Central Bank, it seeks the written consent of the applicant's home
licensing and banking supervisory authority which exercises consolidated supervision
over its global activities including the operations to be carried out within The Central Bank requires
Letters of Comfort to be provided by the successful applicant's head office,
parent bank or its ultimate controlling and beneficial shareholders. OBU's are required to
operate as fully staffed units and not merely as "brass plate or
"managed bank" entities. OBU's have to pay an
annual fee of US$15.000 to the Central Bank as re-imbursement of the latter's
cost of supervision. For locally incorporated OBU's the Central Bank would expect a minimum paid up
capital of US$5 million. All OBU's
are exempt from most of the monetary policy and credit regulations applicable
to onshore banks, such as the minimum reserve requirement, adherence to maximum
interest rates, restrictions on the holding of foreign assets or investments
in shares and immovable property. All OBU's
have to prepare annual accounts and submit them to the Central Bank. These
accounts have to be audited by external auditors appointed by the OBU and approved by the Central Bank. OBU's are required to
maintain their accounting system as well as all official books, records
documents and correspondence relating to their banking business in the
English language. Except as otherwise permitted
by law or any regulations thereunder, OBU's operate wholly on an offshore basis. OBU's are permitted to grant loans or guarantees in
foreign currencies to residents provided that the resident parties involved
obtain a relevant Exchange Control permit from the Central Bank. CAPTIVE INSURANCE The insurance industry is well
established in Their incorporation and
operation is governed by the Insurance Company Law, which is similar to the
English law. The regulatory authority is the Superintendent of Insurance at
the Ministry of Finance. Though there is some relaxation
in certain of the provisions of the Insurance Company Law in case of
captives, there is reasonable control and supervision for the protection of
all interested parties. The
advantages in setting up a captive insurance company are as follows: Cost
savings - through lower overhead and administrative expenses. Cash
flow improvement - Careful planning as to the timing of premium receipts and re -
insurance payments, the captive may provide for greater control over
corporate funds which in turn may generate increased cash. Wider
coverage - a captive may be able to underwrite, at an acceptable cost, risks
for which it is extremely difficult to obtain coverage at an economical price
on the conventional insurance market. Access
to re - insurance - a captive insurance company has the advantage of direct access to
re - insurance markets which enjoy a lower acquisition costs than direct
insurers and can therefore provide risk coverage at lower cost. Taxation - the tax is levied
on the chargeable annual profits at 10%. The taxable profit of insurance
companies, other than life insurance, is made up of underwriting results,
investment income and any other income of a revenue nature less all expenses
including commissions. Double
tax treaties - in addition to low tax rates, captives may be in a position to
enjoy additional tax benefits resulting from the various existing double
taxation treaties between Exchange
control - offshore captives, like all other offshore entities, are not
subject to exchange control. The absence of exchange control restrictions
together with the availability of efficient international banking services
and the excellent telecommunication system of Confidentiality - confidentiality
is ensured by the ability of the beneficial shareholders to use nominees,
with disclosure of ownership only required to be made to the Superintendent
of Insurance and the Central Bank of |
