Understanding IBCs

Understanding the basics. 

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As an entrepreneur, one of the most important decisions that you will ever make is how to structure your business interests. With the dramatic expansion of the Internet more companies than ever hold substantial assets in multiple nations. This, of course, adds to the complexity of structuring requirements

A time-tested corporate vehicle, International Business Corporations, also known as IBC’s, are corporations established under the legislation of an overseas jurisdiction.  Often considered a twin sister to the United States Delaware Corporation. there are many similarities between the two but also major differences. Just as is the case in the Delaware, an IBC is a basic corporation which requires only a minimal presence be maintained in the host jurisdiction.  To meet this obligation, it is normally enough to have a representative office established and maintained by a local law firm.  Operations of the company need not be moved to the host locale.  In fact, the IBC is a legal entity that is frequently prohibited from conducting business in its country of incorporation.  It is also often free from all local taxes and merely responsible for paying small fixed annual fees.   Again, please keep in mind that as an owner, your personal tax obligations and reporting requirements will vary depending upon the owner’s country of origin.

The Three Key Benefits to an IBC:

  • Inexpensive to Establish and Maintain
  • Enhance Personal or Corporate Privacy
  • Provide a Basic Corporate Veil for Asset Protection

Of the three major benefits listed above, we think enhancement of privacy is what sets an IBC apart. Regulatory requirements for IBC are minimal.  This often means that the public records of the company are protected by local law.   This privacy element is not protected when a criminal investigation is underway, or a probe is made by a foreign government for tax reasons.  It is, however, very effective to screen the probing eyes of competitors, attorneys initiating frivolous civil lawsuits or in extreme cases governments known for political persecution. The bottom-line is that the owners of the IBC are not widely known, and ultimately privacy is maintained.

Bearer shares
At this point, it is probably best to go into some detail about bearer shares.   A bearer share instrument is a security that indicates ownership of an entity by means of possession.  Therefore, it is like cash. It differs from registered shares in that no public record is maintained of direct ownership but as stated earlier, the registered office and agent are known.

It is noteworthy to mention that in the United States, bearer shares were once a common form for municipal bonds.  Also called coupon bonds these tax-free instruments were traded in this form until the early 1980s.  The ownership of these bonds was not registered; therefore, they were frequently kept in safety deposit boxes since possession was like cash.  In 1983, the U.S. Government sought more knowledge of who owned their debt – even at the local-level – and this option was eliminated.

Outside of the United States, bearer shares were once a common form for IBCs which is no longer the case. Very few countries (if any) still allow for bearer shares of corporate entities.


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About The Publisher

Jeff Corbett
As entrepreneur, author and magazine publisher with over 25 years’ experience in the global marketplace, I enjoy writing as an advocate for international business and personal freedoms. Thanks to my experiences building businesses I also have a tremendous interest in reading or writing about motivation and self-discipline.