Beneficiaries of an offshore company can have various reasons to reactivate the company after it became dormant and was struck off the corporate registry. The most common causes include, but are not limited to a bank closure, a tax investigation, to avoid personal liability, or to comply with requirements of asset recovery as a next of kin from a testator. Although reactivation procedures are detached from the personal reasons of beneficiaries, there are important steps to consider since failure to comply with the rules can make matters worse.
After the initial quick scan of the offshore challenge results in a need to reactivate the offshore company, several solutions are provided. Depending on the jurisdiction of the offshore company and the time that passed since the company was struck of the registry, there is a need to either formally request the court to reactivate the company, or where it is still possible to request the reactivation via a local procedure. This is not a matter of choice but results from the company law in the given jurisdiction.
Legal Floris LLC and Equation CS have extensive experience in asset and fund recovery procedures in bank failures and investment fraud. These procedures require a consecutive compliance with staged milestones to qualify for a repayment. In bank failure, closure, and liquidation, available assets are distributed on a pro rata basis to qualifying creditors once a (periodic) threshold is met. To qualify for payment, creditors are requested to provide their proof of debt and a proof of claim to the settler or liquidator. When the (offshore) company is inactive and cannot provide a certificate of good standing, it won’t qualify for a swift and easy settlement.
Nowadays, the Common Reporting Standard (CRS) and FATCA give rise to reciprocal financial information sharing by governments and tax authorities. Furthermore, whistle blowing by professional financial advisers, computer hacks, and bankruptcies of tax planners where corporate assets and the administration are sold to local tax authorities gain altitude. Although several courts around the world declared this figurative obtained information impermissible, tax evasion is a financial crime punishable in most jurisdictions. The disclosures have triggered various tax authorities to request information from the beneficiaries regarding their offshore holdings and company. Where the company needs reactivation to avoid further prosecution, do not hesitate to contact us for further assistance.
Beneficial owners who die can leave their offshore company and its holdings to their heirs. A letter of wishes, a will or an endowment can result in the potential payment of the assets to the inheritor(s). Yet, when the offshore company has a bank account while the company is not in good standing, the heirs first need to reactivate the company before the financial institution can execute the payment of the account balance to the estate. Sometimes this catch 22 situation needs tailored relief to avoid a mismatch between the potential inheritance payment and the costs of reactivation. Therefore, we will guide the rightful beneficiaries of the estate to the understanding where the outcome stays on the positive side whilst considering the protection and mitigation of the risk involved.
In exceptional circumstances where an agent or corporate services provider seizes to trade, loses its license to provide company formation services, or just disappears, the continuation of the offshore company is at risk. To ensure the smooth transition away from the late agent or service provider and safeguard the corporate activities of the offshore company the reactivation packages solve this need as well.