C2 - Offshore Financial Services

Question 1

Products in offshore centre

Answer 1

Foundation - assets ring fenced, settlor has rights, separate legal entity

Partnership - 2+ people share profits

Companies - legal person, ltd/plc

Trust - legal arrangement, benefit beneficiaries

Question 2

Trust company business services

Answer 2

Describes provision off:

Company admin services
Services to foundations
Trustee, fiduciary services

Action as: comp, partnership, formation agent, director, secretary/nomineee share holder, trustee, partner, member of foundation council and provide registered office, admin address to comp, partnership or trustee

Question 3

Offshore insurance companies

Answer 3

Domestic insurance

International insurance - influxes: captive insurance, commercial insurance, international life and employee benefits

Insurance intermediaries

Question 4

Captive insurance

Answer 4

Subsidiary company to insure/reinsure risks of partner company and/or associated companies

Used by large companies that spend a lot of insurance premiums or require special type of cover

Question 5

Adv and disadv of captive insurance

Answer 5

Adv - high expertise, cost effective, cover common exclusions, company flexibility

Disadv - exposed to claims and loss, capital commitment of funds

Question 6

Asset allocation

Answer 6

Elements of cash, fixed interest, securities and equities
Proportion of split reflect economic factors
Accords jurisdiction, industry and currencies

Cash - funds to meet expected expenditure, extraordinary expenses

Fixed interest - higher rate of return than cash

Equities - most volatile, spread over locations providing diversification and reduce risk

Question 7

Tax planning

Answer 7

Overall business strategy
Avoid tax, benefit from legal opportunities
Services for investment funds:
- advise on initial structure, manage tax residence and permanent establishment issues
- financial tax compliance regulation
- advise on efficient investments

Question 8

Tax compliance

Answer 8

Prep of tax returns

Question 9

Portfolio management

Answer 9

Execution only - not given advice by firm on investment decision

Advisory - firm provides advise, client makes final decision

Discretionary - customer empires investment manager to exercise discretion defending buy, sell, retain

Question 10

Portfolio planning

Answer 10

Considered:

Investment accessibility - short notice?

Risk attitude to client

Ethics

Tax efficiency

Income/capital growth requirements

Question 11

Legal service offshore

Answer 11

Offshore law firm - licensed to confirm trust comp business as part of legal advice provided

Involved in estate planning

Consulted when trust established, involved in
Prep of trust deed