This article comes courtesy of Savoir LLC. For the discerning client who values discretion and discernment, Savoir LLC is the single point for all your needs. They are a bespoke law practice specialising in solutions, strategy and structures for business leaders, entrepreneurs, families and start-ups. Their services converge with only one objective – You.

Offshore, OK

Recently, people have been asking me with half smirks and sneers:  So, what are the legitimate uses of offshore companies?  Quite a few.  Let’s look at 3, all of which are bona fide.

1.  Protection from criminals.  If you are a business person in Singapore, consider yourself fortunate.  For many business owners in countries where organised or violent crime is prevalent, threat of extortion or kidnapping is more than an unpleasant fact of life.

Offshore companies, with their shield of privacy, can be used to own and operate businesses in such countries, giving business owners and their families anonymity.

2.  Business negotiations.  Let’s say you wish to acquire the property next door.  If your neighbour came to know that you are behind the bid, there’s a good chance that he might be prepared to close only at a much higher price.  Because once you own his plot, you could amalgamate it with your own to form a bigger land parcel with better development potential.

You could set up an offshore company in a seemingly unconnected country to bid for the property.  Your neighbour would not know the true identity of the bidder or objective of the offer.  With clever negotiation, you would likely be able to get a better deal.

3.  Legacy planning.  Many countries (e.g. France) have forced heirship rules.  Simply put, these countries stipulate that a part of a deceased’s estate must be distributed to specified family members (typically dependants / descendants) regardless of their actual needs.  Such an approach would be advantageous in ensuring that this group of beneficiaries are adequately provided for.  However, forced heirship restricts a testator’s freedom; its rigidity prevents a testator from distributing his estate more equitably among beneficiaries who are more needy or vulnerable.

A lawful and honest solution is to set up a trust or a foundation.  Assets transferred into an irrevocable trust or a foundation are no longer part of one’s estate, and would not be subject to forced heirship.  As part of the trust / foundation structure, an offshore company is typically set up to hold the assets. The offshore element is necessary not only to ensure that the assets are kept separated from other property the trustee may hold for other third parties, but to also provide for flexibility.

Conclusion:  We can see the examples above have nothing to do with tax evasion, money laundering, or any other criminal activity.  Offshore structures have, for many years, been used for purposes that are above board.  Let us not be too quick to assume the worst and embark on a paranoid witch hunt.  There are people who are simply crooks; and there are smart people who avail themselves of legitimate structures and solutions to meet their proper, genuine and justifiable objectives.

For more information, please contact:
Benjamin Szeto
Managing Director, Savoir LLC

This information is provided for general information and does not constitute legal or other professional advice. Specific advice should always be sought in relation to any legal issue. Savoir LLC does not accept any responsibility for any loss which may arise from reliance on the above information.

This article is written by Benjamin Szeto from Savoir LLC and edited by Adrian Mah from Asia Law Network.

This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.