INTRODUCTION

The term offshore company is ambiguous. It may refer to either: 1. A company which is incorporated outside the jurisdiction of its primary operations regardless of whether that jurisdiction is an offshore financial centre (sometimes known as a non-resident company) i.e. a Canadian company may be 'offshore' for the purposes of a USA citizen ; or, 2. Any company (resident or otherwise) incorporated in an offshore financial centre, i.e. offshore jurisdictions Typically the requirements for company registration under the relevant provision for non-resident status (as in the former of the two options above) will be pursuant to some or all of the following criteria in a strict legal sense according to Offshore Company Law:Theory, Regulations& Operation(By Zhang Shiwei, China Law Press, 2004):

Must be incorporated under Offshore Company Laws and regulations of offshore jurisdictions Must be incorporated by non-residents of offshore jurisdictions Must not trade within the offshore jurisdictions; and/or, Must meet nominal tax expenses levied by the offshore jurisdictions.

Banking services to off shore business:

deposit taking credit wire- and electronic funds transfers foreign exchange letters of credit and trade finance investment management and investment custody fund management trustee services corporate administration

OBJECTIVE
Trade is not an end in itself, but a means to economic growth and national development., but the stimulation of greater economic activity. The foreign trade policy is rooted in this belief and built around the following objectives. These are 1)The primary purpose is not the mere earning of foreign exchange 2)To double our percentage share of global merchandise trade with in the next five Years. 3)To act as an effective instrument of economic growth by giving a thrust to employment generation. 4)Taxation - In most jurisdictions authorities will not seek to tax companies which they treat as non-resident.

5)Cost of operation - In many cases, i.e. where a self employed consultant provides services to a number of jurisdictions and travels frequently, it is a matter of choice where he chooses to incorporate. In this case the fact that companies in an offshore financial centre are considerably cheaper than buying or renting premises, arranging to engage accountants, receptionists, IT providers etc. would be.

RATIONALE
Offshore banking encompasses today the following activities: 1) Wholesale Banking : includes syndicated loans, project loans etc. 2) Merchant Banking : arranging external funds, issue of equities & bonds. 3) Routing of funds : many transactions routed through these banks to save tax & escape from regulations. Legitimate uses of offshore companies

International trading, especially where the owner has no fixed residence Asset protection Captive insurance Tax avoidance Protection of intellectual property Succession planning Confidentiality (non-criminal)

Illegitimate uses

The finance of terrorism Money laundering Tax evasion Fraud (including investor fraud) Protection from current or future creditors (including taxation authorities and spouses) Irregular trading practices

Practical uses of offshore companies Offshore companies are beneficial for many purposes including at least some of the following: [1]

1. Consultancy, Professional Services, Agency

Professionals, consultants, artists and many self-employed individuals decide to incorporate a business representing their services to gain substantial advantages by working as employees or external consultants of offshore companies of which they may be the sole shareholders and, if they want to, the sole directors.

2. Employment of Expatriate Staff

Expatriates working overseas frequently benefit from being employed through an offshore employment/consultancy company. By not remitting the full salary it can minimise tax and avoid exchange control difficulties in the country of temporary residence. This arrangement is sometimes attractive for expatriates working in politically unstable countries.

3. Property Owning Companies

There are often significant advantages in using an offshore holding company for the purpose of holding property. The advantages of such an arrangement include the avoidance of inheritance tax, capital gains tax and the ease of sale which can be achieved by transferring the property owned by the company and reduction of property purchase costs to the onward purchasers.

4. Investment Companies

Funds accumulated through investment companies set up in offshore areas can be invested or deposited throughout the world. Whilst generally returns or interest payable in respect of these funds will be subject to local taxation, there are a number of offshore areas in which funds may be placed as bank deposits where the interest and/or the capital gains are paid and kept gross. To invest in global securities including mutual funds not available to "local" citizens. Offshore jurisdictions are typically less invasive allowing for aggressive and unrestrained Free Enterprise.

SYDENHAM COLLEGE OF COMMERCE & ECONOMICS

SYNOPSIS
FACILITIES PROVIDED BY BANKS TO THE OFFSHORE BUSINESS.

SUBMITTED TO: PROF. SYED HASAN

SUBMITTED BY: AMAR FUNDE CLASS ROLL NO : T.YB.B.I : 12

CHAPTERIZATION
1.Introduction . 2.Objective. 3.Features of off-shore business. 4. Practical Uses of off-shore business. 5. Banks view on off shore companies 6. Banks services to off-shore business. 7. Off-shore finance 8. RBI Norms. 9. Present Scenerio in India. 10. World Scenerio . 11. Advantages. 12. Disadvantages. 13. Conclusion. 14.Biblography.