Procedures

In most of the offshore jurisdictions, a company name keeps reserved for the initial founder. This is to prevent fraud and improper use of a brand or ‘expired’ company name. It happens more and more that the founder of the offshore company terminates the companies’ activities and stops paying the yearly fees. Put aside the legal consequences of such an action in the country of residence of the founder, there can be financial consequences to the termination of the company as well.

Know your client (KYC) procedures and anti money laundering regulations dictate that banks and other financial institutions need to have up to date customer and business information of their clients. According to these rules bank accounts without recent data should be blocked and eventually terminated. Offshore banks don’t always follow these directives. But when they do, customers will be asked to provide yearly evidence of the status of the company. Any changes must be proven with tangible evidence.

Sometimes banks don’t ask for updates. This becomes problematic when the bank goes bankrupt or is placed under resolution by a central bank, eventually to be liquidated. Since bankruptcy law only allows exact beneficiaries to be compensated, the (offshore) company that is not active or in good standing must be reactivated.

The first thing to do when you need to reactivate your offshore company is to find a new agent. For most jurisdictions and individuals we can introduce you to a reliable agent who not only helps you to reactivate the company in good standing but also prevents you from experiencing the legal and fiscal challenges having an offshore company can bring.

Your new agent contacts the jurisdiction where your (offshore) company is registered and will ask for details about the company. Since the company name is reserved for the founder, even when the yearly fees were not paid and the company is not in good standing anymore, a reactivation fee, late fees and the yearly fees for all years the fees have not been paid. At the end of the day reactivation of your offshore company can be a very expensive exercise.

With the company in good standing, a new bank account can be opened and the founder qualifies for payout of insurance funds (e.g. DGS or FDIC), liquidation and bankruptcy of a bank or to receive funds from other payment schemes.