Offshore companies are, unless otherwise agreed, incorporated and active for one year. Before the annual term ends, the corporate service provider or registered agent should send the beneficial owner an invoice for the next year. There are several occasions that potentially justify the failure to pay annual fees and disbursements for the offshore company. Businesspeople who experience such mishaps should not stress because they are not alone. However, reactivation or reinstatement is sometimes necessary to maintain accessibility to the corporate assets and properties.
More and more jurisdictions make transaction with offshore companies difficult to avoid being unwilling participants in large scale fraud. History shows that offshore financial centers can be abused by obscure actors and illicit financial schemes. Beneficiaries of offshore companies should therefore take into account that counterparts may ask for additional and supporting evidence of transactions and other matters relating to customer due diligence.
Inactive offshore companies can be struck of the registry for non-payment of the annual fees. This is problematic for the continuation of banking services. Reactivation and reinstatement of an offshore company may be required. One should realize that this comes at a price. Since the company name is linked to the legal entity, late fees and penalties must be considered.