Directors and Officers of an Offshore Company

A company Director is normally the entitled to make all decisions as regards the day-to-day business of the company. Directors are initially appointed by the first Subscriber or by the Registered Agent, and thereafter elected by the Meeting of Shareholders or, sometimes, by the Board of Directors, if such exists and is permitted to elect Directors by the Articles. Usually the Director of an offshore company is elected for an open term “until his successor is elected and qualifies”, but a fixed term can also be provided by the Articles, if desired. If there is more than one director, all the directors together comprise the company’s Board of Directors, in which case there would be a more complex system of decision-making process, involving certain especially important decisions passed only by qualified majority. In most offshore jurisdictions, companies are required to have at least one director, but may elect to have several directors. In British Virgin Islands, Business Companies need to have a minimum of one director, which can be either a private individual, or a corporate entity.

Indeed, many offshore jurisdictions, like BVI, permit the director to be a corporation. This may sound strange, but just imagine a management firm comprising of a team of highly competent business specialists who would take the duty of managing the regular business of Your new startup. That’s a perfect example of a “corporate director”. While there are several practical reasons why a corporate director is actually a wiser choice, having it may sometimes make the structure of the offshore company a bit difficult to comprehend. This especially true for people from countries where only live private individuals may act as company directors. Sometimes the existence of a corporate director may serve as an indicator that the company is probably an offshore, tax-free company.

An individual director makes the whole setup look more straightforward, just because we are more used to the fact that a director of a company must be a living, breathing person. The services of individual directors would usually be more expensive than using a corporate director. Another aspect, quite realistic, is the possibility that an individual director falls ill, leaves for vacation, decides to quit the job, or, as it happens with all people, dies. In case of a corporate director there will always be some person who will be empowered to sign or act on behalf of the company. In case of an individual director, there might not be. In such case the company would have to go through a complicated process of registering a change of director in its file before the new director can be elected and can act. Electing an alternate in the first place would therefore not be a bad idea. In fact, the new BVI Business Companies Act 2004 provides for an option that if a Business Company has only one member who is an individual and that member is also the sole director, such sole director may appoint a “reserve director” to act in his place in the event of his death.

The company directors may sometimes appoint managers or attorneys of the company, granting them certain powers to manage the affairs of the offshore company. The manager may, for example, have a signing authority on a bank or securities account, or the powers to negotiate certain types of contracts for the company or do anything else that may be written in his power of attorney. Company shareholders or beneficial owners are quite often appointed as managers or attorneys of the company for such purely practical reasons.