INCORPORATING AN OFFSHORE SAFI CORPORATION
Any person or company, of any nationality, may acquire or incorporate a SAFI.
There are two ways to own a SAFI: by incorporating a new one, or by acquiring a "dormant" one that has already been incorporated. The latter is the most common method, since SAFIs that are pre-incorporated have by-laws with a broad spectrum of permitted activities that allow practically any kid of profit or non-profit activity.
To obtain a SAFI, the interested party simply pays for the cost of incorporation to the person or firm (such as our firm) that incorporated it, then names a Director (which our firm can also provide), and the shares -bearer shares- are all handed to the buyer. A simple process of registration of the company with the tax authorities activates the SAFI immediately.
A SAFI'S TYPE AND AMOUNT OF REQUIRED CAPITAL
A SAFI's equity is represented in the form of bearer shares (although nominative shares can be issued if the owner wishes so).
The SAFI need not have more than one shareholder. The shareholder may be one or many persons or companies.
Since SAFIs have the form of a share-corporation, liability is limited, and thus not extensible to shareholders beyond the capital invested in the company.
SAFIs have an "authorized capital" stated in their by-laws, of which the law requires that only 5% be integrated.
SAFIs' capital and accounting may be in any currency.
ASPECTS OF A SAFI OPERATION
A SAFI has two bodies: the Board of Directors and the Shareholder Assembly (plus an optional Auditing Committee).
The main body is the Shareholders' Assembly. It must meet once yearly. Shareholders may empower third parties to represent them in the annual shareholder meeting. This body designates the Director(s) and their powers.
The Board of Directors may have one or more members. These may be of any nationality and country of residence / domicile. A Director is not required to be a shareholder of the SAFI.
LEGAL OBLIGATIONS OF A SAFI
A SAFI's obligations are minimal and simple. The corporation must:
· Have accounting books of the company.
· Prepare annual financial statements of the company (not of its shareholders).
· Pay the annual tax, once a year.
· Hold an annual shareholders' meeting to approve the financial statements.
***The presence of the SAFI's owners (shareholders) is not required for any of these activities.
EXAMPLES OF A SAFI'S ACTIVITIES
Uruguay's SAFIs may be used for any offshore activity. Examples of the use of SAFIs are:
i) As an investment vehicle
ii) As a holding company
iii) As a trade intermediary
iv) As a provider of loans and investments
v) As a Special Purpose Vehicle (SPV) to secure assets in a third country
vi) As an owner of patents and copyrights
vii) As an asset-protection vehicle
viii) To engage in leasing agreements
ix) To hire personnel abroad
x) To provide professional services
xi) To carry out captive Insurance and Re-insurance activities
Each of these examples is described ahead:
i) As an investment vehicle:
A SAFI may simply be used to own property, intangible goods or shares of other companies in any country. It may be used to perform contracts of any kind, including the handling of bank accounts.
ii) As a holding company:
Multinationals may elect to use a SAFI as a holding company. The parent company may receive its dividends and financing-related payments tax-free and without exchange restrictions in a SAFI, and redirect its investments from there.
iii) As a trade intermediary
A SAFI may be used as a trade intermediary in the following cases:
· To increase the sale price of exported/imported goods (respecting the regulations of the involved countries), or to generate and retain a commission on the sale.
· To avoid the disclosure of the identity of the supplier of the goods.
· To take advantage of exchange arbitrage opportunities.
In the import or export of goods or services, a SAFI may perform the invoicing, in order to accumulate income in a virtually tax-free jurisdiction, maximizing the profits of a company that may be domiciled in any country.
The goods or services do not enter Uruguay. The SAFI simply handles the flow of the payments of the operation and the respective documentation. The goods are shipped directly from the exporter (in Brazil, for example), to the importer (in Europe, for example).
When using an offshore corporation as a trade intermediary, it can either be the importer or the exporter of goods who owns the offshore corporation. To better understand each case, a description of each follows:
· When the owner of an offshore corporation is the EXPORTER:
a) The goods, the documentation related to them and the payments flow between the importer and the exporter.
b) The letter of credit is received in Uruguay, on behalf of the SAFI.
c) The payment is transferred from the SAFI to the place of origin of the goods or to where the seller wishes to transfer it.
d) An invoice is issued in the country of origin of the goods; another invoice is issued in Uruguay. The letter of credit's payment reflects the amount in the SAFI's invoice; the collection is of the amount of the exporting country's invoice.
e) The goods never touch Uruguay. They move directly from the exporter to the importer.
· When the owner of an offshore corporation is the IMPORTER:
a) The letter of credit is opened in the importer's country, in favour of the SAFI. The SAFI itself opens another letter of credit in favour of the country where the goods originate.
b) The payment leaves the importer's country to Uruguay, for the amount in the invoice issued by the SAFI. The amount transferred to the seller is that which is in the selling country's invoice.
c) The goods never touch Uruguay. They move directly from the exporter to the importer.
In sum, the SAFI is a vehicle to retain the difference between the invoices, and where the payment conditions are altered according to the parties' needs.
To see a diagram that illustrates a SAFI's role in a trade operation CLICK HERE
iv) As a provider of loans and investments
A SAFI can be used to give loans to third parties, or to channel capital increases in other companies.
v) As a Special Purpose Vehicle (SPV) to secure assets in a third country
A SAFI is the ideal vehicle to use as an SPV owning the assets that may result in a securities operation of any type, in any country in the region.
vi) As an owner of patents and copyrights
An offshore company owning patents and copyrights may make it easier to justify the transfer of royalties for their use.
vii) As an asset-protection vehicle
Offshore companies are commonly used to protect assets from eventual legal claims from commercial or other parties.
viii) To engage in leasing agreements
An offshore company that owns and leases out capital goods avoids the payment of taxes on the leasing-related income.
ix) To hire personnel abroad
An offshore corporation may be utilized to hire executives of a company.
x) To provide professional services
An offshore corporation may be the sole owner of the rights of services that a client may want to offer to third parties.
xi) Captive Insurance and Re-Insurance activities
Uruguayan Safi's can be engaged in captive Insurance and/or Re-Insurance activities, as permitted by law
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