CS&P-terms Dictionary

CS&P-terms Dictionary

Aircraft registration – all aircrafts must be registered with the national authority and obtain a Certificate of Registration, in order to operate. They are assigned a unique alphanumeric string which may be compared to a car plate. Some jurisdictions have particularly convenient and favourable conditions for aircraft registration purposes.

Annual General Meeting  (AGM) – many companies registered in different jurisdictions are required to hold an annual meeting, where company’s officials elect the Board of Directors and provide information on past and planned activities, including financial information. Various questions may be observed and discussed in this meeting.

Asia-Pacific Economic Cooperation (forum)  (APEC) – this is a forum of 21 Pacific countries, which cooperate for enhancing development of the region, paying a particular attention to the development of trade and investment liberalization. Economic growth is the central objective of this organization.

Bank account – it is a financial account of a private person or corporate entity with a banking institution, where all its financial transactions are recorded. It allows a bank’s clients operate, invest and save money with a bank as an intermediary. There are different types of bank accounts, including savings account, joint account, time deposit account, numbered bank account and others.

Banking – describes the industry of financial services provided by banks, which in general terms refer to safeguarding capitals owned by some individuals and corporate bodies, and lending money to others.

Banking license – authorization granted to a company by the national government of a particular country, which lets that corporate entity provide banking services. Different types of banking licenses may be granted; general banking license allows providing any banking services, while restricted license gives authorization to offer only those banking products, which are specified in the license.

Bearer Shares – these are unregistered stock certificates, which belong to whoever is in their possession at any time.

Beneficiary – private person or legal entity for the benefit of which a trust, will, company, contract, etc.  is established.

Business Plan – document which represents operational, management and financial objectives for establishing and conducting a particular business activity.

Capital Gains Tax – tax levied on profits derived from sale or proceeds of capital assets, such as shares.

Captive insurance – insurance company, which is a risk management instrument, with the help of which a company insures financing risks of a parent group and customers.

Caribbean Community (CARICOM) – organization of 15 Caribbean states and dependences, the central objective of which is to promote economic development of the region, as well as effective cooperation of the member states and coordination of foreign policy.

Citizenship – membership and belonging to a particular country, which provides a status of citizen together with relative rights and obligations.

Commodities – products of mining or agriculture used for economic activities and financial trading.

Company Limited by Guarantee – type of company generally used for non-profit business purposes, which does not issue shares. Company’s members provide a guarantee equal to a specific contribution (generally rather small) in case this company is wound up.

Company Limited by Shares – this type of company is usually referred to as Limited Company. It has shareholders with limited liability. Liability is equal to the capital invested into the company and value of shares held by them. In case this company is wound up, a shareholder will lose only the amount of money invested in the company, while his personal assets will remain protected and unchanged.

Concierge Services – planning, arranging, organizing and providing a range of services in different life spheres, including travelling, movable assets and real estate management for clients.

Corporate Finance – branch of finance, which deals with decision making in corporate world, creating and analyzing tools, which companies apply to maximize profits and thus their overall corporate value.  Long-term and short-term decisions and their relevant methodology may be distinguished for the analysis and planning purposes; special attention is paid to financial risk management procedures.

Corporate Structuring – organizational design, which unites all the job positions into departments and makes all the company employees work for a common corporate goal. Corporate model ensures that the effective working chain is established and all tasks are executed in time- and cost-effective manner.

Corporate Tax – tax paid by a corporate entity on its income. The amount and terms of its payment vary depending on a country and jurisdiction where the company is registered and from where it operates.

Customs Duty or Import Duty – tax payable to the customs authorities on imports and sometimes on exports. This tax aims to raise state income and to protect local industry from competition with foreign market participants.

Director – person who is elected or appointed by the board of directors of a company, who does not need to be its shareholder or employee. Directors of a company work out and implement a corporate strategy, following the guidelines of the corporate legislation and articles of association.

Due Diligence – duty of a company or individual to conduct a research and investigation on all the entities involved in a particular deal, and gather all the necessary information associated with potential risks which may occur within a business relationship.

Ethical Code of Conduct – usually written guidelines created within an organization, which list ethical values a firm’s management and employees should follow, in order to act according to the outlined moral standards.

Fiduciary Company – corporate entity with legal and moral obligations to execute specific tasks for the benefit and on behalf of its clients.  Clients’ interests and goals must be primary and must not enter in a conflict with the company’s objectives at any time.

Financial Action Task Force on Money Laundering (FATF) – intergovernmental organization, which was established in 1989 by the G7 forum for the purpose of developing international cooperation against money laundering and terrorist financing.

Foundation – organization, which is established for the purpose of donating funds to others. Private foundations which may be created in several offshore jurisdictions represent an effective asset protection tool nowadays, which provide a high level of confidentiality to its protector.

Free Zone or Free Trade zone – seaport, airport or any other specific area, where raw materials, unfinished and finished goods may be imported, stored, built, processed and the introduced to the local market, after the required duties have been paid, which generally are significantly lower than those of the rest of the country.

Fund – investment company managed by a financial professional (investment manager), which raises its assets by selling shares to the public. It generally has an investment strategy which is popularized to potential investors. A fund may be open-ended and close-ended.

General Partnership – an organization with two or more general partners, within which every partner actively participates in its management, and is jointly and severally liable for the partnership’s obligations and debts.

Gift Tax – tax levied on a property, which is transferred to another entity (either private person or corporate body) without any payment in exchange. Depending on legislation of every jurisdiction, this tax may be paid either by the transferor or the person who receives this gift. Some offshore countries do not have gift tax.

Group of Eight (forum) (G8) – forum of eight large and industrial countries: US, Canada, Japan, France, Germany, Italy, UK, Russia. It was primarily known as G6 before Canada joined the organization in 1976, and starting from 1997 it became G8 after Russia has been invited to join the forum.

Gross Domestic Product (GDP) – the total value of finalized services and goods produced in a certain country in a particular year, equal to total investment, consumer and government spending, plus the value of total exports, minus the value of total imports.

Gross National Product (GNP) – the sum of GDP with the local residents’ income derived from foreign investments, minus the total income of foreign entities in the local market.

Hedge fund – investment fund the central idea of which is to reduce risk of adverse price movement by taking an offsetting position. It generally has its investment strategy and may invest in a wide range of investment types, including commodities and securities. Usually a hedge fund manager gets a specific performance fee on a monthly basis for its services.

Hedging – activity which aims to reduce risk of investment if an adverse price movement occurs; offsetting positions are taken, in order to minimize risk.

Import Duty – please, see customs duty for definition.

Income Tax – tax levied on income which derives from wages, commissions, interests, rent fees, etc. It is levied on individuals as a personal income tax and on companies as a corporate tax (please, see corporate tax for definition).

Inheritance Tax – tax levied on wealth and/or assets received by inheritor after the death of its owner. Several offshore jurisdictions do not have such a tax.

Insurance License – authorization issued by state authorities which gives permission to a company to provide certain or a full range of insurance services, depending on a type of license.

Intellectual Property – documented or undocumented ideas, opinions and other creations of human mind, such as logos, formulas, inventions, designs, programs, artistic and musical works, etc.,  that have material value and are protected under a trademark, patent or copyright.

International Business Company – a company formed in an offshore jurisdiction, such as Panama, BVI, Seychelles and others, which is not authorized to conduct any business activity in the country of incorporation. This type of company usually enjoys high confidentiality standards, comparatively low formation costs and rapid incorporation procedures, low taxation or its absence, as well as minimal filing requirements.  Nominee shareholders and nominee directors may be often used for this company’s creation and management purposes in the majority of offshore jurisdictions.

Joint Bank Account – bank account which is opened for and operated by two or more individuals who jointly and equally share rights and obligations for the account management purposes. Any action made against one of the joint account holders is regarded as action against both of them, as they jointly represent an account owner.

Know Your Customer (KYC) – due diligence that banks and other financial agencies must conduct, in order to identify their future clients, type of business they plan to conduct and origin of their capital.

Limited-Liability Company (LLC) – flexible type of company, which unities characteristic traits of partnership and company, the owners and managers of which have limited liability.

Limited Liability Partnership (LLP) – some or all partners of this structure have limited liability. Rules and regulations may vary in different jurisdictions. Some elements of a partnership and others of a company are characteristic to this type of structure. Differently from a limited partnership, one partner of an LLP is not responsible for another partner’s misconduct.

Limited Partnership – in this type of partnership there should be at least one general partner who is fully liable for obligations and debts of the partnership, and at least one limited partner, who is liable to the partnership’s obligations only up to the capital invested into this structure.

Marketing Plan – document which summarizes marketing activities of a certain product or service within a certain period of time for achieving set objectives. Market research is conducted, aim auditory is determined and then a detailed plan with relevant budget and sales forecast and marketing strategy is created.

Mergers and Acquisitions (M&A) – part of a corporate strategy and corporate finance plan which deal with acquiring, selling or uniting a number of corporate entities, and as a result a new structure ensures a more solid and sustainable growth without the necessity of establishing additional companies and being able to use already existent resources of different types.

Money Laundering – a process of integrating money received from illegitimate activities such as drug dealing or other crimes into legitimate economic activities.

National Insurance Contributions – contributions which are payable in some jurisdictions usually on a monthly basis to the government, which aim to protect their payers from income or job loss, maternity, which provide sickness benefits and retirement pensions. These contributions are generally payable by employers and employees.

Offshore – situated in a foreign jurisdiction and thus not subject to taxation.

Offshore bank – bank located in a foreign jurisdiction where a depositor is not resident; such a bank generally provides high confidentiality protection and low taxation or its absence. Nowadays many offshore banks located in classic al offshore jurisdictions adhere to international KYC (please, see the Know Your Customer for definition) and anti-money laundering procedures.

Offshore company – any corporate entity registered in an offshore financial centre or any company which is registered in a particular country which is outside of place of its primary operations.

Offshore insurance – insurance company which is incorporated in an offshore financial centre.

Offshore jurisdiction – usually this term refers to a small low-tax country, which specializes in provision of corporate services to private and corporate non-residents. In its widest sense, an offshore jurisdiction is a country which is not a country of one’s residence.

Offshore trust – trust which is created in and managed from an offshore jurisdiction.

Online Gambling License – an authorization issued to a company which allows providing online gambling services. Several offshore jurisdictions offer particularly attractive conditions for managing this type of business.

Onshore – located within the borders of the country of one’s residence.  This term is also often referred to a high-tax jurisdiction.

Organization for Economic Cooperation and Development (OECD) – international organization for economic cooperation, which united developed countries with high-income and high human development indexes. It aims to enhance international cooperation standards.

Organization of Eastern Caribbean States (OECS) – inter-governmental organization, which aims to develop economy of the Eastern Caribbean region, enhance individual rights and good governance of its member states.

Organization of Petroleum Exporting Countries (OPEC) – the organization consists of 12 member states and it aims to stabilize oil prices on the international market, as well as to safeguard individual and collective interests of its members.

Partnership – unincorporated organization which is created for a business purpose, which consists of two or more partners. There are limited partnerships and general partnerships (please, refer to the definition)

Patent – the exclusive right issued by the government to an individual or a company, which authorises the entity to make use of invention for a defined time frame.

Private Company – company, shares of which may not be offered to the general public.

Property Tax – this tax is levied in some jurisdictions on owned property; it may be levied on real estate and automotive assets.

Protector – a third party appointed to guide the trustee in executing its trustee duties, or that entity which guides the development of a private foundation.

Public Company – company, shares of which are traded and may be offered to the general public.

Research and Development (R&D) – enhance the knowledge and develop new concepts, products and services, which are later applied in business or other life spheres and offered to potential clients and partners.

Residency or Residence – country where a person spends at least six months and one day in a year. A country of residency does not obligatory coincide with the place of citizenship. A company is often considered resident in the country where it is registered.

Securities – financing or investing instruments, including but not limited to shares, bonds, options and warrants, which are sold and bought in financial markets.

Settlor or Settler  – entity which establishes a trust and gives its own assets to a trustee for managing them based upon conditions specified in a trust deed.

Social Security Contributions – taxes payable by workers to the government authorities for the purposes of disability income, sickness and retirement pensions.

Share – evidence of a part of a company’s ownership, which gives rights for a part of company’s profits proportional to the amount of owned shares, and at the same time makes a shareholder (please, refer to the definition) to the company’s debts.

Shareholder or Stockholder– a private person, group of individuals or a corporate entity, which holds one or more shares of a company, to which a share certificate is issued.

Stakeholder – a private person, group of individuals or a corporate entity, which has some stake in a particular company, as can be affected by its objectives and activities. Directors, employees, owners, clients, partners and governmental institutions may be a company’s stakeholders.

Stock Exchange – place where different types of stock are traded.

Stamp Duty or Stamp Tax – flat tax rate which is applied to certain transactions, such as transfers of different types of property.

Strategic Planning – activity conducted by a company or external experts, which define the most time- and cost-effective development strategy to reach corporate goals and establish competitive advantages.

SWOT analysis – documents which summarizes a company’s strengths, weaknesses, opportunities and threats in a certain market segment at given time. It helps a company evaluate its advantages and drawbacks, which it must address and improve, in order to become more competitive.

Tax optimization – legal tax planning activities, which aim to optimize due individual and/or corporate taxes, using modern instruments the international environment offers.

Tax planning – activity which aims to minimize taxes through available deductions, exemptions and reduction, taking advantage of today’s international opportunities.

Trademark registration – trademark (™) is a distinctive sign, logo, words or combination of the above, which identify a company and/or its products and services and authorises to make the exclusive use of them.

Trust – a legal entity, which is created by a settlor who gives the right to a trustee to manage its assets on behalf of the beneficiary who receives the proceeds from these asset management activities. It is a typical structure of Common Law jurisdictions, even though this concepts tarts being popular in Civil law countries as well. However, Civil law countries’ representatives often prefer to create a foundation, as an effective asset management instrument (please, see foundation for definition).

Trustee – private person or a corporate entity which is assigned to nominally own and manage assets for the benefit of the trust beneficiaries. Generally a corporate trustee is supposed to have a relevant trustee license to provide trustee services in the majority of jurisdictions.

Withholding Tax – government fees which are levied on dividends, salaries and other types of income. It may be a fixed percentage of the payment or may vary depending on the overall amount on which a tax must be withheld. Some offshore jurisdictions do not have this type of tax.

Value Added Tax (VAT) – type of indirect taxes, which is levied on products and services at different rates in different countries. Usually food and medicines are exempt from VAT.

Vessels Registration – registration procedure conducted in a selected country, within which a registration certificate is issued, which determines laws under which a vessel operates. Several offshore jurisdictions offer attractive conditions for registration of vessels in terms of taxation, as well as rapid and cost-effective registration procedures.

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