Most often used terms

Annual Report – it is the report presenting the structure of the company.

Apostilization – a simplified document legalization procedure for the countries that have joined the Hague Convention ( where an Apostille applied by the consular department of the Ministry of Foreign Affairs is sufficient for the legalization of the document. An Apostille is recognized in all countries of the Hague Convention as a document that certifies the signature of the person that has signed the document and, as the case may be, the authenticity of the seal/stamp affixed to the document. An Apostille itself is not a separate document. It can only exist together with the primary (apostilized)document that it is affixed to. An Apostille may be applied to the original document or to a copy thereof.Apostilized copies of documents of incorporation have the same extent of legal effect as the original documents and the recognition thereof is mandatory. Documents with an Apostille require no other means of attestation or legalization in the countries that have joined the Hague Convention. According to the Hague Convention, apostilization may not be demanded in case the “Provisions of treaties and conventions on legal assistance and legal relations pertaining to domestic, civil and criminal proceedings” apply.

Double tax treaty – an international treaty made between two countries in order to avoid double taxation of any transactions between the countries, prevent tax evasion, distribute fiscal rights and liabilities between the parties of the treaty, prevent tax discrimination and provide a clearer definition of the tax regime applied to the taxpayers of one country conducting business in the other country. Such treaties apply to income taxes and capital taxes.

Due diligence – the procedure required to comply with international standards as regards the customer’s personal identification and the awareness of the essence of the customer’s business.

Certificate of Good Standing – this document confirms the company name, company number and date of incorporation and it certifies that the company has been in continuous and unbroken existence since the date of its incorporation. It also states that no action is currently being taken by the Registrar of Companies for striking the company off the register and dissolving it as defunct, and as far as the Registrar is aware, the company is not in liquidation or subject to an administration order, and no receiver or manager of the companys property has been appointed. This certificate will not be issued if the company is not up to date with the filing of annual returns and accounts.

Holding Company – is a company that owns or has an interest in one or more subsidiary companies. A definition of a Holding Company is provided in s.736 of the Companies Act 1985.

Legalization of documents – procedure of authentication of documents in Embassy of the country in which the document will be used. Legalization of documents is necessary in two cases:

  • If documents will be used in the country which has not joined the Hague convention of 1961;

  • If the country in which documents stand out, has not joined the Hague convention of 1961.

International tax planning – a legal means of minimizing tax expenses in business by applying fiscal legislation of different jurisdictions, including the use of offshore companies or companies subject to considerable tax remissions.

Capital gains tax – the tax paid for the increase in the value of assets that are not related to the company’s direct operations.

Nominee service – service when the company appointed to the post of director or as shareholders of the company by other persons or entities, the proposed registrar. At the same time, the company actually owns and operates the real owner.

Partnership – business carried on by two or more persons with a view to a profit, where the partners share liability and profits under an agreement. The partnership can be governed by a partnership agreement or by a tacit agreement between the parties. Ordinarily partnerships do not provide limited liability, unless they are a limited liability partnership (LLP).

Power of Attorney – a document given by one person (the Grantor) to another person (the Attorney), which is an authorization to act on someone elses behalf in a legal or business matter.

Ready-made Company – a company incorporated or held by a formations agent with a view to reselling it to an end client. A ready-made company usually has a nominee director and a shareholder, standard memorandum and articles, and is dormant/ non-trading.