Starting a company is an exciting time, but few of us pay much attention to the nitty gritty of administration. We all know that incorporating requires a mount of paperwork, but what happens afterward? Every jurisdiction has some kind of annual obligation that requires ongoing compliance. But what to expect? Fast Offshore brings you this guide to corporate compliance and how to go about managing it.
What is corporate compliance?
Corporate compliance is the rules, regulations, and best practices you must adhere to once your company has been incorporated. This will vary depending on your company type, the jurisdiction it is incorporated in, and what kind of business you conduct and where. For example, an online gambling company with clients outside of jurisdiction may have different requirements than a shell company that operates its business inside a country. These rules lay down what you must do periodically in terms of audits, statements, taxes, and updates to company documents that must be made if and when things change. Other forms of compliance can include business meetings, the separation of assets, and the designation of certain individuals to specific roles.
What happens if I am not compliant?
Not following corporate compliance rules can have several effects depending on the severity or type of infringement. These can include financial penalties and fines, administrative procedures, suspension or closure of the company, or even, in some cases, criminal proceedings. In all cases, compliance is a much smarter move than non-compliance as it prevents any interruption to business activity, licensing and financial or reputational issues.
What are common corporate compliance requirements?
Depending on the jurisdiction, you may need to appoint an auditor and carry out annual audits of your company. These are often then submitted to the authorities and stored for future reference. In some cases, they can be publicly available. But not all jurisdictions have this requirement, so be sure to speak to your corporate service provider beforehand to figure out precisely what you need to do. Audits ensure transparency and accountability regarding your business operations, fiscal matters, and local corporate law.
- KYC on directors and shareholders
Anyone with a significant stake or role in your business, such as a director or shareholder, will often be subject to know-your-customer (KYC) processes as a part of corporate compliance. This typically requires information such as name, date of birth, passport copy, proof of address, CV and qualifications, links to other companies or entities, and source of funds, when applicable. These should be updated every time individual changes or their particular circumstances change.
- Registered office
A registered office is a location in the jurisdiction where the company is based, which serves as the official address of the entity. This is where all correspondence will be sent and where the authorities will come knocking should there be an issue. In the case of offshore companies, the corporate service provider can often offer a registered address to their clients and receive mail on their behalf.
- Statements and reports
Companies may also be required to submit statements and reports as a part of their corporate compliance. Depending on the jurisdiction, these may or may not need to be audited by a third party. In many offshore jurisdictions, the statements and reports can be filed directly, but some require another set of eyes. Be sure to clarify with your corporate service provider before starting the incorporation process.
- Annual meetings
Annual meetings are a core part of corporate compliance, but again, each jurisdiction has different requirements. Involving all directors and key stakeholders, they can take place in person or online. Some require detailed minutes to be taken and shared with the authorities; others do not. But most jurisdictions require that such meetings take place periodically and that such meetings are documented.
Does all this corporate compliance sound like a lot to take in? Don’t worry; Fast Offshore has over 25 years of experience working in the corporate services sector. Not only can we help you set up your company, but we can manage all ongoing matters and compliance for you depending on your circumstances. To discuss your options and determine which jurisdiction and type of company are best for you, contact a member of our team today. For the most transparent and professional advice around, Fast Offshore is the only option.