centaurtrust.com

Introduction 

The English common law concept of agency is sometimes described by legal writers as the doctrine of identity. This conveys the concept that the agent is the alter ego of the principal. In the act of the agent the act of the principal can be clearly seen; the act performed by the agent on behalf of the principal is the same as if the act was performed by the principal. Practical experience may have exposed us all to the idea of agency. In other words, we do not always deal directly with the principal as we sometimes deal with an intermediary or agent.

The Concept 

The Agency or Commissinaire or Nominee Structure is in reality a simple set-up, where for example a Cyprus company is used as a nominee, or agent, for an undisclosed offshore company. The agent represents the principal in accordance with the terms of the agreement in place between them. Under the agency agreement, which is normally confidential and is therefore not disclosed to any third parties, the Cyprus company will allow the offshore company to use its name and address on contracts, invoices, letters and correspondence with third parties. In effect, the offshore company conducts the business, but in the name of the Cyprus company.  The above structure successfully avoids many of the common problems faced by offshore companies, when trading internationally. Offshore companies, when trading internationally, often face the following problems in relation to their business associates:

• In some countries (especially in Europe) invoices from offshore companies are not considered as tax allowable expenses.
• An increasing number of business associates do not feel comfortable to enter into any business agreements with offshore entities.

How it works

The nominee structure provides an effective solution to the above problems, as all transactions are with an onshore company. The Structure is comprised of a Cyprus registered company and an offshore company (usually a BVI or a Belize company). The offshore company (BVI) is the principal in all transactions, whilst the nominee company (Cyprus) contracts for business and acts on its behalf. The Cyprus company represents the offshore company in accordance with the terms of the agreement in place between them. Under the agency agreement, the Cyprus company will allow the offshore company to use its name and address on contracts, invoices, letters and correspondence with third parties. All invoicing and accounting, as well as marketing, promotion and advertising is performed by the Cyprus company. Any third parties, such as the public and any customers, will only be aware of the Cyprus company. No invoices from the offshore company will be issued to customers.  Goods will be purchased and transactions invoiced by the Cyprus company, in its own name. The proceeds of sales will be transferred to the Cyprus company’s bank account. Third parties will only be aware of dealing with a normal Cyprus company in a European onshore jurisdiction. There is no necessity to declare the nominee relationship which will exist with the offshore company.