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TCI Hybrid Companies

A Hybrid company (as referred to on this website) is first and foremost a company limited by guarantee. It differs from a standard Guarantee company however, in that it also has a share capital. TCI legislation makes specific provision for companies "limited by guarantee" and for companies "limited by guarantee and having a share capital".

Background

The concept of Guarantee companies having a share capital is derived from the development of company law in the UK and is familiar to practitioners in that part of the world.  Guarantee companies and hybrids were originally intended to provide an alternative means of limiting the liability of the members in circumstances where a company had no capital requirements (where a Guarantee company could be used) or limited capital requirements (where a hybrid company could be used). As a term of membership members guarantee to contribute a fixed amount (e.g. US$100) to the assets of the company in the event that it has debts when it is wound up.

Application

Because Hybrid companies also have a share capital the voting control can be separated from the prospect of receiving distributions and/or participating in any liquidation. That is, the members of a hybrid company that hold shares can be exclusively entitled vote at general meetings, but can be precluded, under the articles of association from receiving distributions from the Board of Directors. The potential to receive distributions from the Board can be restricted to the client members, who would provide a Guarantee but do not take up voting shares.

The Articles of Association of TCI Hybrid Companies are drafted to separate management powers from the potential to benefit from assets contributed or accumulated by the Hybrid.  When properly structured a Hybrid Company creates a relationship between the management and the contributing member/client which is similar in effect to that of a trustee and a settlor.

Notwithstanding that an individual is a member of a TCI Hybrid Company, when properly structured his/her position will be as follows:

  • Not a shareholder

  • Not a director or officer

  • No voting rights or fixed entitlements to assets contributed

  • No tangible control over dividends, loans or payments

Uses

Objectives which may be achieved by careful use of TCI Hybrid Companies include the following:

  • Indefinite, legitimate deferral of capital gains tax in certain circumstances;

  • Enhanced asset protection;

  • Confidentiality of membership (exempted TCI Hybrid Companies benefit from the same high level of confidentiality as standard IBC's and are almost as simple and cost-effective to maintain);

  • Avoidance of probate and estate costs.

By virtue of the above Guarantee Companies can clearly be useful as conduits for active investment enterprises and as shareholders in other structures, e.g. by structuring them as charitable foundations and utilizing them as shareholders of trustees to private family trusts.

Corporation Services Limited - professional company formation and management in the Turks & Caicos Islands


Contact Details:


1, Caribbean Place
Leeward Highway,
Providenciales
Turks & Caicos Islands
British West Indies

Tel: 649-946-4344
Fax: 649-946-4564

Email

 

 

 
Corporation Services Limited - professional company formation and management in the Turks & Caicos Islands

 

Reasons to consider an exempted Hybrid in TCI:

  • No nationality restrictions;
  • Exempted from future TCI taxation (if any) for 20 years;
  • Minimal reporting req's;
  • Enhanced privacy;
  • Not req'd to hold AGMs;
  • Rapid set-up at reasonable cost.
     
Corporation Services Limited - Turks & Caicos company formation and management
Corporation Services Limited - professional company formation and management in the Turks & Caicos Islands


CSL Group:


 

Corporation Services Limited - Turks & Caicos company formation and management

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