Spoilt for choice

Sunday, 01 September 2013
John Harper looks at the factors to consider when choosing a corporate or trust jurisdiction.

Not only is the subject of this article a regular Diploma examination question, but it often crops up in the office in a real-life situation. I am deliberately going to avoid comparing one named jurisdiction with another. I know many senior people in the industry who will say ‘I like using jurisdiction X because the company law is very user-friendly and the costs low.’ Referring to that same jurisdiction, I have equally encountered the comment that ‘Jurisdiction X may be cheap, but no self-respecting client would wish to be there.’

Nearly 2 per cent of the entire population of Jersey are STEP members. Not bad for a ‘difficult’ jurisdiction

I can remember the days (in the 1970s and early 1980s) when we commonly used companies from a certain jurisdiction. They were not the easiest to use, but there was little choice. The success of that jurisdiction was probably a result of the remorseless effort and charm of a certain founder of a certain law firm who must have visited every trust company in the known world (and probably beyond).

Let us now look at the main features that may affect the decision for you or your client.


Jurisdictions close to the client or their advisors may have some attraction. Bear in mind, however, that a trust governed by the law of offshore state A and a company incorporated in offshore state B can be perfectly well looked after from offshore state C. So this requirement has more to do with the location of the trustees or corporate administrators than anything else.

Company and trust law

The laws of some jurisdictions may not accommodate the specific needs of the client. It might have something to do with the doctrine of capital maintenance, the use of no-par-value shares in a company, or how long a creditor has before any claim under local fraudulent disposition laws becomes time-barred.


If litigation arises in the future, it will be important that the court and its judges hearing the case will be robust, experienced, impartial and available. I recall a case I was involved with many years ago. We needed a court decision from one of the smaller corporate jurisdictions. My contact there had to admit to me that Judge Y, who always heard such cases, was ‘off bonefishing for another month, and doesn’t take his mobile phone with him’.


Clients and their advisors often have enough trouble maintaining the integrity of the structure without the jurisdiction in question being on some blacklist or other. Such lists come and go and contract and expand like a concertina, so being up to speed is vital.


Many people will say they achieved financial success because they ‘Looked after the pennies and the pounds took care of themselves.’ That may be true to an extent, but ‘Pay peanuts and you get monkeys’ is more my take on it.

Infrastructure, telecommunication, banking and other financial services

Some otherwise successful offshore jurisdictions are still inhibited by the range of services they offer. I have visited them all and could give you examples of dial-up internet in 2012 and bank compliance officers who resolutely demand a certificate of incorporation for a trust!

Double-taxation treaties

Certain jurisdictions probably exist only because of highly advantageous treaties. You will know who you are!


Advisors and their clients both take much comfort from the fact that their chosen offshore jurisdiction is well regulated: not overbearingly difficult, but not too slack either. At this point I am going to mention a particular jurisdiction. For many years I have heard advisors using phrases along the lines of ‘It’s like wading through porridge’ when referring to dealing with the regulators in Jersey. Therefore the reader may be interested to know that nearly 2 per cent of the entire population of that island are STEP members. Not bad for a ‘difficult’ jurisdiction.

Quality of local service

In my opinion, all of the above are of little consequence unless the chosen service provider, wherever it is, adds perceived and actual value for the client, is highly disciplined with response times, is meticulous in accounting and record keeping, and consistently provides service of the highest technical quality for an appropriate price. 

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John Harper

John Harper TEP is a part-time lecturer, delivering face-to-face courses for the STEP international diploma examinations all around the world.

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