The long-term concept, the hybrid is technically guarantor and corporation with equity capital. Extremely versatile and flexible tax planning tool.
A Straight Trading Company has shareholders who contribute to capital, which then finances the company's business, but a group of people gathered to create a company in a guarantee company is not required to offer funds. Instead, they guarantee that they give money to the company's obligations and are known as "guarantors".
Most tax evasion legislation focuses on: –
o Ownership of Shares
o Some form of economic benefits of shares, regardless of whether the dividends or the assets under liquidation are taken over.
ability to associate an entity with the power of voting, usually associated with shareholding
Some or all of the above may be structured.
o Guarantee members are entitled to or do not have control, that is, voting rights
o Enable or hold any economic rights
o Provide capital injections in the form of membership fees – this is the most important way to guarantee members' fundamentals in the structure
o One option is to use the company as an investment tool for the guarantee members, so their funds must be efficiently introduced to the company. This can be done by membership fees that are set at the level of the investment
Utilizing commercial property with the enjoyment of the company's assets provides a structure that is suitable, for example, to operate a timeshare resort under common law.
Sharing assets and gaining pleasure results in a structure that alleviates wealth taxes under certain civil law laws.
Assignment of ownership and right to property are also very similar to trust.
A typical trading company traditionally has two people – the shareholder and the directors; a typical hybrid company has a third set – the guarantee members. In the statutes of a hybrid company, directors must have a certain discretion as to what they should do with the rights that are automatically transferred to the shareholders in a private company in a public limited company.
If directors have a discretionary power over voting rights, economic rights, ownership and enjoyment of assets, and entitlement to assets, solutions to different tax planning problems may arise.
Hybrid as Enterprise Trust
Creating trust in a company by creating articles that allow guarantor members to have so much or no right to comply with local law in client jurisprudence. For example, guarantors do not have veto rights – simply the contributions of dividends and / or assets under liquidation. You may only have the right to earn revenue from the company's assets or, in the discretion of the directors, have no rights or benefits. In the latter way, it can create corporate equivalence for a completely discretionary trust, with the advantage that the corporate structure facilitates the understanding of the client, the tax authorities and the courts alike.
Hybrid as a Commercial Vehicle
The separate ownership and enjoyment of the economic benefits of enjoying real assets generates a commercially useful structure that is traditionally developed by timeshare.
The developer maintains the ultimate control and ownership of the development and gains from its operation. Owners of timeshare rights only have the right to occupy and enjoy the assets for a fixed period of time.
Hybrid as an Investment Facility
The guarantor's rights are limited to the right of liquidation. By this and by introducing funds from the guarantee member, the entity has not disclosed any interest in the life of the fund. This is because he does not control the entity and does not have the automatic right to enforce the assets.
Shareholders have legal and beneficial ownership rights over property and income rights as they arise during disputes, but in fact no dividends can be disclosed. Directors may consider when assets are charged.
Inheritance Tax Planning
Warranty members enjoy reciprocity. This means that each guarantor member has equal rights with the assets and benefits of membership to any other guarantor member. There can be no difference between the guarantors. Mutuality also provides the right to survive. When a guarantor member dies, the remaining members will continue to retain all the rights and benefits of guarantee membership. The deceased member leaves nothing to his estate, so there is no inheritance tax.
Hybrids can be a solution to violent inheritance and tax problems and can help unmarried and same-sex couples and illegitimate children.
In some cases there is a great discretion for the board of directors of the hybrid company. These concerns can be designed with one of the following methods:
o Protector – is similar to trust. There may be a problem if the defender has too much power under the company's statutes, since he is then considered to be a director and must therefore beware of [Golden Shares]
– the share of redeemable preference often provides better protection than the appointment of a defender
o & # 39; and & # 39; call & # 39; options over stocks – sometimes useful but complex and sophisticated
Hybrid companies are highly flexible structures where rights and entitlements can be adjusted according to different circumstances. They can have the same effect as trust, though in a more understandable corporate structure. They can be used with the same efficiency in commercial, inheritance and investment applications.
Each structure is individually tailored to a particular situation. The statutes and all contracts or agreements must be formulated separately. It's not practical to buy a hybrid company from the shelf.
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