Should we consider offshore company formation?

[qosh]

Hello,

There is a group of people who want to invest in eurobonds and etf's.
Let's say 15 people - UK, EU, Russia and Ukraine tax residency, each has 50k-250k USD/EUR/GBP.
They all agreed on fund strategy (what to buy, when to sell, ...). They all trust at least one of them, so that this person can manage a fund.
Interactive Brokers has "Family and Friends" type of account, which seems to suit them.
But may be there are also other ways.
Does it make sense to open an offshore company? The point is that there going to be maximum several trades a year, so it is not so much about trading, but more about possibility to involve more money into the fond from people who might need more guaranties to be ready to invest.
So basically my question is if there any tools in offshore field to cover the situation described above?
Thanks.

 

[happyjohn]

IT can be a good idea. But I think the problem is that you can't get a bank account for the activity of each individual unless you are able to provide a lot of documentation.

 

[Martin Everson]

qosh said:
They all agreed on fund strategy (what to buy, when to sell, ...). They all trust at least one of them, so that this person can manage a fund.
Interactive Brokers has "Family and Friends" type of account, which seems to suit them.
Click to expand...

The IB Friends and family solution works perfectly fine in my own personal experience. It offers good cost, reporting and trading management. You can open an IB friends and family account then start emailing each party to register and fund their account via IB and all accounts are linked in IB for you to be able to see and manage their funds, place block trades etc etc. You do however need to confirm that a license is not needed in your resident country to carryout this management activity.

Alternatively if you try and pool clients funds into a single account you will have problems without being regulated somewhere plus banks will not be welcoming. If you do decide to setup an offshore company you can do so where each investor is a shareholder in the company and the company opens a brokerage account. Keep in mind however that if a bank or brokerage blacklists Russia or Ukraine persons then the offshore company becomes effectively redundant. Hence the IB solution may be better as it maintains physical separation of each client funds but aggregation for trading and investment purposes.

You may also want to consider setting up an offshore white label fund. However this is not cheap.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[qosh]

Thank you for your replies. I have decided to start with IB.

 

[Horsecap]

What about setting up an US LLC to run the IB Family and Friend account. If there are less than 15 members and AUM are less than US 25 M, the administrator does not need to register in the USA.
Let me know how it goes.