Many clients have asked about information concerning the formation of an offshore company in the Bahamas, Belize, Nevis and some other jurisdictions.  Of importance is the fact that many firms offering such a service often tout the idea that bearer shares are issued to the client (and is of value accordingly).  On the point of practicality, there are some important things to consider when forming a company with bearer shares, as you may find some difficulty operating such a company in the real world (in the case of banking especially).
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 John Schroder, of Ascot Advisory Services, writes for a number of on-line and print publications, in addition to his popular Weekly Update news bulletin.  The following article was reprinted from either the weekly update news bulletin, or is an aritcle which may have appeared in another on-line or print publication written by him . 
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The Weekly Update news bulletin offer news and commentary regarding a number of issue which are of interest or concern to clients.  Such topics may include offshore company formation, trusts, banking, investing, real estate, expatriate matters, residency & second passport matters, and other topics concerning the Dominican Republic & Panama.
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The Problem with Bearer Shares
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Many clients look to form an incorporated company in a jurisdiction that permits “nominee” directors and “bearer shares” for the purpose of anonymity and privacy.  This idea is all well and good in theory, but the problem is such documents often are worthless in the real world when it comes to opening a bank account or conducting other business.  Why is this so?
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Let us take the example of two individuals that showed up at an offshore bank recently with their incorporation documents and bearer share stock certificates in hand.  One client had completed an incorporated company in NEVIS, and the other in BELIZE (not through our firm).  Two jurisdictions, that very much promote such an arrangement when a client wishes to form a company.
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The problem for the bank (and the client) was that the client had nothing to indicate he had the authority to establish an account in the name of the company.  The incorporation documents did not have his name anywhere on them.  The “bearer share” stock certificates look nice, but no name is on them either, and in reality such certificates can be easily printed at “Joe’s quick copy center”, so what legitimate value do they have as a legal document?
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The solution then is of course to make sure a valid corporate resolution is obtained, or a legal & notarized power of attorney, which allows the client the stated legal right to conduct business on behalf of the company.  Many incorporation service firms (or law firms) do not automatically provide such documents to clients.  In some cases, some jurisdictions may require that such documents are public record, defeating the purpose of privacy.  However, this may not be such a negative thing.  The fact that someone is an authorized signatory, investment advisor or consultant for a company does not inherently mean that such a person is a director, shareowner or other wise beneficiary of company profits, which is truly the key point for “tax connection” issues.
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Let us illustrate this by taking the example of an investment advisor or broker, who may have trading authorization over a clients investment account.  Surely such a person can conduct business in or on behalf of the account, yet he is not a director, shareowner of the company, nor is he a “beneficiary” of the account (or company) profits with respect to taxation matters.  Why don’t some incorporation service firms in Nevis & elsewhere automatically provide such documents to clients, so they can make practical use of a structure they have paid good money for?  The honest answer is, I do not know.  Perhaps it is because the nominee wants you to be dependent on them, charging a fee for any new account or other documents you need to be signed.  Perhaps they wish to maintain control because they offer investment products they wish for you to invest with (whereby they earn an investment commission).  Regardless, being able to do something as simple as opening a bank account (on your own) is an important point to be aware of when forming a structure in any jurisdiction.
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