Appleby Reports Offshore Incorporation Activity

30 Jul, 2013

In their latest survey on Company Incorporation activity in the major offshore markets, Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services, reports a decrease of 3.6% in the second half of 2012 compared with Q1 and Q2 2012, indicating the impact of uncertain global economic conditions across the majority of the offshore markets.

 

However, according to Appleby’s latest On the Register Report, which analyses incorporations in the British Virgin Islands, Cayman Islands, Bermuda, the Crown Dependencies, Mauritius and Seychelles, and also provides insights into how activity in these jurisdictions compares to financial centres such as the UK and Hong Kong, there are grounds for optimism in 2013 as Bermuda reports a 7% increase and the comparative market of Hong Kong also shows an increase in new company registrations. These are good market indicators for the health of offshore jurisdictions.

 

“There are signs that 2013 will be a watershed year in terms of seeing a universal return to pre-2009 activity levels across the offshore jurisdictions,” said Farah Ballands, Partner and Global Head of Fiduciary & Administration Services at Appleby.

 

Geographically, the British Virgin Islands (BVI) continues to dominate the volume of new company incorporations offshore. The trend in the formation of companies in the information, technology, natural resources, mining and extraction sectors continues, with heightened activity in telecommunications and global project and infrastructure work in the robust markets of Africa, Canada, Latin America, Mongolia and Australia all of which is driving demand for BVI vehicles.

 

Minimal Growth in 2012

Taking the entire year into account, the total number of active companies, with most jurisdictions showing little movement from the previous year as new company formations cancelled out the numbers leaving the registries.

 

Hong Kong saw a 9% increase in the total number of active registered companies, with the local register there breaking through the one million mark for the first time. The Mauritius and Cayman registries are steadily returning to their pre-recession peaks experiencing a 3% and 1% rise respectively. 

 

“Continued uncertainty in some markets and the shift in focus from China/Asia to Africa for jurisdictions like Mauritius and the Seychelles are preventing a speedy return to the numbers of company formations recorded prior to the global economic crisis,” Ms. Ballands said. “Add to this several major international events during the second half of 2012 including the US Presidential Elections, continued economic uncertainties in the Eurozone and the once-in-a-decade change in leadership in China, and it’s hard to be surprised at the company registrations barometer struggling to improve quickly but we are seeing growth in some markets.”

 

The story is similar for overall growth rates in new company incorporations for the majority of jurisdictions stayed at minimal levels last year, which proved to be a year of consolidation following large increases in annual new incorporations between 2009-2011.

 

Among the report’s key findings is that in the second half of 2012:

  • Overall volumes of new offshore companies being registered were 11% lower in Q3/Q4 2012 than the preceding six months. After a busy first half of the year, jurisdictions including the Isle of Man, Mauritius, Cayman and the British Virgin Islands were approximately 10% down in the latter half.
  • BVI dominates offshore new company registration activity by volume, maintaining a six-fold lead ahead of its nearest comparator, the Cayman Islands.
  • Year on year, Guernsey is the only offshore jurisdiction revealing growth in new company registration activity with a 1% increase between 2011 and 2012.
  • Mauritius is the offshore economy witnessing the greatest growth rate in total number of companies on its register, with a 3% increase between 2011-2012. 
  • The UK and Hong Kong, as comparators, continue to show signs of recovery.  Hong Kong was the only jurisdiction indicating real growth between Q1/Q2 2012 and Q3/Q4 with a 7% increase in registrations.  Both Hong Kong and the UK are back to registration levels well above those recorded in 2009. 

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