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Ukrainian crisis highlights the original rationale for of going offshore

PRLog - April 17, 2014 - The battle for hearts and minds currently raging across Eastern Ukraine illustrates clearly one of the fundamental reasons why well regulated, transparent offshore centres developed to service the business community and that reason is to protect against the wild card that is political risk.

Historically, the spotlight fell on British nationals working in so called hardship locations in the Middle East, where the local ruling political elite were felt to be untrustworthy,  a history – real or imagined -of asset annexation and sudden clampdowns on limited political freedoms, allied to a deep distrust of the local banking environment meant that for years, pioneering expatriate workers in the 70s and 80s chose to transfer wealth once earned to London and the British offshore dependencies.

Wind the clock forward to 2014 and the same scenarios are being played out again, but this time, instead of the hot sands of the Middle East, it is the heavy industrial heartland of Eastern Ukraine which is now in the spotlight. Post Perestroika, former Eastern Bloc satellites such as Poland and the Baltic States have won independence and gone on to create thriving capitalist economies, whilst for others such as Ukraine, the path has been slower, but progress has been undeniable. Just under two years ago, who would have thought that Poland and Ukraine would have been jointly hosting Euro 2012, one of the highest profile international sporting festivals, setting new  attendance records for the 16 team format both for the highest aggregate attendance, 1,440,896 and average per game at 46,481. Ordinarily, the economic stimulus such events bring to the host country can provide are catalysts for business and entrepreneurs alike, but in the case of Ukraine, this optimism has been quickly snuffed out with firstly the annexation of Crimea by Russia and latterly with the dark clouds gathering over other important cities in the East of the country.

For those who have started businesses in Ukraine, both domestic and international, now is an important time to be thinking about the security of assets which have been carefully nurtured.

In times of political uncertainty, there is a history of capital flight and offshore company formations (http://www.londonincorporations.com/) as people and their assets leave an unstable region and head to a safer area. In the Ukraine and the Crimea at the moment, the temptation of course is for flight capital to be drawn away from the region, as people turn to safer, more politically stable jurisdictions to bed down their assets and wealth.

One of the areas that many Ukrainians are turning to as a political and economic safe haven is of course the UK. With London as a global economic power house, a growing economy, world leading banking sectors and a buoyant real estate market, many Ukrainian citizens are now actively seeking the stability of London and the UK as a temporary home for accumulated wealth, whilst still maintaining the day to day operations of their businesses.

International company formations (http://www.londonincorporations.com/services/) specialists such as London Incorporations Limited exist to provide UK company structures for Ukrainian entrepreneurs in times like these. Through a UK company, any legal asset can be held, and once the company is established it can continue to be run for the benefit of the shareholder of the company.

Brian Lee, Managing Director, London Incorporations Limited explains that, “Providing the company is run legally with accounts prepared and submitted, a UK company formation can represent a very flexible tool for Ukrainians to safeguard their assets. Factories, shops and offices can continue to be run locally in the Ukraine, but financial assets are held safely offshore, away from local political risk.”

Whilst companies will still need to adhere to strict UK disclosure and reporting rules, organisations such as London Incorporations which can provide accounting, payroll and company secretarial services look to be well placed to meet this new emerging demand.

For more information, please visit www.londonincorporations.com, telephone: 0161 925 6021

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