Advice on the optimal company structure to handle deals involving the sale or option of real assets

[ajmining]

Hello,

I'm part of a 3 person syndicate that acquires, and then options or sells mineral exploration tenements in Canada, Australia and various other countries. Our transactions typically involve receiving cash and shares from publicly traded or privately held Canadian companies for the mineral rights. As our deal flow increases, managing these transactions as individuals is becoming less feasible. We are considering creating a corporate structure to handle these deals more efficiently.

Currently, we are looking to establish an entity, possibly an LLC or similar, to replace us as individuals in these transactions. Our preliminary idea involves an offshore holding company where we are the ultimate beneficial owners. This entity would then have a Canadian subsidiary to manage the transactions and hold assets. The reason for the Canadian entirety is it's more favourable for the listed Canadian companies to deal with a Canadian entity.

We aim for the following:

• Shares from deals are held in a Canadian brokerage account in the name of either the Canadian or offshore entity.
• Cash proceeds go directly to the offshore entity.
• Acquisition-related expenses are accounted for to offset capital gains.
• Profits are distributed to us individually, with taxes paid in our respective countries of residence.

We have come across suggestions of using a New Mexico LLC for its privacy benefits and a British Columbia LLC for Canadian transactions but are unsure how this would work with the inclusion of securities. Other examples I have read about would be a Cayman or BVI holdco, with the Canadian sub.

Could anyone provide insights or examples of structures that would accommodate these requirements, particularly when dealing with securities? Any advice on jurisdictions for the offshore entity that balance legal compliance, tax efficiency, and operational simplicity would also be greatly appreciated.

Thank you in advance for your time and assistance.

JAJM

 

[mytoofood]

You can cross New Mexico off your list, that much I know, it won't work for the purpose you have in mind.

 

[JohnnyDoe]

You can cross New Mexico off your list, that much I know, it won't work for the purpose you have in mind.

Why?

 

[ActionMan]

Hello,

I'm part of a 3 person syndicate that acquires, and then options or sells mineral exploration tenements in Canada, Australia and various other countries. Our transactions typically involve receiving cash and shares from publicly traded or privately held Canadian companies for the mineral rights. As our deal flow increases, managing these transactions as individuals is becoming less feasible. We are considering creating a corporate structure to handle these deals more efficiently.

Currently, we are looking to establish an entity, possibly an LLC or similar, to replace us as individuals in these transactions. Our preliminary idea involves an offshore holding company where we are the ultimate beneficial owners. This entity would then have a Canadian subsidiary to manage the transactions and hold assets. The reason for the Canadian entirety is it's more favourable for the listed Canadian companies to deal with a Canadian entity.

We aim for the following:

• Shares from deals are held in a Canadian brokerage account in the name of either the Canadian or offshore entity.
• Cash proceeds go directly to the offshore entity.
• Acquisition-related expenses are accounted for to offset capital gains.
• Profits are distributed to us individually, with taxes paid in our respective countries of residence.

We have come across suggestions of using a New Mexico LLC for its privacy benefits and a British Columbia LLC for Canadian transactions but are unsure how this would work with the inclusion of securities. Other examples I have read about would be a Cayman or BVI holdco, with the Canadian sub.

Could anyone provide insights or examples of structures that would accommodate these requirements, particularly when dealing with securities? Any advice on jurisdictions for the offshore entity that balance legal compliance, tax efficiency, and operational simplicity would also be greatly appreciated.

Thank you in advance for your time and assistance.

JAJM

So, forget about the US for your structure, it's one thing if you want a pass through entity and you reside in a tax friendly counter, it's completely different when we are talking about holding companies.

or holding, I'd point you towards Labuan, Dubai, and BVI. Dubai was hot for holding companies, but with all the tax news swinging back and forth, and everything so up in the air, it's lost some of its shine. Labuan and BVI, though, they're solid picks. And if you're looking to park your money in a bank account, Labuan for holding and possibly banking with Singaporean banks is a smart move.

On the offshore holding side, that's my two cents. As for Canada, I'm not too clued up there, but from what I get, a British Columbia LLP could be a better fit for you, especially if you're gonna get taxed in your home country anyway. Plus, It's a good setup if you or any of your partners are thinking of moving to a tax-friendly country later on.

 

[ajmining]

So, forget about the US for your structure, it's one thing if you want a pass through entity and you reside in a tax friendly counter, it's completely different when we are talking about holding companies.

or holding, I'd point you towards Labuan, Dubai, and BVI. Dubai was hot for holding companies, but with all the tax news swinging back and forth, and everything so up in the air, it's lost some of its shine. Labuan and BVI, though, they're solid picks. And if you're looking to park your money in a bank account, Labuan for holding and possibly banking with Singaporean banks is a smart move.

On the offshore holding side, that's my two cents. As for Canada, I'm not too clued up there, but from what I get, a British Columbia LLP could be a better fit for you, especially if you're gonna get taxed in your home country anyway. Plus, It's a good setup if you or any of your partners are thinking of moving to a tax-friendly country later on.

Thanks for the insight and confirmation that the US is a no-go.

I'll research Labuan. I've previously looked at Dubai but as you say, it's lost it's shine recently.

With the BC LLP, wouldn't the TopHoldCo be the only "partner" or is that entirely normal to only have one partner in an LLP?

thanks again.