Whilst the second half of 2012 has seen a decline in company incorporation activity in the major offshore markets, there are grounds for optimism in 2013, according to a survey released by Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services.
The Group’s latest On the Register Report, which analyses company 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, 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 regions, including Bermuda (+7%) and Hong Kong have shown an increase in new registrations, a strong indicator of the strength of the offshore markets.
Isle of Man holds steady
In line with the offshore trend, the Isle of Man witnessed a decrease in new incorporations activity between the first and second six months of 2012; however this has had a negligible impact on the year overall when compared with 2011. When looking at the number of active companies on the register the figures have held steady across all three of the UK’s Crown Dependencies, in spite of the economic instability experienced over the past three years.
Part of the reason for this is that the number of companies being removed from the Isle of Man register has steadily declined over the past five years and is now half the number it was in 2008. This positive trend is reflective of the Island’s continued economic growth, which reached 3% (in real terms) in 2012, compared with the OECD average of 1.4% (comprising the world’s major developed economies).
“This latest report is encouraging for the Isle of Man,” said Sean Dowling, Appleby Isle of Man Managing Partner. “Whilst there is no doubt that 2012 has been a challenging year for the offshore markets as a whole, the steady performance of the Isle of Man company incorporation activity is testament to the strength of the jurisdiction.”
He continued, “The numbers speak for themselves but I remain positive that we are beginning to see an upturn in activity to boost business for the remainder of 2013.”
Minimal Growth in 2012
Taking the entire year into account, 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.
“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,” Sean commented.
“Add to this several major international events during the second half of 2012 including the US Presidential Elections, continued economic difficulties 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.”
Global Offshore Company Incorporation Activity: Q3/Q4 2012
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.
Photo - Appleby Isle of Man Managing Partner Sean Dowling.
