Key Logistic and Support Issues in Evaluating a Domicile
The ease and cost of a captive’s carrying out day-to-day operations can vary widely from one domicile to another.
A domicile with burdensome legal or administrative requirements can add needless operational cost and delays and hamper an owner’s ability to pursue business opportunities. For this reason, it is important to quantify the impact of the following logistic and support issues in any domicile evaluation:
- Annual meeting requirements – All jurisdictions currently require that the captive hold at least one board of directors meeting in the state of domicile. Domiciles differ significantly as to the type and number of persons who need to be physically present at the meeting. The requirement seems simple, but can often become a burden.
- Resident directorship and agent requirements – Domiciles differ on the details of these requirements. Most require that at least one director be a domicile resident. In many domiciles, the resident director and resident agent requirement can be filled by a single member of the captive manager’s staff at no added cost (or possibly by the captive’s local legal counsel).
- Location of assets – Some domiciles require that the minimum statutory capital/surplus must be held on deposit only with a local financial institution.
Other factors that can significantly affect a captive’s ease of day-to-day operations are a domicile’s political support for captive-enabling laws and how consistently a particular jurisdiction applies its regulations.
In short, owners should pay close attention to how logistic and support issues, as well as the local political environment, can impact the time and costs required for administration and legal compliance.
Free Download: Offshore to Onshore -- For an informative look at the latest trends in captive insurance domiciles, download “Offshore to Onshore: Re-Domestication of Captive Insurance Programs."
Wilmington Trust neither claims to nor provides legal or tax accounting services. Clients should consult professional tax and legal advisors regarding favorable tax treatment of any particular strategy.