RUSSIAN UPDATE – Guide To Using Offshore Holding Companies For Russian IPOs


  • A key step in planning for an IPO is choosing the location in which to establish the holding company to list on a foreign exchange.  Offshore holding companies are often used for Russian IPOs to increase investor comfort, avoid an extra layer of tax or tax compliance costs, avoid stamp duties in certain jurisdictions and take advantage of foreign legal regimes that are more attractive.
  • Common locations in which to establish the new holding company include:
    — the United Kingdom, which may offer benefits for FTSE eligible London IPOs but may have drawbacks from a taxation and regulatory perspective;
    — low tax jurisdictions such as Cyprus or Luxembourg, which have a good network of double tax treaties; and
    — “zero tax” offshore jurisdictions such as the British Virgin Islands (BVI), the Cayman Islands, Guernsey and Jersey.
    The article explores the finer points of selecting offshore jurisdictions in further detail.
  • The main downsides are the time and cost involved in complying with the laws and regulations of another jurisdiction, though generally these downsides are more than offset by the benefits that the new structure will bring.

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