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I'm neither a lawyer nor an accountant. But I can smell that something is off. I don't wish to appear discriminatory, so I won't ask which country your foreig

I'm neither a lawyer nor an accountant. But I can smell that something is off. I don't wish to appear discriminatory, so I won't ask which country your foreign investors are from. But you need to do your research into them and similar investors. Just saying. If your counsel can't tell you, then they are not very well informed. Haven't you read about the Panama Papers? That is just one of many tax havens. But it is more than just tax management. Using off-shore companies is used for all sorts of "frowned upon" activities. You need to be aware that the IRS requires significant amounts of documentation etc - which could affect you as founders and shareholders. Other government agencies are also very interested in such off-shore arrangements. As good as HN is for feedback. You really need competent attorneys and accountants to advise you.

SmellTheGlove 10y ago
It doesn't have to be nefarious. OP said it's a foreign investor. A foreign investor probably wants to avoid as much US bureaucracy and taxation as possible. Forming offshore with the US entity as a subsidiary allows the foreign investor to own shares of a non-US entity. The real question for me governing law, and the potential to have to appear in the Caymans if there's a dispute. Maybe it's because I am a lawyer, but I'd rather go to court in Delaware than somewhere outside of the US, but this isn't really my area of knowledge. An attorney more versed in this would have more knowledge about the foreign forum and whether it presents a risk in potential litigation.