The number of companies incorporated in offshore markets dropped by 3.6 per cent in the second quarter of 2012 from a year earlier, as uncertain economic conditions depressed activity, according to data by Appleby, the offshore legal and fiduciary specialist firm.

The data analyses incorporations in the British Virgin Islands, Cayman Islands, Bermuda, the Crown Dependencies, Mauritius and Seychelles. It also looks at how activity in these places compares to financial centres such as the UK and Hong Kong. The report found that Bermuda reported a 7 per cent increase and the comparative market of Hong Kong also shows an increase in new company registrations.

Geographically, the BVI continues to dominate the volume of new company incorporations offshore, Appleby said. The trend in the formation of companies in the information, technology, natural resources, mining and extraction sectors continues, with heightened activity in telecommunications and global project and infrastructure work in the robust markets of Africa, Canada, Latin America, Mongolia and Australia all of which is driving demand for BVI vehicles.

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.

Hong Kong saw a 9 per cent increase in the total number of active registered companies, with the local register there breaking through the one million mark for the first time. The Mauritius and Cayman registries are steadily returning to their pre-recession peaks experiencing a 3 per cent and 1 per cent rise respectively.

In the second half of last year, overall volumes of new offshore companies being registered were 11 per cent lower 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 per cent 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, the Appleby report said. Year on year, Guernsey is the only offshore jurisdiction revealing growth in new company registration activity with a 1 per cent increase between 2011 and 2012.

In the second half of 2012, Mauritius was the offshore economy witnessing the greatest growth rate in total number of companies on its register, with a 3 per cent increase from the year earlier.