In this section:
Virgin Islands Company Limited by Guarantee
Virgin Islands Hybrid 'Cap 285' Company
Virgin Islands Public Company
Virgin Islands International Business
Virgin Islands Limited Partnership
Virgin Islands Trusts
1 January 2007 the British Virgin Islands Business
Companies Act 2004 (the BVI BC Act) became the
sole Business Companies Act in the jurisdiction,
creating an environment where financial institutions
and corporations can undertake a wide range
of structured asset and project finance transactions
in the BVI.
October 2004 Chief Minister Dr. D. Orlando Smith
had informed the country’s Legislative
Council that a two-year transition period would
be put in place to smooth the changeover to
the new Business Companies Act, which lowered
the income tax rate to 0% for both local and
International Business Companies and effectively
removed the distinction between 'offshore' and
new IBC legislation was drafted to ensure the
territory was fully compliant with the European
Union (EU) Savings Tax Directive and EU Code
of Conduct on Business Taxation, as required
by the United Kingdom of all its Overseas Territories.
the transition arrangements, new incorporations
were possible under old legislation throughout
2005. From 2006, new incorporations had to be
made under the new Business Companies Act, although
companies already on the register were permitted
to operate under the old IBC Act or Companies
Act for an additional year.
Act requires companies to use a registered agent
to ensure compliance with the new laws.
the 1984 IBC Act, which preceded the 2004 Business
Companies Act, just one corporate form was available,
that of the company limited by shares. Under
the new regime, several different types of companies
can be incorporated. These are:
limited by shares. Likely to remain the
most popular form of BVI company. (For more
detailed information, see the British Virgin
Islands International Business Company section
limited by guarantee not authorised to issue
shares. This corporate form is likely to
prove useful for not for profit organisations;
limited by guarantee authorised to issue
shares. This 'hybrid' type of company provides
greater flexibility in structuring transactions,
as a result of its combined equity and guarantee
companies authorised to issue shares. This
structure provides greater transparency,
as it is possible to look through the company
to its shareholders; and
companies not authorised to issue shares.
This type of company could be used to ensure
effective estate planning.
Act also allows companies to be registered as
Restricted Purposes or Segregated Portfolio
Companies. The former would likely be used primarily
in structured finance transactions, while the
latter's use will be limited to mutual funds
and insurance companies.
legislation allows more flexibility on the name
that can be used by a BVI business company,
and allows the re-use of the name of a company
which has been previously struck off from the
register, has changed their name, or been dissolved.
The Act also permits company names to contain
foreign characters, which should be particularly
attractive to company owners in the Far East.
BVIBC Act has abolished the concept of authorised
share capital and replaced it with a maximum
number of shares that the company is entitled
has also removed the requirement that a dividend
can only be declared and paid out of 'surplus',
leaving in place the pre-existing solvency test
requirement, and has boosted the rights of minority
previously stated, a registered agent must apply
to form the company and provide a written consent
to act, but the registered office of the company
need not be the address of the registered agent,
although it must be within the BVI.
Act has also formalised and tightened the record
keeping obligations of companies.
shares are now prohibited unless authorised
by the memorandum or articles of association,
and bearer share certificates must be deposited
with a custodian who has been approved by the
BVI Financial Services Commission.
company which had existing bearer shares (created
before 1 January 2005), and which re-registered
on 1 January 2007, was obliged to deposit its
bearer shares with an appropriate custodian
on or before 31st December 2009.
eligible to apply as an authorised
custodian are service providers licensed under
any BVI financial services legislation, as well
as bodies corporate incorporated or formed outside
the BVI that are not resident in, and do not
have a place of business in, the BVI. Those
eligible to apply as a recognised
custodian are investment exchanges or clearing
organizations that operate securities clearance
or settlement systems in a jurisdiction which
is a member of the Financial Action Task Force.
All applicants to be authorised
custodians have to satisfy the Financial Services
Commission that they meet certain fit
and proper criteria and have the necessary
systems in place for safe custody of their bearer
shares. For bodies corporate, the Commission
will consider the prudential regulation and
anti-money laundering regulations with which
the bodies have to comply.
company issuing bearer shares must provide the
full name of the beneficial owner of the
the full name of any other person having
an interest in that share or a statement
to the effect that no other person has any
interest in the share.
in July 2007, the British Virgin Islands Financial
Services Commission (FSC) announced that several
amendments were being readied to the new Business
Companies Act that would, among other things,
establish new, simplified provisions for the
transitioning of bearer share companies to non-bearer
original transitional provisions required companies
to fully immobilise their shares by 31 December
2010. However, the FSC said that it had become
aware of industry concerns that compliance with
the transitional arrangements would place a
huge burden on the sector, given the recent
introduction of new companies legislation and
a new online companies registry.
even more important, it would cause considerable
inconvenience to the directors and owners of
former IBCs who will have to pass resolutions
amending their memoranda of association,"
the FSC observed.
BVIBCA and the IBC Act before it were designed
to provide a legal mechanism for incorporating
companies without unnecessary administrative
burdens. The effort that would be required to
comply with the existing transitional provisions
is not consistent with this underlying philosophy,"
the Commission noted.
FSC said that it had listened to the representations
that it had received from industry, and had
tried to find a workable solution that would
achieve the immobilisation of all bearer shares
before 2010, but which would impose the minimum
administration on BVI companies.
Order by the Executive Council attempted to
achieve this by deeming that the memorandum
of every former IBC will be amended with effect
from the transition date to prohibit the issue
of bearer shares, unless the company elects
that the deeming provision should not apply;
and by abolishing the staged increases in annual
fees between 2008 and the transition date.
FSC announced that, given this will make the
transitioning of most bearer share companies
to non-bearer share companies a straightforward
process, the transition date was brought forward
one year from 31 December 2010 to 31 December
the years 2008 and 2009, a former IBC that is
a bearer share company paid the same fee as
a non-bearer share company. On 31 December 2009,
the memorandum of a bearer share former IBC
was deemed to be amended to prohibit the issue
of bearer shares, and the company became a non-bearer
share company. It was open to any bearer share
former IBC to elect to disapply this deeming
provision. As a consequence, the vast majority
of former IBCs needed to do nothing, according
to the FSC. An IBC that wished to continue to
issue bearer shares had to disapply the provisions
of the new Act.
full text of the BVI Business Companies Act
2004 can be found in the Tax
News Resources section.
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British Virgin Islands
Company Limited by Guarantee (Updated: See Above)
the Companies Act, a company limited by guarantee
must have a minimum of two members; the Memorandum
of Association contains a statement of the amount
up to which the members guarantee the company's
debts. The Articles can provide for the members
to have differing 'shares' of the assets and
Company Limited by Guarantee has certain advantages,
including that there is no list of members on
the annual return, and that control over assets
can be achieved without the use of shares; in
some jurisdictions, profits realised from such
companies are classified as capital gains rather
than as income. Specialist advice is required
by anyone considering the use of a company limited
fee payable on incorporation is USD100, and
annual registration fees are as for companies
limited by shares.
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British Virgin Islands Hybrid
'Cap 285' Company (Updated: See Above)
A hybrid company under the Companies Act usually
has a group of shareholding members which is
distinct from the group of guarantors. The shareholders
can have 100% of the voting power, and can execute
a trust deed in respect of their shareholdings;
under the BVI's trust legislation (see Law
of Offshore) a trust Protector can be appointed
to oversee the trustees' actions. The result,
if the company is set up correctly (specialist
advice needed!), is to separate control and
membership of the company from beneficial interest,
which is sometimes desirable.
fee payable on incorporation and the annual
registration fees are as for companies limited
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British Virgin Islands
public company formed under the Companies Act
is similar to a private company limited by shares
except that it must have five or more members,
and the restrictions listed above do not apply.
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British Virgin Islands International Business
International Business Company was the most
widely used vehicle for offshore operations
in the BVI; it normally took the form of a private
company limited by shares. The governing legislation
is the International Business Companies Act
1984, updated by the International Business
Companies (Amendment) Act 1990 and the International
Business Companies (Amendment) Acts of 2003
and 2004, which immobilise bearer shares (see
above) and impose record-keeping requirements
on professional intermediaries. The
Memoranda of Association of existing IBCs were
deemed to have been amended to state that they
are authorised to issue only registered shares
and that these may not be exchanged for bearer
the International Business Companies (Amendment)
Act 2003, from December 31, 2004, all international
business companies (IBCs) located in BVI are
required to establish and maintain a Register
of Directors, and must appoint their first director
within 30 days of the IBC's incorporation. As
from 2007, all IBCs are known as BVI Business
Companies. Other statutory
requirements remain minimal, and flexible:
- Only one
director and one shareholder are required;
directors and officers need not be resident
in the BVI and there is no stipulation as
to their nationality;
- There is no
minimum capital requirement; shares may
be either registered or bearer and may be
issued in any currency (bearer shares now
have to be deposited with an authorised
intermediary, who must record the identity
of the beneficial owner);
- Accounts need
not be kept; however, if they are kept there
is no requirement for an audit;
- No returns
are needed of shareholders, directors or
and directors' meetings need not be held
in the BVI and can be held by telephone;
- The Memorandum
and Articles of Association are the only
documents to be held on the public record.
status is granted subject to certain conditions:
- No business
may be transacted with residents in the
- No ownership
interest in real property in the BVI is
permitted; property may be leased for office
- Banking or
trust business may be carried on only if
an appropriate license is issued;
a licence is required to carry on insurance
or re-insurance business;
- Engaging in
the business of company management or providing
registered facilities for BVI incorporated
companies is not permitted.
are permitted to own shares in other BVI companies,
maintain bank accounts in the jurisdiction and
employ the services of local professionals.
IBCs are exempt from BVI taxes by statute.
is usual to use a registered agent in the BVI
to incorporate an IBC (eventually it is obligatory
to appoint one anyway; there are about 70 of
them, licensed by the Government). Fees for
incorporation of an IBC are based on the company's
authorised share capital. Normally, the incorporation
process takes no more than one day; however,
for banks, trust companies and insurers the
process is lengthier (see Offshore
Legal and Tax Regimes).
incorporation fees are USD350 for capital up
to USD50,000 and USD1,100 thereafter. The annual
license fee is:
USD50,000 and some or all of the shares
have no par value
which disapplied the bearer share regulations
of the new Business Company Act pay higher fees.
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Islands Limited Partnership
Limited Partnerships are governed by the Limited
Partnerships Act 1996; as regards general partnerships
this act reproduces almost exactly the common
law provisions of the English Partnership Act
1980, but the clauses dealing with limited partnerships
follow modern US Delaware precedent.
of a limited partnership is normally carried
out by a registered agent (it is obligatory
to nominate one on formation in any event).
The agent files the Memorandum and Articles
of Association with the Registrar of Limited
Partnerships, who issues a Certificate of Limited
Partnership; the partnership then exists; but
if there is no certificate, the partnership
will be deemed to be a general partnership.
The fee payable on registration if USD500 and
there is an annual license fee, also USD500.
rights and limitations of limited partnerships
under the Act mirror those of the International
Business Company (see above); however the Act
distinguishes between local and international
partnerships - local partnerships may transact
local business but are not tax-exempt, while
international partnerships are tax-exempt but
barred from local business.
BVI limited partnership legislation was designed
to facilitate the use of such vehicles in investment
and mutual funds. As is usual in limited partnerships,
there are one or more general partners with
unlimited liability and management responsibility,
while limited partners are liable only to the
extent of their capital contributions, and their
identity does not need to be disclosed. It is
possible for the same person to be both a general
and a limited partner in the same partnership.
A limited partner's interest in the partnership
is assignable. There are no minimum capital
requirements or prescribed debt:equity ratios.
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British Virgin Islands Trusts
trust law of the British Virgin Islands is based
on English trust law. The Trustee Amendment
Act 1993 (the "Amendment Act") updated the original
British Virgin Islands Trustee Act (itself largely
based on the English Trustee Act 1925).
Amendment Act introduced a fixed perpetuity
period not exceeding 100 years, and has modern
'wait-and-see' provisions to deal with interests
that might vest outside the perpetuity period.
The Amendment Act also introduced purpose trusts.
See Law of Offshore
for a fuller description of the legal regime
for Trusts in the BVI.
trusts are exempt from registration under the
Registration and Records Act, and trustees are
exempt from any need to file annual returns
and from any other reporting requirements.
majority of BVI trusts are exempt from all taxes
provided there are no beneficiaries resident
in the BVI, and that the trust does not conduct
any business in the BVI or own any land in the
jurisdiction; see Offshore
Legal and Tax Regimes for further details.
A trust duty of USD50 is imposed on each trust
instrument subject to BVI proper law.
Amendment Act provided for the appointment of
a 'protector of trust', effectively a supervisor
of the trustee(s), and also managing and custodian
trustees. A company offering trust services
must obtain a licence under the Banks and Trust
Companies Act 1990 and conform to various conditions.
Business Sectors: Trust Management.
effect from 1 March 2004, three new pieces of
Trust Legislation came into force in the BVI:
Virgin Islands Special Trusts Act (VISTA);
The Trustee (Amendment) Act; and
The Property (Miscellaneous Provisions)
Vista Act allows trustees of VISTA trusts which
hold a shareholding in a BVI International Business
Company to disengage the trustee from management
responsibilities. The use of trusts to cater
for the succession of shares in companies has
historically been impeded by the 'prudent man
of business' rule of English trust law which
is designed to help preserve the value of trust
investments. The new legislation leaves the
responsibility for managing the company to the
directors of the company.
The new Act applies only where there is an enabling
provision in the trust instrument. Where the
new Act applies, designated shares will be held
on “trust to retain” and the trustee’s
duty to retain the shares as part of the trust
fund will have precedence over any duty to preserve
or enhance their value. It is also possible
to amend existing trusts to allow the provisions
of the VISTA Act to apply to them.
The Act is confined to shares in BVI International
Business Companies and Companies Act companies;
and the trustee of a VISTA trust must be a company
which holds a licence to undertake trust business
under the Banks and Trust Companies Act, 1990.
The Trustee (Amendment) Act makes a number of
amendments to the BVI Trust law. These include:
new regulations improving the BVI's purpose
trusts regime and some amendments in relation
to conflicts of laws provisions, including robust,
comprehensive and carefully crafted provisions
protecting BVI trusts (and dispositions to their
trustees) against “forced heirship”
duty is USD100.
Property (Miscellaneous Provisions) Act provides
that deeds executed by individuals no longer
need to be sealed.
July, 2005, the BVI said it would amend its
trusts legislation so that special trust vehicles
can hold shares in private trust companies (PTCs),
thus broadening the appeal of the vehicles.
Virgin Islands Special Trusts Act (VISTA), which
came into effect in March 2004, allowed trustees
of VISTA trusts which hold a shareholding in
a BVI International Business Company to disengage
the trustee from management responsibilities.
British Virgin Islands introduced new laws on
private trust companies from January 1, 2007.
to Robert Mathavious, Managing Director and
Chief Executive Officer of the BVI Financial
Services Commission, speaking in November 2006,
the legislation has been introduced by amending
the Financial Services Commission Act and issuing
a new Regulatory Code under that Act which enables
certain categories of companies to apply, on
a fast-track basis, for exemptions from the
licensing requirements and other provisions
of the BVI’s Banks and Trust Companies
changes were applauded by the Society of Trust
and Estate Practitioners (STEP), which has said
that the introduction of the measures would
make the BVI a highly attractive jurisdiction
to use for the incorporation of private trust
Chairman of STEP-BVI, Christopher Mckenzie observed
that that the element of certainty that would
be created by the new measures would attract
those who are seeking a reputable jurisdiction
in which to set up these sorts of structures.
1 August 2007, regulations enabling the establishment
of private trust companies (Financial Services
Exemption Regulations 2007) came into force.
A private trust company is exempt from obtaining
a trust license. An Order made by the Executive
Council, in anticipation of the new regulations,
set the fees payable by private trust companies.
to the Order, the incorporation fee and annual
fee for a private trust company are as follows:
the company is authorised to issue 50,000
shares or less, USD750 instead of the normal
fee of USD350
the company is authorised to issue more
than 50,000 shares, USD1,500 instead of
the normal fee of USD1,100.
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