The BVI Business Company

The British Virgin Islands

Situated in the Caribbean, about 60 miles east of Puerto Rico, the British Virgin Islands (BVI) have been an Overseas Territory of the United Kingdom since 1672. They are today an internally self-governing dependency with a ministerial system of Government adopted in 1967.

The British Virgin Islands have, over the years, become one of the fastest growing international centres for business and finance activities. With British Law and flag, legal tender of US currency, stable politics, no currency exchange regulations and the lowest crime rate in this part of the world the BVI ranks amongst the most attractive locations for foreign investors. Apart from a large number of trusts, more than 700,000 companies have been registered in the BVI over the years, which allow the Territory to qualify as one of the most important offshore corporate centres in the world.

Many international firms and private investors have taken advantage of the islands’ attractive economic climate and their well-developed telecommunication facilities, making them easily accessible from any place in the world. Additionally, the British Virgin Islands have not appeared on the FATF Black List, because of the vigilance and constant efforts by the Government and the Financial Services Commission.

In 2004 the BVI Business Companies Act was enacted and came into law on 1 January, 2005. Companies previously existing under the International Business Companies Act, which had not voluntarily re-registered under the new Act, were automatically re-registered on 1 January, 2007. Companies incorporated under the Companies Act Cap. 285 which are not re-registered prior to that date will be automatically registered on 1 January, 2008.

The main purpose of the new Act is to ensure that only one type of company is in existence in the BVI. This company will not be subject to any tax irrespective of the source of income, i.e. not only foreign, but also local assets and income are tax free. The only existing tax for companies is a payroll tax which is applicable for those companies having employees within the Territory.

Another important change is the concept of authorized capital. A company no longer needs to state in its Memorandum of Association an authorized capital. Reference is only made to the maximum number of shares authorized to be issued.

Types of companies

Several types of companies are now allowed under the new Act. These are:

• Companies limited by shares
• Companies limited by guarantee not authorized to issue shares
• Companies limited by guarantee authorized to issue shares
• Unlimited companies authorized to issue shares
• Unlimited companies not authorized to issue shares
• Restricted purposes companies
• Segregated portfolio companies

Company Name

Any name is acceptable, provided that it does not contain any “sensitive” or prescribed words, is not offensive or objectionable, and is not identical to, or too similar to, that of an already existing company. The words “Limited”, “Corporation”, “Incorporated”, “Société Anonyme” or “Sociedad Anonima”, or an abbreviation thereof, must be included in the company name to denote limited liability.

Other companies must indicate in their names their specific type. For example, restricted purposes companies need to add “SPV” to their names, while segregated portfolio companies need to include such phrase or the abbreviations “SPC” before the required name ending.
Names can be reserved for 10 days unless an extra fee is paid which would cover a 90-day period.

Shares and Shareholders

A BVI BC requires only one shareholder. Even though bearer shares will continue to be permitted in the British Virgin Islands, the new regulatory regime requiring the immobilization of bearer shares from January 1, 2005 makes it more prudent to choose Anguilla for a company’s domicile should bearer shares be required.

Directors

A BVI BC may have one or more individual or corporate directors of any nationality. No statutory meetings need to be held whatsoever, and board meetings may take place anywhere in the world, or may be conducted by telephone, if preferred. We recommend, however, that local directors or a majority of local directors are elected to ensure that effective management is conducted in the jurisdiction of the BC at all times.

The BVI BC Act provides for a “reserve” director which is allowed where a company has one director who is also the sole shareholder. The reserve director is authorized to act on the death of the sole shareholder\director and helps eliminating the occurrence of a deadlock situation.


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Accounts

There is no requirement to file or audit annual accounts. However, a BVI BC must keep such accounts and records as the directors consider desirable or necessary in order to reflect the financial position of the company. We recommend, however, that accounts and financial statements are maintained for the company at all times.

It is also a requirement that companies meet the solvency test when dividends are declared.

Administration

A BVI BC must have a registered office and a registered agent within the BVI.

Confidentiality

There is no requirement to enter the names of directors and shareholders in a public registry. A Register of Directors must, however, be maintained at the registered office of the Company together with a Register of Shareholders and a Register of Charges.

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