The British Virgin Islands (BVI) is a British overseas territory located in the Eastern Caribbean with a reputation as an international business and finance centre and a world leader in incorporations.
The largest Island is Tortola and Road Town is the capital. Its legal system is based upon English common law and it is part of the Eastern Caribbean Supreme Court (ECSC) region.
A commercial court was established in 2009 to hear business and finance matters and appeals are made to the Eastern Caribbean Court of Appeal, with a further right of appeal to the Privy Council in England.
English is the official language, and the currency is the US dollar. There are no exchange controls. The BVI has no capital gains or capital transfer tax, no inheritance tax, no sales tax or VAT. There are stamp duties on certain transactions and property taxes. Personal and corporate income tax was abolished in 2004.
BVI became the market leader for corporate services following the introduction of the International Business Companies Act in 1984, which created the International Business Company. The BVI Business Companies Act 2004 updated the IBC Act and the IBC was replaced by the Business Company. The BVI is home to more than 368,000 companies.
In 2006 a 24/7 electronic filing system, the Virtual Integrated Registry & Regulatory General Information Network (VIRRGIN) was introduced leading to the fast and efficient turnaround of documents by the Registry of Corporate Affairs.
The European Union announced BVI is a fully compliant jurisdiction for tax purposes in 2020 and placed it on its "white list".
The key benefits of using a BVI company are:
• Political stability of the BVI
• Tax neutral - no income tax, corporation tax or capital gains tax
• Reputation as a politically safe, mature financial centre
• Common law legal system, well respected commercial court with ultimate appeal to the Privy Council
• Straight forward administrative processes and low ongoing costs
• Modern and flexible legislation.
The most used BVI entity is a company limited by shares. It can issue shares, the directors manage its routine affairs and shareholders enjoy separate legal personality.
Only a BVI registered agent can apply to incorporate a company and must undertake customer due diligence and adhere to anti-money laundering legislation, including obtaining the names, dates of birth, residential address and nationality of all beneficial owners.
• The word Limited, Corporation, Incorporated, Societe Anonyme or Sociedad Anonima or the abbreviation Ltd, Corp, Inc or S.A. must be a part of the name of every company, and an unlimited company's name must end with Unlimited or Unltd
• If the company is a restricted purpose company, the name of the company must end with the words '(SPV) Limited' or '(SPV) Ltd'
• A company may be registered with an additional foreign character name approved by the BVI Registrar of Corporate Affairs
• Indecent or objectionable names are not permitted, such as names suggesting royal support or the entity is regulated
• The Registrar has a name reservation system for a set amount of time.
• Every company must have a registered agent located in the BVI
• Registered agents must be licensed in the BVI
• Registered agents act as an intermediary between the Registry of Corporate Affairs, the BVI International Tax Authority (ITA)) and the company
• Registered agents provide services such as incorporation, nominee directors and/or shareholders, company secretaries and company management
• Commonly the registered office of a company will be that of its registered agent.
ILS World is proud to have been operating in the BVI for more than 25 years and ILS Fiduciary (BVI) Limited is licenced by the British Virgin Islands Financial Services Commission.
• Company Memorandum and Articles of Association act as its rulebook and regulate the rights and obligations of directors and shareholders
• Memorandum of Association sets out the type of company, registered office, registered agent, maximum authorised share limit as well as the company's objects and powers
• Articles of Association can be 'off the shelf' or tailored for a specific purpose and often regulate matters such as the issue, transfer and charging of shares, shareholder proceedings, director powers and proceedings, conflicts of interest, record keeping and distributions.
• Subject to the Memorandum and Articles of Association, the directors have the power to manage the day-to-day business of the company and most decisions can be taken by the board of directors
• A company director must:
♦ act in accordance with the Act
♦ act in accordance with the company's Memorandum and Articles of Association
♦ act honestly, in good faith and in what the person believes to be the best interests of the company
♦ in accordance with common law duties
• Subject to Memorandum and Articles of Association, company directors don't need to be a natural person or a resident of the BVI
• A company must file (and keep updated) a copy of its register of directors with the Registrar
• The number of directors can be prescribed in the company's Articles of Association but must be at least one.
• Shareholders of a company are its owners, typically enjoying voting and dividend rights in the proportions (percentage) of which they hold shares
• No minimum share capital requirements are prescribed
• A company must keep a register of shareholders in the BVI containing details of shareholders, the shares they hold and when they became or ceased to be shareholders
• Shares maybe issued as fully paid, partly paid or unpaid and consideration for shares can be money, services rendered, property, a promissory note or other binding obligation to contribute money or property to the company
• The transfer of a registered share is effective only when the name of the transferee is entered in the register of shareholders
• A company is not required to hold an annual general meeting
• The Act codifies the traditional common law basis for shareholders' remedies and provide sophisticated remedies for shareholders who object to certain corporate actions, such as a merger involving another BVI company
• The Act includes statutory pre-emption rights on the issue of shares in a company, but these only apply where a company expressly provides that such rights will apply in its Memorandum or Articles of Association
• Subject to a company's Memorandum and Articles of Association, a company may hold shares in treasury.
Distributions and disposals
• Distributions maybe declared by the directors of a company, subject to a cash flow and balance sheet solvency test
• A company may buy back the shares of a shareholder, subject to a solvency test
• If a company disposes of more than 50 per cent in value of its assets, this must be approved by its shareholders unless the disposal is made in the usual or regular course of the company's business.
Continuance and discontinuance
• Where permitted to do so under its domestic jurisdiction, a company incorporated outside the BVI can generally apply to be continued into the BVI
• Once complete, the company continues as a body corporate under BVI law and all rights, assets and obligations continue
• Subject to its Memorandum and Articles of Association, a company can continue out of the BVI provided the relevant foreign jurisdiction permits this
• Continuing out of the BVI will not release any existing claims or debts against a company or its directors.
• A minimum local presence is required in the BVI, which means having a registered agent and a registered office in the BVI
• Companies must maintain, at the office of the registered agent, various mandatory documents including its Memorandum and Articles of Association, registers of directors and shareholders and copies of all documents filed by the company in the past 10 years
• A company is not required under the Act to file accounts or returns, but must maintain financial records sufficiently detailed enough to explain the company's transactions
• Ongoing filing with the Registrar for a company is done electronically
• Each company is required to pay an annual fee to the Registrar
• A company is required to file a copy of its register of directors with the Registrar
• Neither a company's register of shareholders nor register of charges is required to be filed with the Registrar, however:
♦ where a shareholder creates security over shares in a company, the secured party may require the company to file a copy of its register of shareholders with the Registrar
♦ where a company creates security over any of its assets, a secured party may require the company to file particulars of the security with the Registrar.
The Economic Substance (Companies and Limited Partnerships) Act, 2018 came into force on January 1 2019 and imposes economic substance requirements on companies and limited partnerships in the BVI. The regime applies to legal entities carrying on a 'relevant activity' during any applicable period, with such entities being required to comply with the economic substance requirements in respect of that activity.
Please note: ILS World does not offer tax advice and would therefore recommend you obtain your own tax advice. If you require an introduction to a tax adviser, we would be happy to assist.