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British Virgin Islands - BVI OffShore Company
BACKGROUND INFORMATION
The British Virgin Islands are a British Dependant Territory composed
of over 50 islands, islets and cays located approximately 60 miles
(95 kilometres) East of Puerto Rico. The total land area is approximately
60 square miles (155 square kilometres) and the total population is
approximately 21,000. The principal island is Tortola, with a population
of about 13,500. The capital of Road Town is located on Tortola. Access
to the islands is easy by air and sea; the main gateways are Puerto
Rico and the U.S. Virgin Islands, which lie immediately to the west.
The Territory is politically stable and has a high level of internal
self-government.
The government consists of a British appointed Governor and thirteen
democratically elected members of a Legislative Council who, in turn,
elect Ministers. The Executive Council of the Territory consists of
the Governor, the Deputy Governor, the Ministers and the Attorney
General. The United Kingdom, through the Governor, is responsible
for defence, external affairs, internal security, and the administration
of justice. The legal system is primarily based on that of Great Britain
and there is legislation to regulate and protect corporate, banking,
trust, mutual fund and insurance operations. All domestic matters
are legislated locally, by the Legislative Council, including taxation.
There are no capital gains taxes, inheritance taxes or death duties
in the Territory. Government revenues are derived from local income
tax, import duties, stamp duties, license fees and company fees.
The British Virgin Islands are a party to two double taxation treaties,
with Japan and Switzerland, which the United Kingdom entered into
many years ago. These treaties were extended to cover the British
Virgin Islands, although the Territory does not have a tax treaty
with the United Kingdom itself. The treaties themselves are little
used. There are no plans to negotiate any new tax treaties.
The Territory has adopted the U.S. Dollar as the local currency. There
are no exchange controls and no restrictions on the free movement
of funds.
In recent years the British Virgin Islands has become a significant
international finance centre. The government seeks to maintain and
enhance the Territory's reputation in international finance through
a policy of ongoing consultation and active support of the offshore
industry.
TYPE OF COMPANY FOR INTERNATIONAL TRADE AND
INVESTMENT
International Business Companies (or IBCs) are companies incorporated
under the International Business Companies Ordinance 1984 (as amended).
This Ordinance provides for the establishment of tax exempted companies
with extended privileges and contains strict confidentiality requirements.
It provides for the re-domiciliation of companies from other jurisdictions
in the Territory and also provides for companies to move their domicile
out of the Territory, to be continued elsewhere. International Business
Companies are by far the most popular and widely used type of company.
The international finance community has embraced the British Virgin
Island's IBC. Since the initial passage of the legislation in 1984,
the Territory has incorporated about 600,000 companies by the end
of 2003. The BVI legislation has been so successful that it is considered
the ideal model by many new jurisdictions seeking to establish an
offshore financial industry.
Some of the more significant features and advantages of an International
Business Company are:
 It
requires a minimum of only one founder, one shareholder, and one
director (who can all be one person).- It need not appoint any operating officers
- Its shareholders, directors and officers may be individuals
or corporations and of any nationality.
- It need not hold shareholder's or director's meetings in the
British Virgin Islands.
- It can hold meetings of directors or shareholders by telephone
or other electronic means; alternatively, directors as well as
shareholders may vote by proxy.
- It need not hold an Annual General Meeting.
- Its shares may be denominated in any currency and in more than
one currency.
- Its shares may be issued with or without par value.
- Its minimum issued and paid-in capital can be one fully paid
share.
- Its shares may be issued for consideration other than cash.
- Its shares may be issued in bearer form, transferable by delivery
only (insuring complete confidentiality of ownership and simplifying
the transfer of assets between parties).
- If a governmental authority outside the British Virgin Islands
seizes the shares, or any other interest, in the Company in connection
with nationalization, expropriation, confiscatory tax, other governmental
charge, etc., the Company or a shareholder may apply to the BVI
court for an order that the Company disregard the seizure and
continue to treat the person from whom the shares were seized
as continuing to hold the shares.
- The Company can buy back or redeem its own shares from shareholders
and hold them as treasury shares or cancel them.
- It is required to keep only such accounts and records as the
directors consider necessary or desirable and these may be kept
abroad.
- It is not required to prepare financial statements or to appoint
auditors.
- It is not required to file any return of shareholders, directors
or officers, although such registers may be filed at the Companies
Registry if so desired.
- It is not required to maintain registers of directors or officers,
although such registers may be maintained at the registered office.
- Its incorporation documents (Certificate of Incorporation and
Memorandum and Articles of Association), which include the location
of its registered office in the Territory and the identity of
its registered agent, are the only documents required to be filed
at the Companies Registry as a matter of public record. These
documents do not contain the identity of the ultimate directors
or shareholders of the Company. An IBC is not required to disclose
any particular information on its letterheads.
- It can amend its Articles of Association by a director's resolution
passed at a board meeting called at three days notice and attended
by at least 50% of the directors.
- It can be incorporated within 24 hours of the receipt of instructions,
if necessary. Actual incorporation documents are available from
the Companies Registry within a few days thereafter.
- Its name may end with any of the following words, or their abbreviations:
Corporation, Incorporated, Limited, Societe Anonyme, or Sociedad
Anonima (Corp., Inc., Ltd., S.A.).
RESTRICTIONS ON TRADING
Cannot trade within British Virgin Islands or own real estate there.
Cannot undertake the business of banking, trust company, insurance,
mutual fund and related businesses, assurance or reinsurance. However,
the legislation does allow an IBC to carry on the following activities
within British Virgin Islands:
- make or maintain deposits with local banks in British Virgin
Islands;
- make or maintain professional contact with persons in British
Virgin Islands;
- prepare or maintain books and records within British Virgin
Islands;
- hold meetings of its directors or members within British Virgin
Islands;
- hold lease of property for use as an office in British Virgin
Islands;
- own a vessel(s) registered in British Virgin Islands;
- hold shares in another British Virgin Islands IBC.
POWERS OF COMPANY
A Company incorporated in British Virgin Islands has the same powers
as a natural person.
LANGUAGE OF LEGISLATION AND CORPORATE
DOCUMENTS
English.
NAME RESTRICTIONS
Any name that has already been incorporated, or is so similar as to
cause confusion. Any name which in the opinion of the Registrar is
considered undesirable, obscene or offensive. Any name which suggests
the patronage of royalty or of the British Virgin Islands Government.
LANGUAGE OF NAME
A British Virgin Islands IBC is typically incorporated using the English
language and with an English name. Provision exists for a translation
of the name to be included in the Memorandum and Articles of Association.
REGISTERED OFFICE REQUIRED
Yes, must be maintained in British Virgin Islands. Typically maintained
at the offices of the Registered Agent of the Company.
NAMES
REQUIRING CONSENT OR LICENCE
Any name which suggests an association with the banking, trust company,
insurance, mutual fund, assurance or reinsurance industry. Any name
which suggests the patronage of royalty or of the British Virgin Islands
government.
SUFFIXES TO DENOTE LIMITED LIABILITY
Limited, Corporation, Incorporation, Societe Anonyme, Sociedad Anonima,
or the relevant abbreviations (Ltd., Corp., Inc., S.A.)
AUTHORISED
SHARE CAPITAL
The normal authorised share capital is US$ 50,000 divided into shares
with or without par value. The share capital may be expressed in any
currency. The minimum issued capital may be one share of no par value
or one share of par value. Essentially any share capital is permitted,
but additional government fees apply for the use of Bearer Shares
and authorised capital over $50,000 ($750).
CLASSES OF
SHARES PERMITTED
Registered shares, bearer shares, shares of no par value, preference
shares, redeemable shares and shares with or without voting rights.
Nominee shareholders are permitted.
BEARER SHARES PERMITTED
Yes.
DISCLOSURE OF BENEFICIAL OWNERSHIP TO AUTHORITIES
No. Disclosure of the beneficial owner(s) is not required; share register
may be inspected only by a shareholder. Share Register must be lodged
with Registered Agent, with Bearer Shares showing a contact address.
FILING REQUIREMENTS
Only the Memorandum and Articles are required for public records.
The registration and deregistration of Registers of Directors, Members,
and Mortgages and Charges may optionally be filed.
TAXATION
A British Virgin Islands IBC is exempt from...
- the payment of all forms of local taxation;
- the payment of stamp duties for transactions in respect of its
shares, debt obligations or other securities;
- the payment of stamp duties with respect to all instruments
relating in any way to its assets or activities.
DOUBLE TAXATION AGREEMENTS
British Virgin Islands is a party to two very old double tax agreements,
with Japan and Switzerland, which were applied to the BVI through
'coat-tail provisions' of two UK treaties. (These UK treaties have
now been superseded, but the old treaties technically remain in force.)
The treaties are essentially never utilised. Because BVI IBC companies
are exempt from BVI taxation, the concept of double taxation does
not apply.
LEGAL PROTECTION OF ASSETS
Assets are protected from confiscation or expropriation orders or
similar actions by foreign governments.
LEGAL SYSTEM
The BVI has an independent legal and judicial system based on English
Common Law, with a right of final appeal to the Privy Council in London.
Policies and legislation are developed in close consultation with
the private sector. Offshore business can be carried out in a tax-free
environment.
FINANCIAL STATEMENT REQUIREMENTS
The company is required only to keep whatever financial records the
Directors feel are appropriate to show the financial position of the
company. No filing of annual returns is required.
MEETINGS
No annual meeting is required. Any and all meetings may be held outside
of British Virgin Islands and may be by telephone or other electronic
means.
DIRECTORS
The minimum number of directors is one. Directors may be natural persons
or bodies corporate. They can be of any nationality and need not be
British Virgin Islands resident.
COMPANY SECRETARY
A company secretary is not a requirement under the Act, but a secretary
can be appointed to facilitate signing obligations.
SHAREHOLDERS
The minimum number of shareholders is one. Shareholders may be natural
persons or bodies corporate and of any nationality.
CAPITAL
No minimum capital is required. Shares may be issued with or without
par value and in any currency as permitted by the Memorandum of Association
and Articles of Association. A minimum of one share should be issued
to maintain limited liability of the Directors.
THE WORLD'S
MOST POPULAR OFFSHORE JURISDICTION
The British Virgin Islands is by far the most popular jurisdiction
in the world for International Business Companies (IBCs).
The international financial and tax planning community can and does
seek out those jurisdictions which best accomplish its various requirements.
In the BVI, over 600,000 IBCs have been incorporated to date, with
approximately 50,000 incorporated last year alone! The reason for
this BVI preeminence in offshore company formation lies its unique
combination of those factors that are most important to the diverse
elements that make up the international financial community.
Some of the more important factors contributing to the success of
the British Virgin Islands are:
- the BVI are a British Overseas Territory, with the inherent
political stability that this brings.
- the BVI has been free of major political scandal, unlike many
other Caribbean offshore centres.
- the currency of the BVI is the U.S. dollar and there is no domestic
currency whatsoever. Not only are there no currency controls,
but with the US$ used as the BVI currency, it is essentially impossible
for the government to regulate the money supply and hence to ever
impose currency controls.
- the BVI is well served by air transportation and international
communications. It is in the Atlantic time zone, making it the
same time as Eastern Standard Time (New York, Toronto) in the
summer and one hour earlier in the winter. (There is no Daylight
Savings Time in the BVI.)
- although many Caribbean jurisdictions do not have actual tax
treaties with the U.S. or Canada, many have, under pressure, signed
some form of information sharing agreement, often under the Caribbean
Basin Initiative (CBI). The British Virgin Islands has a much
higher standard of living than most of the non-U.S. Caribbean;
moreover, the BVI is a small country, with a very successful financial
services sector. Revenues from international financial business
provide the largest single contribution to BVI government revenues.
Thus "membership" in the CBI, which is a form of economic assistance
program but which also requires an arrangement to share financial
information and records, has no attraction for the BVI.
- Despite its international popularity as an offshore financial
centre, the BVI does not have the high profile, attention getting
reputation of other centres. It represents an ideal offshore location
for clients seeking confidentiality without the 'red flags' that
are often raised through the use of more well publicised centres.
- IBC formation legislation in the BVI is both modern and very
flexible, in fact it is the model upon which much of the other
Caribbean IBC formation legislation is based. The legislation
requires only one shareholder and one director (both of which
may themselves be other corporations); no corporate officers are
required; bearer shares are permitted; there is no requirement
for an annual general meeting; the company need only keep such
accounts and records as the Director(s) think appropriate. The
BVI government need not be informed of the identity of the IBC's
shareholders or directors. Many of the benefits of the BVI flow
from this combination of a very high level of flexibility and
the unquestioned confidentiality.
More information is given in the preceding overview, but the basic
point is quite simple. The BVI is by far the most popular jurisdiction
in the world for IBCs because it provides the best combination of
those qualities that the international financial professional seeks
out when establishing such a company for his clients. |
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