British Virgin Islands Companies are incorporated under the BVI Business Companies Act, 2004 (“The BVIBC Act”).
BVI Business Companies
The BVI company has become the corporate international vehicle of choice due to its flexible and business-friendly approach to corporate governance, funding, and share capital requirements without sacrificing shareholder rights and remedies which are of increasing importance to institutional and individual investors.
The BVIBC Act allows for the incorporation of the following types of companies:-
- companies limited by shares
- companies limited by guarantee
- companies limited by guarantee authorised to issue shares
- unlimited companies with or without shares
- restricted purposes companies or RPC
- segregated portfolio companies or SPCs
The BVI company is often used as a property holding company, a trading company, a structured finance vehicle, as a mutual fund or a listing vehicle on any number of international exchanges from London to Shanghai. They have been especially popular for listings on the world’s most successful growth market, the LSE’s Alternative Investment Market (AIM). In order to assist you and your client in gauging the suitability of a BVIBC for your transactional requirements, we highlight below the key features of The BVIBC Act that make a BVI company an extremely versatile and adaptable corporate entity.
- BVI is the largest corporate domicile in the world
Capacity and powers –
- A BVI company is a legal entity in its own right separate from its members and has full capacity to carry on or undertake any business, activity or transaction
Share capital –
- Shares may be issued with or without a par value and may be issued in any currency.
Capital maintenance requirements –
- None (but share buybacks are subject to a solvency test)
Annual Returns –
Amendment to the M & As –
- Either by a resolution of directors (if permitted by the Memorandum of Association) or by a resolution of members
Types of shares –
- Convertible, common or ordinary
- Redeemable at the option of the shareholder or the company or either of them 3. Shares which confer preferential rights to distributions 4. Shares which confer special, limited or conditional rights, including voting rights 5. Shares which confer no voting Rights 6. Shares which participate only in certain assets of the Company (eg tracker shares)
Financial assistance –
- No restrictions
Distributions and solvency test –
- Distribution of assets to members are possible, and subject to a solvency test (ability of company to pay its debts as they fall due and that the value of the company’s assets exceed the liabilities)
Minimum number of members –
Annual General Meetings –
- Not compulsory
- Minimum of one, corporate directors permitted and no limitation on their location
Directors meetings –
- Physical and participation by electronic means permitted
Directors Powers –
- The board of directors has the powers to run a BVI company’s affairs without the need for authorisation from the shareholders. • Directors have power to protect the assets of the company by transferring assets to trustees, another company or legal entity, for the benefit of the BVIBC, its Shareholders or creditors;
Director and member resolutions –
- E-signatures can be used. The BVI BC permits both director and member resolutions of BVI companies to be in the form of written resolutions. They need to be consented to in writing or by telex, telegram, cable or other written communication.
Finance Record and Audit –
- No compulsory audit however the financial records must be sufficient to show and explain the company’s transactions and enable the financial position of the company to be determined with reasonable accuracy.
- No taxes will be imposed in the BVI on transactions involving BVI companies. Stamp duty is only imposed on the transfer of shares of a BVI company if that company owns land (directly or indirectly) in the BVI
Corporate Domicile –
- Can be changed to another jurisdiction
VAT Implications –
OECD Status –
- White – listed
Takeover Code –
- None. No stock exchange in the BVI
Time for Incorporation –
- One day
Public Records –
- No public record is maintained as to the identity of Shareholders. As of 2016 a public record of directors is now maintained;
Annual Government Fees –
- A BVIBC with par value and no par value shares which is authorised to issue up to 50,000 shares is US$350. If the authorised number of shares exceeds 50,000 the incorporation fee is US$1,100. The annual BVIBC licence fee is US$350 where the authorised number of shares is less than or equal to 50,000 and US$1,100 where the authorised number of shares is more than 50,000.
License Fees –
- The annual licence fee is payable in each year following the year of incorporation. For companies incorporated in the first half of the year the licence fee is payable by May 31. For companies incorporated in the second half of the year the licence fee is payable by November 30. A 10% penalty is imposed on payments up to two months late. A 50% penalty is imposed on payments made between the third and sixth month after their due date. A company is struck off the Register if the licence fee is not paid before the sixth month after its due date.