Company Formation and Management Services
International investors are attracted to the BVI by the regulatory framework, low tax and an established legal system, which ensures that the territory is a neutral and safe place to pool capital. This neutrality of venue makes it an appropriate place for outside investors to establish a holding company or to invest into markets where there may be political risk or legal barriers that deter direct investment. The BVI has 450,000+ active companies on its Register.
On 1 January 2007 the BVI Business Companies Act 2004 became the sole Business Companies Act in the jurisdiction. The BC Act lowered the income tax rate to 0% for both local and International Business Companies and effectively removed the distinction between “offshore’” and “onshore” entities. It was drafted to ensure the BVI was fully compliant with the European Union (EU) Savings Tax Directive and EU Code of Conduct on Business Taxation, as required by the UK of all its Overseas Territories.
Under the previous 1984 IBC Act only one corporate form was available – a company limited by shares. Several different types of companies can be incorporated under the new regime:
- Companies limited by shares
- Companies limited by guarantee
- Hybrid Companies limited by guarantee and authorised to issue shares
- Unlimited companies authorised to issue shares
- Unlimited companies not authorised to issue shares
The Act also allows companies to be registered as Restricted Purposes, which are generally used in structured finance transactions, or Segregated Portfolio Companies, which are limited to mutual funds and insurance companies.
All BCs located in BVI are required to establish and maintain a Register of Directors, and must appoint their first director within 30 days of incorporation. Other statutory requirements remain minimal and flexible:
- Only one director and one shareholder are required;
- Shareholders, 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 (only under restricted conditions) and may be issued in any currency;
- Accounts need not be kept; if they are kept there is no requirement for an audit;
- No returns are required of shareholders, directors or officers;
- Shareholders’ 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.
The BC Act permits more flexibility on names. It allows the re-use of the name of a company that has been previously struck off the register, changed its name or been dissolved. The Act also permits company names to contain foreign characters.
The BC Act abolished the concept of authorised share capital and replaced it with a maximum number of shares that the company is entitled to issue. It 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 shareholders.
A registered agent must apply to form the company and provide a written consent to act. The registered office of the company need not be the address of the registered agent but it must be within the BVI.
The Act further formalised and tightened the record keeping obligations of companies and abolished bearer shares unless specifically authorised by the memorandum or articles of association. Bearer share certificates must be deposited with a custodian who has been approved by the BVI Financial Services Commission.
Companies 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 portions of the assets and liabilities.
BVI Limited Partnerships are governed by the Limited Partnerships Act 1996; for general partnerships it follows the common law provisions of the English Partnership Act but the clauses dealing with limited partnerships follow US Delaware legislation. The legislation was designed to facilitate the use of such vehicles in investment and mutual funds. There are no minimum capital requirements or prescribed debt/equity ratios and a limited partner’s interest in the partnership is assignable. International partnerships are tax-exempt but barred from local business.
In 2006, the BVI successfully introduced an electronic filing system named VIRRGIN. All incorporations and post incorporation filings can be made electronically, which leads to fast, efficient and accurate turnaround of documents by the Registry of Corporate Affairs.
Once a BVI entity is incorporated, we provide a domiciliary service, which includes the provision of company secretarial, registered office and nominee shareholder services. Full management services from our own licensed corporate directors are also available and highly advisable in most cases. Re-mailing services are available at modest cost for all companies established by Sovereign.
Note: Ancillary services
In addition to providing incorporation, domiciliary and management (directorship) services, a range of ancillary services at competitive prices is available on request. These services include, but are not limited to: provision of dedicated telephone lines; office and personnel assistance; designated staff members (temporary or permanent availability); assistance with office relocation, introduction to real estate agents, government agencies and other third parties.
Trust Formation and Trustee Services
Trusts have many applications and advantages, including the protection and preserving of assets, tax planning or just avoiding the expense and delays of obtaining probate under a will. They also provide a high degree of confidentiality. The BVI’s innovative, modern and user-friendly legislation, Virgin Islands Special Trust Act (VISTA) 2003 and Private Trust Company (PTC) legislation have enhanced its position as a jurisdiction for trust settlements and operations. VISTA allows a shareholder to establish a BVI trust over a BVI company, which disengages the trustee from administrative and managerial responsibility in relation to that BVI company. Considerable use is also made of the 2007 regulations to establish PTCs for holding and consolidating family wealth whilst retaining significant control over the trustees’ decisions by being directors of the PTC.