IBC – an International Business Company – is the most commonly used official name for what is more popularly known as an “offshore company”. IBC’s are the basic building blocks of the offshore financial services industry.
Essentially, a modern IBC is a private corporation which is exempt from tax, suitable for virtually any international business activity, has a flexible organizational structure, is not burdened by excessive reporting and record-keeping requirements, and maintains strict confidentiality provisions.
Since the adoption of the British Virgin Islands International Business Companies Ordinance in 1984, the BVI IBC has attained a model status in the offshore services industry. With more than 600,000 total incorporations and more than 5000 new companies registered every month, BVI is by far the most popular offshore tax haven. Such is the dominance of the British Virgin Islands as an offshore corporate domicile, that in many regions of the Far East International Business Companies are called simply as “BVI’s”.
In January 1, 2005 a brand-new version of the BVI Business Companies Act came into force. The new Act represents a further development in the already outstanding BVI offshore corporate legislation. The new law successfully addresses the challenges faced by the offshore financial industry in the 21st century, in particular the pressures against ‘illegal discrimination’ between domestic and offshore companies. Thus, the new BVI Business Companies Act removes any former distinction between a local company (operating in the domestic market) and an offshore company (restricted only to international business). According to the new Act, there is now only one, unified type of company – a BVI Business Company, which continues to be exempt from tax and continues to enjoy all the substantial benefits afforded by the previous legislation.
The Chief Minister of the BVI, Dr. the Hon. D. Orlando Smith, said at the announcement of the new legislation: “The new BVI Business Companies Act was designed to safeguard the attributes that have made the BVI the world’s premier offshore company domicile. The collaborative effort to draft this new Act has resulted in legislation that not only retains all the virtues of the current IBC Act, but makes the BVI even more attractive to clients by including new features that have become desirable since the enactment of the current Act.”
A full text of the consolidated BVI Business Companies Act is available in our BVI Company Resources section.
CORNERSTONES OF SUCCESS
These are some of the general advantages of the British Virgin Islands over many other offshore financial centres:
US dollar is the official currency in the BVI – therefore, by definition, there can be no currency controls and no artificial manipulation of money supply by the local government.
BVI are a British Overseas Territory, which provides for an outstanding political stability. The country also maintains a low international profile and a clean reputation, thus avoiding the pitfalls experienced by some more publicized and less scrupulous offshore tax havens.
BVI has an independent judicial system based on English Common Law. Laws and regulations are routinely developed in consultation with the private sector. Offshore financial services sector contributes a very significant part to the country’s gross domestic product. Therefore, an inherent and pronounced interest exists both with the government and with the general public to maintain and develop the country’s status as a competitive offshore financial centre.
BVI is an independent country with a fairly high standard of living. Therefore, it avoided entering any information-sharing agreements with foreign countries or organizations for exchange of financial aid. Client confidentiality is robustly enshrined in the BVI corporate and business legislation.
BVI is easily accessible by sea and air, has modern telecommunications and is on US Eastern Standard Time (1 hour behind EST in winters).
A British Virgin Islands Business Company has separate legal personality and the same powers as a natural person.
Confidentiality is one of the key features of the BVI Business Company as details of the company beneficial owners, directors and shareholders are NOT part of public record. Register of Members, Register of Directors and all Minutes and Resolutions by the Company are kept only at the offices of the Registered Agent in complete confidentiality. Certainly, though, these files are available for inspection to Company shareholders.
The only documents held on public record are the Memorandum and Articles of Association, but these normally do not contain any indication as to the actual shareholders, directors or the beneficial owners of the company.
At the same time, if the owners of the company so wish, the Register of Directors and/or the Register of Members may be filed with the Registrar of Companies. Such step may be desirable if a complete certainly must be achieved and showed publicly as to the actual identities of the Company managers or members – but, again, this is purely optional.
BVI Business Companies does not have an obligation to prepare of file financial accounts. However, records must be kept that are sufficient to show and explain the Company’s transactions; and will, at any time, enable the financial position of the Company to be determined with reasonable accuracy. Such records do not have to be kept in the British Virgin Islands and the location for keeping such records can be freely determined by the owners of the Company, and there is no requirement whatsoever to file or otherwise make public any commercial or financial records of the Company.
Shares of a BVI Business Company may be issued in bearer form. However, the bearer shares may not be issued to their actual owner but may only be kept in custody of a licensed custodian in the BVI, or with such custodian outside BVI, together with a written indication as to the actual identity and address of the owner of such shares. The schedule of Government fees for BVI Business Companies contains a clear negative incentive against utilizing bearer shares in the structuring of the Business Companies, as the Government fees for such companies will be considerably higher.
Various types of incorporations
A BVI Business Company may be incorporated as a company limited by shares, a company limited by guarantee (with or without authorization to issue shares), an unlimited company (with or without authorization to issue shares), a segregated portfolio company and a restricted purpose company.
No requirement to state operational objects
Since 2005, there is no requirement to specify the operational objects of the BVI Business Company in the foundation documents of the Company (Memorandum and Articles of Association). However, the company may choose to do so and, indeed, a specific type of a “restricted purpose company” is envisaged by the Business Companies Act.
A BVI Business Company may not be registered under a name that is identical to the name of an existing BVI company, or is so similar to the name of an existing BVI Company, that, in the opinion of the Registrar, such name would be likely to confuse or mislead. As the BVI Registrar of Companies has a name-reservation system, a reserved name would also be considered as an already existing name.
Without obtaining a prior written consent of the Financial Services Commission, a BVI Business Company may not be registered under a name that contains a “restricted” word or phrase (according to a published list of such restrictions) – such as the words “Assurance”, “Bank”, “Building Society”, “Chamber of Commerce”, “Chartered”, “Cooperative”, “Imperial”, “Municipal”, “Royal”, “Trust” or any word conveying a similar meaning, as well as any name suggesting the patronage of the British Royalty, British, BVI or any other government or its department.
The Registrar may also refuse the registration of any particular name if, in the opinion of the Registrar, such name is offensive or, for any other reason, objectionable.
The name-endings denoting the type of company
The name of a limited company shall end with the word “Limited”, “Corporation” or “Incorporated”; the words “Societe Anonyme” or “Sociedad Anonima”; the abbreviation “Ltd”, “Corp”, “Inc” or “S.A.”; or such other word or words, or abbreviations thereof.
The name of an unlimited company shall end with the word “Unlimited” or the abbreviation “Unltd”.
The name of a restricted purposes company shall end with the phrase “(SPV) Limited” or the phrase “(SPV) Ltd”.
The name of a segregated portfolio company shall end with one of the phrases “Segregated Portfolio Company Limited”; “Segregated Portfolio Company Ltd”; “SPC Limited”; “SPC Ltd”; or, in the case of a segregated portfolio company that is a restricted purposes company, one of the phrases specified in this paragraph with “(SPV)” inserted immediately before that phrase or immediately before “Limited” or “Ltd”.
Quite uniquely for BVI, the name of a BVI Business Company may comprise the expression “BVI Company Number” followed by its company number in figures and the ending required, as specified above – for instance “BVI Company Number 987654 Ltd”. A company name expressed in such fashion may also contain additional foreign characters between the company number and the ending.
Appointment of Agents
The directors of a BVI Business Company may appoint any person (including an existing director), to be an agent of the Company. Subject to the Memorandum and Articles of Association such agent has such powers and authority as the directors may prescribe, except that no agent shall have no authority to amend the Memorandum or Articles; to appoint directors or agents; to approve a plan of merger, consolidation or arrangement; or to make a declaration of solvency or approve a liquidation plan.
Fixed Government fee
A BVI Business Company must pay the following annual license fees to the BVI Government:
FOR COMPANIES WITH REGISTERED SHARES ONLY:
USD 350 for Company with up to 50,000 shares, with or without par value.
USD 350 for Company limited by a guarantee or an unlimited company without shares.
USD 1100 for Company with more than 50,000 shares, with or without par value.
USD 5000 for a Restricted Purposes Company.
FOR COMPANIES WITH, OR AUTHORIZED TO ISSUE BEARER SHARES:
USD 800 for Company with up to 50,000 shares, if all bearer shares are kept with a BVI Custodian.
USD 1100 for Company with more than 50,000 shares, if all bearer shares are kept with a BVI Custodian.
USD 1100 for Company with up to 50,000 shares, if some of the bearer shares are not kept with a BVI Custodian.
USD 1350 for Company with more than 50,000 shares, if some of the bearer shares are not kept with a BVI Custodian.
(Apart from these Government fees, Registered Agent and Address fees will normally be payable, as well as another professional fees for Company Management and Administration. These are set forth in full detail in our Schedule of Fees.)