The British Virgin Islands, by virtue of its double tax treaties, was a financial centre long before the enactment of the International Business Companies Act in 1984 (replaced by BVI Business Act 2004). In 1984 the Territorial Government enacted legislation to enable the jurisdiction to meet the increasing demands of the international financial community. The cornerstone of the corporate legislation is the International Business Companies Act, 1984. This legislation has proved so popular with the international financial community that the British Virgin Islands is now one of the world’s pre-eminent offshore financial centres.
In keeping with its role as one of the world’s pre-eminent financial centres, the Territorial Government has also been conscious of the need to provide the international financial community with a broader legal framework within which to provide offshore financial services. A legislative review programme was undertaken which has seen the amendment in 1993 of the Trustee Ordinance, 1961 and the enactment of the Partnership Act, 1996 and the Mutual Funds Act, 1996.
BVI International Business Companies
The International Business Companies Act, 1984 (“IBC Act”) provides for the incorporation and administration of the International Business Company (“IBC”). Some of the specific features of IBC’s include the following:
(1) IBC’s incorporated pursuant to the IBC Act enjoy a complete exemption from income tax. This includes an exemption from capital gains tax, and all forms of withholding tax. There is no exchange control.
(2) Company names must include one of the following words: Limited, Corporation, Incorporated, Societe Anonyme, Sociedad Anonima or abbreviations of the aforementioned.
(3) Memorandum and Articles of Association are provided. The standard form is designed for a straightforward corporate structure. This structure may be amended after incorporation. Alternatively, special form Memorandum and Articles of Association can be tailored to meet a client’s requirements prior to incorporation. A minimum of one subscriber is required.
(4) There are no minimum capital requirements and shares may be denominated in any currency. Shares may be issued with or without a par value and may be issued in different classes with special rights attached. Bearer shares may be used.
(5) The minimum number of directors is one. The first appointment is by the subscriber. Corporate directors may be used.
It is a requirement that IBC’s have a registered office and registered agent in the British Virgin Islands where a copy of the share register and imprint of the corporate seal is kept.
The IBC Act provides an environment of administrative ease and flexibility. Specifically:
(1) There is no requirement to file annual returns or financial statements.
(2) There is no requirement to hold annual meetings of directors or shareholders.
(3) Directors and shareholders resolutions may be passed by telephone meetings or by circulating written resolutions (including facsimile copies) for signing. Meetings need not be held in the British Virgin Islands.
(4) A company need not have British Virgin Island resident directors.
(5) The books and records of the company may be kept at such place as the directors determine.
(6) Bank accounts may be opened anywhere in the world.
(7) A company may finance or repurchase its own shares out of surplus. Repurchased shares may be cancelled.
(8) Reductions of capital can be affected by resolution of the directors or shareholders. There is no necessity for a court order.
(9) There are minimal disclosure requirements and the ownership of shares and the names of directors and officers are not available on the public record.