The British Virgin Islands is a British overseas territory consisting of 36 islands located in the Caribbean Sea off the east coast of Central America. They are characterised by a strong economy and high living. It would be quite difficult to find a more prosperous place in the Caribbean.
Tourism and offshore business incorporation have contributed to the development of the region. Since 1984, more than 650,000 offshore companies have been registered in the British Virgin Islands which some estimate accounts for 40% of the total number of all offshore businesses in the world. These figures are even more staggering considering that just over 37,000 people live on 16 out of 36 islands.
It is not a mere coincidence that international business has a direct interest in this jurisdiction. Registering a company on these islands gives an entrepreneur exceptional opportunities.
The BVI corporate law is undergoing more and more changes as part of the general fight against terrorism and money laundering. On the one hand, new legislative initiatives enhance the reputation of this jurisdiction, but on the other hand, foreign entrepreneurs can no longer be guaranteed absolute confidentiality. This problem can be partially solved through the nominee services.
To register a business in the British Virgin Islands, foreign entrepreneurs usually choose a commercial company. The principal forms of business organisation in the BVI are:
Imperial & Legal recommends the first option to their clients as it limits the founder’s liability to their contribution to the share capital. Types of companies limited by shares:
Companies limited by guarantee, as well as unlimited companies can be divided into two types:
In addition to the types of companies already listed, in the British Virgin Islands you can open a professional fund, investment fund, hedge fund, partnership or trust. We will take a closer look at a company limited by shares as this is the most common form of incorporation in the BVI.
There must be at least one shareholder and one director in a company limited by shares. An individual or legal entity can be appointed as director. The founders, beneficiaries and directors of a business in the British Virgin Islands can be residents of any country.
According to the current BVI laws, each company in the islands is obliged to keep a register of its directors with information about both appointed and reserve directors of the company.
A director is only considered to have been appointed when they provide the company with written consent to such appointment. The law regulates when the first director must be appointed and who can become a director. You will have to pay a large penalty if these requirements are not met.
The company issues its shares as soon as the first director is appointed. In other words, from the moment of registration of an offshore company until the issuance of its shares, but not later than six months.
The constituent documents of the company allow the following:
As a rule, such a company issues no more than 50,000 shares of the same par value. Shareholders are not required to pay up the full value of their shares at the time of issue, but each such shareholder is indebted to their company to the extent of the payment not made to the authorised capital. If the shareholding in the company is sold, this debt is also transferred to the new co-owner of the business together with the ownership of the shares.
Once the shareholder’s name is entered in the company’s register of founders, the shares are deemed to have been issued.
If the company’s memorandum of association does not include the possibility of issuing bearer shares, the company cannot violate its own rules and start issuing non-named shares, let alone convert registered shares into bearer shares or exchange them. Violators of this rule are punished with a $10,000 fine or more.
No company can be registered in the British Virgin Islands without the engagement of a local incorporation agent. Moreover, this agent must keep the articles of association, copies or originals of shareholders’ and directors’ registers, and all important outgoing documents of the company after incorporation.
Therefore, an offshore business must begin working with a responsible and efficient incorporation agent. Typically, experienced corporate lawyers who are hired to provide legal support for setting up a company in the British Virgin Islands will recommend a local professional to contact.
However, before you start the incorporation process, decide on the area of activity of your future company. It might require a licence which will automatically increase your operating costs, or the niche you have chosen will be too competitive.
The next thing to do on your way to opening an offshore business is the preparation of the articles and memorandum of association.
The full package of documents is handed over to your incorporation agent. They start the process of company registration which usually takes one to 10 working days.
For decades, the process of opening an offshore business in the British Virgin Islands has been polished to perfection. In the past, the country was a model for other jurisdictions claiming the status of tax havens. However, over time, under pressure from the UK and European countries, the BVI authorities began to significantly amend their corporate legislation.
On the one hand, all the changes over the last few years have not affected the key advantage of this country — tax optimisation. On the other hand, the rules of doing business have become stricter: offshore companies have more obligations, the requirements for the founders and management of such companies have been tightened, and it has become more difficult to conceal the ultimate beneficiaries of offshore companies.
To ensure that your first experience of doing business in a tax haven does not result in large fines, and the registration of a BVI company is completed in record-breaking time, contact incorporation advisers at Imperial & Legal for legal support. The experienced advisers will not only help you understand the intricacies of foreign corporate law but also benefit from all the opportunities of this unique jurisdiction.
Corporate law has established several requirements for persons to be appointed as a director. Therefore, it is not permissible for a director to be appointed, if they are:
Partial confidentiality is maintained through nominee service available in the jurisdiction. Documents with information about the beneficiaries, founders and directors of the company are kept with the incorporation agent and are only made available to:
Foremost, these are the constituent documents of the company: articles of association and memorandum of association. In addition, the incorporation agent keeps the following:
If the incorporation agent only holds copies of the registers of directors and shareholders, they need the following from you.
The British Virgin Islands Finance Commission adopted two regulations in 2008 governing the due diligence checks of foreign shareholders of companies incorporated in the jurisdiction.
The funds invested in the share capital after an offshore company has been registered in the BVI are also subject to due diligence. A foreign businessperson must prove to the authorities that their money was legally sourced or has been kept in a bank account abroad for at least six months.
It is profitable to use an offshore company for the following activities.
Please remember that a British Virgin Islands company cannot own or deal in real estate on the islands. Also, it is not allowed to conduct certain activities including banking, insurance, and reinsurance.
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