BVI (British Virgin Islands)

Key Benefits

The British Virgin Islands are located east of Purto Rico in the Caribbean. These British Dependent Territory islands are part of the Virgin Islands Archipelago which consist of over 50 islands and cays. The main islands are; Virgin Gorda, Tortola, Anegada and Jost Van Dyke. The capital is Road Town and which is located on Tortola (the main island) which is 20km long and 5km wide with a population of around 22,000.

The British Virgin Islands are among the most prosperous islands in the Caribbean, with the main source of revenue being tourism and the financial sector. With a politically stable government, a UK based system of law and English as the official language, the BVI is an attractive jurisdiction to register a company. The BVI is one of the world’s leading finance centres offering stability with a progressive and democratic society. The financial sector is responsible for just over 50% of total government revenues. The BVI is committed to retaining an investor’s right to privacy providing a professional banking sector with top quality legal, accounting and trust and management services.

The British Virgin Islands have been regulated by the independent Financial Services Commission since 2001. The BVI Financial Services Commission is the regulatory authority for all financial services operating in, or from within, the British Virgin Island. The FSC is dedicated to safeguarding the privacy and confidentiality of legitimate businesses whilst prohibiting any illegal or unauthorised business.

Since the adoption of the BVI International Business Companies Ordinance in 1984 there have been over 450,000 companies incorporated, demonstrating the dominance of the British Virgin Islands as a major offshore jurisdiction.The British Virgin Islands are a stable, established, tax efficient jurisdiction in which to incorporate.

Benefits of registering a company in BVI:

  • All documents and legislation are in the official business language of English.
  • The incorporation time for a BVI company is short and any future administration simple and cost-efficient.
  • A BVI company offers a high level of privacy and confidentiality.
  • There are no requirement to pay capital gains, inheritance taxes or death duties.
  • No dividends, interest or royalties are required to be paid.
  • Registered or bearer shares are permitted.
  • Only one Director and Shareholder are required. The Directors and Shareholders can be any nationality and are not required to be resident in the BVI.
  • There is no requirement for an annual meeting to be held. If board meetings are required they can be held anywhere in the world.
  • Directors can be individual or corporate bodies.
  • There is no requirement to register initial or ongoing changes in Directors and Shareholders.
  • There are lenient accounting and auditing requirements.
  • No foreign exchange controls exist.
  • Corporate bank accounts can be opened without being present at the bank.

Procedure of company registration

The BVI Business Company Act of 2004 (the BVI BC Act) replaced all existing legislation with regards to the legislation and regulations of offshore companies.
This has provided more credibility for the BVI as a place in which to locate an offshore company.

The procedure for the formation of a British Virgin Islands company is still fast and efficient.

For an Individual the following documents are required:

  • An application form is completed with details of preferred name and details of beneficial Directors and Shareholders (nationality, country of residence, address, profession etc).
  • A scanned and notarised copy of the passport of the beneficial directors and shareholders is required.
  • A photocopy of another official document (such as Driving License, ID Card etc) notarised to confirm the copy is a true copy and the photo is a true likeness.
  • An original proof of residence showing the name and address of the individua is required. This can be in the form of a utility bill or bank statement and must not be older than 3 months.
  • One original letter of introduction is required. This letter can be from a bank, lawyer, accountant or similar profession.
  • Completed and signed Beneficial Owners Declaration (BOD) by all Shareholders and Directors.

For a Company the following documents are required:

  • Certified copy of the Certificate of Incorporation.
  • Certified copy of the Company’s Memorandum and Articles of Association.
  • Certified copy of the Registered Shareholders with details of shares held by each.
  • Certified copy of Register of Directors.
  • Certified copy of the Register of Offices.
  • For at least 2 Directors the documents set out in ‘Individual section’ above.
  • At this point Service Pro will issue an invoice for a British Virgin Islands Company Formation. Upon receipt of money we start the incorporation process.
  • The Memorandum and Articles of Association and any other associated documents required to register a BVI IBC are sent to the Registrar. The Memorandum of Association will include; the name of the company, the address of the registered office of the company, the function and objectives of the company, the share capital of the company and an explanation of liability.
  • When the Memorandum of Association is accepted then a Certificate of Incorporation will be issued.
  • The company’s Certificate of Incorporation, Memorandum and Articles of Association are required to be submitted to the Companies Regstry at the time of the company formation. No additional documents are required for incorporation. These documents will not state the identity of the Directors or Shareholders therefore maintaining confidentiality.

Company Administration Guidelines

Share Capital:

  • There is no minimum capital requirement for a BVI IBC.
  • An unlimited number of shares is permitted. Bearer shares are permitted but are subject. to a custodian service and also a higher government license fee.
  • Can be formed with one shareholder who can also act as the director.
  • The use of nominee shareholders is permitted.

Directors:

  • A minimum of one director is required, can also act as a shareholder if required
  • Directors can be either individuals or corporate entities
  • Use of nominee directors permitted

Restrictions on Name & Activity:

  • The company name must not be identical or similar to any existing name.

Local Requirements:

  • A registered office in the BVI must be maintained. The following documents are required to be kept at the registered office; Memorandum and Articles of Association and any amendments, Copy of Register of Members or Share Register, Copy of Registered Directors, Impression of the Corporate Seal, Register of Changes. A company is considered resident if it has a registered office in the BVI
  • There is no requirement to hold annual meetings. If required meetings can be held anywhere in the world
  • A company secretary is not a mandatory requirement for incorporating a BVI IBC

Confidentiality:

  • The Register of Members, Register of Directors and all minutes and resolutions by the company do not appear on public record
  • Details of the company’s beneficial owners, directors and shareholders are not publicly available
  • The only documents held on public record are the Memorandum and Articles of Association which do not contain any details of beneficial directors or shareholders
  • Nominee directors and shareholders can be used in order to further increase privacy and ensure the upmost privacy

Timescale:

The incorporation of a BVI company is very quick and will take approximately two days.

Tax and Accounting Regulations

A coherent offshore planning tax strategy is essential to maximize the effectiveness of offshore companies. Service Pro can assist by structuring the most tax efficient strategy to satisfy your requirements. Service Pro will guide you as to which jurisdictions offer the best tax structure by identifying the types of tax payable as well as applicable exemptions and incentives. Service Pro will provide tax planning advice that will identify which is the most favourable, tax efficient jurisdiction in which to incorporate.

The following information provides an overview of the tax and accounting regulations in British Virgin Islands.

Tax System:

The following are exempt from tax:

  • Income
  • Royalties
  • Capital Gains
  • Inheritance
  • Profits
  • Transfer
  • Net Worth
  • Dividends
  • Investments
  • Capital Transfers
  • Interest – Although there is no tax on interest the BVI has implemented the EU savings directive which means that agents making interest payments to residents of an EU member state will automatically exchange information with the relevant member states tax authority with respect to the identity of the beneficial owner and the payment

International Aspects of Taxation:

Double Taxation Treaties – There are no Double Taxation Treaties in place.

Annual Reporting Requirements:

There is no requirement to file audited accounts with the authorities; a company is required to keep financial records which reflect the financial position of the company.

Offshore Mutual Funds

The British Virgin Islands is one of the leading mutual fund domiciles. Approximately 2,800 funds are registered or recognized under the Securities and Investment Business Act, 2010 (SIBA) with an estimated total of USD 100 billion worth of assets under management.

In May 2010 SIBA replaced the Mutual Funds Act, 1996 (the MFA) and has been welcomed by the industry due to the fact that SIBA has retained the well-established framework of public, professional and private funds established by the MFA but has updated the regime to bring it in line with best practice and international standards. Funds recognised or registered under SIBA are regulated by the Financial Services Commission (the Commission), the financial services regulator in the BVI.

The BVI is a well regulated jurisdiction with a proven track record and is a widely preferred and recognised choice for the incorporation of Mutual Funds. The BVI was amongst the first jurisdictions to implement specific anti-money laundering legislation in 1996 which has resulted in the BVI possessing some of the highest standards of KYC due diligence but within realistic and practical codes of conduct.

There are a number of major benefits to a BVI Offshore Mutual Fund, some of which are summarised below:

Benefits of a BVI Offshore Mutual Fund:

  • Flexible regulation ensures ease of establishment and administration of the fund
  • Relatively low formation and operating costs compared to other jurisdictions
  • Wide choice of fund structure
  • Fund assets can be anywhere in the world
  • No restrictions on investors
  • No requirement to appoint local directors, functionaries or auditors. Also there is no obligation of BVI residency of the key fund functionaries
  • No substantial back office operation required
  • Legal system based on English Common Law
  • Exemplary legal and professional advisors resident in the BVI to assist where necessary
  • BVI Funds are recognised and are capable of being listed on exchanges including NYSE, TSE, Dublin, Singapore, Luxembourg and Bermuda.
  • The Local Currency is the USD and there are no exchange controls
  • The BVI is a British Dependent Territory and is politically stable\

Fund Vehicles:

Sponsors and Fund Managers considering the establishment of an investment fund in the BVI may choose from the following range of vehicles:

  • BVI Business Company
  • Limited Partnership
  • Unit Trust

The vast majority of British Virgin Islands investment funds are established as companies limited by shares under the BVI Companies Act, 2004 or as limited partnerships formed under the Partnership Act, 1996.

Categories of Fund:

There are three categories of mutual funds:

  1. The Private Fund

    A Private Fund is defined in SIBA as a mutual fund with the following:

    • No more than 50 investors
    • The making of an invitation to subscribe for, or purchase fund interests issued by the mutual fund, is to be made on a private basis only.
  2. The Professional Fund

    • Fund interests shall only be issued to professional investors
    • The initial investment by each investor in the fund is not less than 100,000 USD.
  3. The Public Fund

    • Offers investment to the general public

Functionaries / Service Providers:

Under SIBA a fund applying to be recognised or registered must appoint the following functionaries:

  • Investment Manager
  • Administrator
  • Custodian
  • Auditor

Private or Professional funds may apply for an exemption to appoint an investment manager, a custodian or an auditor in certain circumstances, for example where the fund only has a very small number of investors.

An application for recognition or registration of a fund whose functionaries are domiciled in a Recognised Jurisdiction will usually be processed by the FSC without the need to assess the fit and proper status of the functionaries. The following countries have been designated by the FSC as “Recognised Jurisdictions”:

Argentina, Australia, Bahamas, Belgium, Bermuda, Brazil, Canada, Cayman Islands, Chile, China, Denmark, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malta, Mexico, Netherlands, Netherlands Antilles, New Zealand, Norway, Panama, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, United Kingdom and the USA.

The FSC may, upon application, accept functionaries domiciled in jurisdictions that are not

Recognised jurisdictions if satisfied that the jurisdiction effectively regulates fund business.

On-going Requirements for Funds under SIBA:

Under SIBA Private and Professional Funds have certain continuing obligations some of which are listed below:

  • A Fund must have at least two directors, one of whom must be an individual
  • A Fund must file a copy of its offering document with the FSC which must contain a prescribed investment warning
  • A Fund must have an Auditor at all times (the FSC may exempt certain funds from this requirement upon application). Audited Financial Statements for each financial year must be filed with the FSC within 6 months of the relevant year end.
  • All Funds must appoint an authorised representative in the British Virgin Islands. This entity acts as a liaison between the Fund and the FSC.
  • Notifying the FSC of any changes within 14 days to directors, amendment of constitutional documents or offering document or a change of address of the Funds place of business.
  • Notifying the FSC at least 7 days prior to appointing a new Functionary.

Additionally Funds registered as Public Funds must comply with certain other requirements covering their operations as detailed in SIBA, the MFR and the PFC.

Summary of Requirements for a Private, Professional and Public Fund:

 PrivateProfessionalPublic
CriteriaRestriction of maximum number of investors to 50.

All invitations to subscribe for the fund shares shall be made on a private basis.

These requirements must be specified in the constitutional documents of the fund.

Shares are made available only to professional investors.

The initial investment is not less than 100,000 USD or equivalent.

Offers investment in shares to the general public.
FunctionariesAll mutual funds must have the following: ·
  • Fund Manager – must be suitable qualified and licensed and is subject to the approval by the FSC. A foreign registered manager may, subject to approval, be appointed.
  • Fund Administrator – The accounting and reporting function of all Mutual Funds must be carried out by an approved Administrator. No requirement to be domiciled in the BVI.
  • Fund Custodian – All Mutual Funds require the appointment of a suitably licensed custodian. The custodian must be operationally independent from the Administrator and Manager.
  • Auditor – All Mutual Funds require the appointment of an Auditor approved by the FSC. No requirement to be domiciled in the BVI.
  • Registered Agent – A BVI domiciled entity must appoint a licensed registered agent. The registered office of a BVI Mutual Fund must be in the BVI.
  • Authorised Representative – The primary point of contact between the Mutual Fund and the FSC is the Authorised Representative. Records must be kept for each Mutual Fund that the representative is appointed for.

All must satisfy the Commissions fit and proper criteria.

The FSC requires that functionaries of Public Funds be independent of each other. The FSC may exempt certain

Reporting Obligations:
Financial Statement Requirements:Financial Statements for each financial year must be prepared and comply with IFRS, US, UK or Canadian GAAP.

All Mutual Funds are required to submit an annual return to the FSC containing summary prudential and governance information.

Audit Requirement:Financial Statements must be audited by an auditor meeting certain criteria unless the fund is exempted from the audit requirement by the FSC (no local sign off).Financial statements must be audited by an auditor approved by the FCS (no local sign off)
Regulatory Approval Time:5 business days from submission of complete application3 weeks from submission of complete application
Approximate overall establishment time:3 weeks10 – 15 weeks
Cost of Regulatory Fees:USD 1,000.00 per annumUSD 1,500.00 per annum
Approximate cost of fund establishment*:From USD 14,000From USD 25,000

*an individual quotation will be provided upon request.

How Service Pro can assist:

Service Pro can offer comprehensive turnkey solutions for the establishment of a BVI Mutual Fund and for licensing of a BVI Fund Manager.

We provide a complete set of services necessary in order to register, license and launch a BVI Mutual

Shelf companies

Shelf companies are ready made companies whose primary purpose is to bypass the lengthy registration or incorporation process that can be required when forming a business.

Certain jurisdictions may take from 3 business days up to 3 weeks for the whole incorporation process to be completed. Shelf companies can be up and running within 4 business days. In some cases banks, government projects and investors will not provide credit ratings, projects or be interested to invest in newly formed companies. This is where shelf companies offer invaluable creditworthiness as they are able to show company history.

Benefits of a shelf company include:

  • Saving time involved in taking the steps to create a new company (such as filing corporate documentation).
  • Shelf companies gain the opportunity to bid on contracts. Some jurisdictions require that a company has been trading for a certain length of time to have this ability.
  • To show that the company has been up and running for some time in order to attract consumers or investors.
  • Shelf companies can gain access to corporate credit.
  • Clients generally trust companies that have been trading for a number of years.
  • Usually, the older the company, the higher it's standing in the business community.
  • Opening a bank account for a shelf company is generally a faster process.