For already more than 25 years the government of the British Virgin Islands (BVI) allows the establishment of foreign companies on its territory. For this purpose, a regulatory structure that meets international standards was established there to prevent money laundering and other illegal operations. As well as the Bermudas, the British Virgin Islands have made a decision not to facilitate the development of banking services that are not regulated by the state. Under the pressure from OECD and FATF, the British Virgin Islands, simultaneously with many other similar jurisdictions, responded with the tightening of the system that regulates this kind of business. On January 1, 2002 the government of the British Virgin Islands created an independent organization to regulate the business which is not subject to the national control – the "Financial Services Commission" (FSC).
The "International Business Company" (IBC) is one of the most frequent forms of business activities on the British Virgin Islands. As a rule, it is a LLC, the liability of which is limited by a nominal value of shares. The main legislation is the "International Business Companies Act 1984" ("IBC Act") with the amendments made in 1990 and 2002, the essence of which is to limit the company transactions with the bearer shares, as well as to oblige the companies to keep all the company documents in the office registered in the BVI. On January 1, 2005 a "New Business Companies Act 2004" ("BC Act") came into force, which was combined with the already existing "IBC Act" and had the following consequences for the owners of BVI companies:
Starting from January 1, 2006 the companies can be established only in accordance with the "BC Act". The companies that already existed on the BVI could continue their operations in accordance with the "IBC Act".
Starting from January 1, 2007 all existing companies would be automatically re-registered in accordance with the "BC Act".
What are the main consequences?
- Company name: in the future the company name should contain words and acronyms that reflect its legal form and in some cases, the company specialization (limited liability companies should have the endings Ltd., S.A., GmbH and the like in their names; unlimited companies – the ending Unltd.; special purpose companies – the ending SPV (special purpose vehicle)).
- Documents of incorporation should specify the maximum amount of shares allowed to be issued. The companies with warranty liability should specify the amount of warranty. Special purpose companies should specify the purpose for which they were established.
- Directors’ registry: a company should appoint at least one director. The directors’ registry should be run in the registered office of the company. The registry is not public domain information.
- Shares: a company has the right to issue the bearer shares only if it is envisaged by the documents of incorporation. The bearer shares should be kept in one of the offices recognized by the FSC, otherwise they will be considered invalid and deprived of their right. As a consequence, no new companies with bearer shares are being established on the BVI.
- The registered office: a company should have a permanent registered office on the BVI, where it should keep the directors’ registry and copies of all official documents. The documents should be kept for 10 years.
- Expenses: costs to establish a company depend, as a rule, on the amount of the share capital.