British Virgin Islands (BVI): Types of Company

In order to have an environment in which financial institutions and corporations could undertake different structured asset and project finance transactions in the BVI, the British Virgin Islands Business Companies Act 2004 (the BVI BC Act) became the only Business Companies Act in the jurisdiction on the 1st January 2007.
Indeed, this new IBC legislation has been drafted in order to make sure that the BVI would totally comply with the European Union (EU) Code of Conduct on Business Taxation and EU Saving Tax Directive. This had been required by the United Kingdom of all its Overseas Territories.
Before the 2004 Business Companies Act, only one type of company was available. This was the company limited by shares which were legislated by the 1984 IBC Act. With the new Act, it is possible to incorporate different types of companies such as:

• The company limited by shares. This type of company is the most common type of BVI company;

• The company limited by guarantee not authorized to issue shares. Most of the time, this type of company is used by non-profit organizations;

• The company limited by guarantee authorized to issue shares. This type of company, called “hybrid” type of company, offers a better flexibility with regards to the structuring of transactions;

• The unlimited company authorized to issue shares. This is the most “transparent” type of company as it is possible to see “through” the company to its shareholders; and

• The Unlimited companies without authorization to issue shares. This type of company can be used in order to ensure effective estate planning.

Most of the companies incorporated in the BVI for offshore purposes are formed under the International Business Companies Act 1984. However this law did not replace the existing Companies Law 1963, which is based on English law. The Companies Law 1963 is used by other types of company, and also for offshore businesses which cannot use the BVI IBC form, such as insurance companies, banks, and mutual funds.
The Companies Act 1963 allows the companies to be incorporated as private companies limited by shares, by guarantee, or hybrid; or they can be unlimited, which is less frequent. There can also be Public companies formed under the Act. No matter what type of company it is, Memorandum and Articles of Association must be filed at the Companies Registry and the registration fees must be paid.
It is also possible for foreign companies to re-establish themselves in the BVI. This process is called a continuation.

- British Virgin Islands International Business Company

The BVI offshore company (BVI IBC) is the most common vehicle for offshore business in the BVI. It is the equivalent of a private company limited by shares. The BVI IBC’s are legislated by the International Business Companies Act 1984 which has been updated by the International Business Companies (Amendment) Act 1990 and the International Business Companies (Amendment) Acts of 2003 and 2004. The amendments forced the bearer shares to be immobilized. With regards to the existing BVI IBC’s, they are able to amend their Memorandum of Association in order to state that they only have the possibility to issue registered shares which may not be exchanged for bearer shares.
According to the International Business Companies (Amendment) Act 2003, from December 31, 2004, every BVI IBC must have and maintain a Register of Director. It is mandatory for a BVI company to appoint the first director within 30 days of the offshore company formation. The main characteristics of the BVI offshore company are the followings:

• The company can be formed with only one director and one shareholder.

• It is not mandatory for the shareholders, directors and officers to be resident in the BVI and there is no restriction with regards to their nationality;

• There is no minimum capital requirement; shares may be either registered or bearer and may be issued in any currency; however, bearer shares need to be deposited with an intermediary who needs to record the identity of the bearer.

• There is no accounting requirements;

• Shareholders and directors meetings do not need to be held in the BVI and can be held by telephone;

• The only documents to be held on the public record are the Memorandum and Articles of Association.

BVI IBC status is subject to certain conditions:

• It is not possible to have any business activity or to transact any kind of business with residents of the BVI;

• A BVI IBC cannot have ownership interest in real property in the BVI; the only way that a property may be leased is for office use;

• An appropriate license is required in order to carry on Banking or trust business, insurance or re-insurance business;

BVI IBC’s are allowed to have activities within the BVI without compromising the offshore status under the Act;

• A BVI offshore company can have professional contacts with lawyers and accountants;

• A BVI offshore company can prepare and maintain books and records;

• A BVI offshore company has the right to own shares in other BVI companies

• A BVI offshore company can maintain bank accounts in BVI

• A BVI offshore company is exempt from BVI taxes by statute.

In order to be able to incorporate a BVI offshore company, it is mandatory to use a registered agent in the BVI. The incorporation fees of an IBC will depend on the company's authorized share capital. Normally, the incorporation of a BVI IBC takes no more than one day; however, for banks, trust companies and insurers the process takes longer than that.
The governmental fees for the incorporation of a BVI offshore company are $350 as long as the capital would not exceed $50,000 and $1,100 for capital over $50,000.

- British Virgin Islands Ordinary Resident Company

In order to be able to carry on local business, it is usual to use an ordinary resident company limited by shares. The requirements for this type of company are the followings:

• A minimum of two members is required;

• The transfer of its shares must be restricted;

• The public cannot be invited to subscribe for its shares; and

• A maximum of 50 members if required.

The residence of a company will depend on the location of management and control. The company will be considered as a resident company if at least half of the directors are resident in the BVI. In order to be able to conduct business in the BVI, the company must have a Trade License. The license fee that the BVI Company will have to pay will depend on whether the shareholders are foreigners or residents. The incorporation fee is 200 USD for a nominal capital up to 10,000 USD. Then it will be 15 USD for each 10,000 USD.

- British Virgin Islands Limited Partnership

It is the Limited Partnerships Act 1996 which governs the BVI Limited Partnerships (LP). The LP Act 1996 has been closely inspired from the common law provisions of the English Partnership Act 1980.
In order to be able to form a LP, you will need to use the services of a registered agent. Indeed, once the Memorandum and articles of Association will have been filled by the agent, the Registrar of Limited Partnerships will issue a Certificates of Limited Partnership. The registration fees are $500 and the annual license fee is also $500.
There is a difference between local and international partnerships. Indeed, the local one has the possibility to make transactions with local business without being tax-exempt; the international partnerships can only transact local business and are tax-exempted.

More information about this jurisdiction : Demography - Economy - Offshore industry