Jurisdiction of the month: British Virgin Islands

2014 08 21 | Category: News

Editor News Leave a Comment

Geography, Population, Languages
The British Virgin Islands (BVI) are located in the West Indies, in the Eastern Caribbean. They are a group of small islands and coral reefs (about 100 in all) in the northern part of the Lesser Antilles archipelago, to the East of Puerto Rico. The BVI lie to the North-West of the United States Virgin Islands and are separated from them by a channel only 5 km wide. The British Virgin Islands occupy a territory of 153,4 sq. km, and the population is approximately 23,000. Except for Anegada, which is a flat coral island with little soil, the Islands are hilly. The largest and most heavily populated Island is Tortola, which is connected by a bridge to Beef Island. The capital, Road Town, is on the southern shore near Sir Francis Drake Channel. The population is about 9’400. The official language is English.

History, Political Structure and Law
The British Virgin Islands were discovered by Columbus in 1493. From the 16th until the mid-17th century the Islands harbored Dutch and English buccaneers. In 1672, Tortola was claimed by Britain. At the same time, Denmark asserted her ownership over St. Thomas and St. John, and in 1773 purchased St. Croix from France. The USA purchased the Danish
Islands in 1917. Relations between the United States and the British Virgin Islands are good. The British Virgin Islands are a self-governing British colony. A ministerial system of Government operates under the Constitution of 1967. The Governor, appointed by the Crown, remains responsible for defense and internal security, foreign affairs, the civil service, the administration of the courts and finance. The Governor is normally bound to act in accordance with the advice of the Executive Council. The latter consists of the Governor as Chairman, the Attorney General, the Finance Secretary and the Chief Minister, appointed by the Governor to command a majority in the Legislative Council, the Deputy Minister and two other ministers appointed by the Governor on the advice of the Chief Minister. Elections are held at intervals of not more than five years. The Government is stable and promises to remain that way. The type of law is Common Law, based on English Common Law with local modifications and local statutes.

Economy and Infrastructure
The economy, one of the most prosperous in the Caribbean area, is highly dependent on tourism, which generates about 45% of national income. The greatest tourist attraction is the superb beaches. The raising of livestock is the most significant agricultural activity. Fishing also brings in essential income. The Islands’ crops, limited by poor soils, are unable to meet local food requirements. However, sugar cane, citrus and other tropical fruit are grown. There is an excellent daily air service between the Islands and the USA. Cruise ships call in weekly to the Islands and freight carriers also call there. Telecommunication facilities are excellent. Courier services are well represented on the BVI. There is a good commercial and professional infrastructure, and the Government is actively encouraging the development of the offshore finance business. The Government has now upgraded the Companies Registry by installing state-of-the-art technology. In recent years the BVI have become an extremely popular jurisdiction due to extensive marketing, particularly by lawyers who moved from Panama during the Noriega regime and set up offices in the BVI.
The official currency on the BVI is the US Dollar, and there is no currency exchange control.

Company Incorporation
In 1985, the Government offered offshore registration to companies wishing to incorporate in the Islands. The principal corporate legislation is The Companies Act 1985, the International Business Companies Ordinance 1984 (as amended) and the Banks and Trust Companies Act 1990. The type of Company used for international trade and investment is called an International Business Company (IBC). A company incorporated in the BVI has the same powers as a natural person. Off-the-shelf companies are available. The language of legislation and corporate documents is English. The incorporation procedure for an IBC includes the submission of the Memorandum and Articles of Association and a Certificate from the Registered Agent confirming compliance with the requirements of the Ordinance.
As a matter of local company law, the Company must maintain a registered office address within the BVI and must also appoint a BVI resident as registered agent. There are no specific statutory provisions governing secrecy in relation to companies, but English Law, which applies within the BVI, requires that professionals keep the affairs of their clients
absolutely confidential.

An IBC is subject to the following restrictions on trading and business activities:
• A Company does not have the right to trade within the British Virgin Islands or own real estate there;
• A Company is not permitted to engage in banking, insurance, assurance, reinsurance, fund management, collective investment schemes, trust management, trusteeship, giving investment advice or any other activity that would suggest an association with the banking or insurance industries;
• A Company cannot offer its shares for sale to the public.

Company names are subject to the following restrictions:
• A Company cannot use a name that is identical or similar to that of an existing company.
• A Company cannot use any name that suggests the patronage of the Royal Family or the Government of the British Virgin Islands.
• A Company name can be in any language, although the documentation must be in English and an English translation of the name must be given.
• A name containing such words as Bank, Building Society, Chartered, Co-operative, Savings, Loans, Insurance, Assurance, Reinsurance, Fund Management, Investment Fund, Trust, Trustees, Chamber of Commerce, University, Municipal or their foreign language equivalents require consent or a license.
• Limited, Corporation, Incorporated, Societe Anonyme, Sociedad Anonima or abbreviations thereof are the required suffixes denoting limited liability.

The minimum number of directors is one. They may be natural persons or bodies corporate. They may be of any nationality and need not reside in the British Virgin Islands. Details of the directors do not appear on the public files. The minimum number of shareholders is one. No details of the shareholders appear on the public files but a register of shareholders must be kept at the company’s registered office address.

The normal authorised share capital is US$ 50,000 with all shares with par value, this being the maximum share capital to qualify for the minimum duty payable upon incorporation and annually thereafter. The share capital may be expressed in any currency. The minimum issued capital is one share without par value or one share with par value. The following classes of shares are permitted: registered shares, shares of no par value, preference shares, redeemable shares and shares with or without voting rights.

Annual Taxation and Fees
An IBC does not pay any tax on its world-wide profits to the British Virgin Island authorities. The British Virgin Islands have treaties with Japan and Switzerland, although they are of limited benefit and are not applicable to offshore business.

The license fees depend on the company’s share capital:
• Companies with an authorised capital of up to US$ 50,000 pay US$ 350 per year;
• Companies with a share capital of over US$ 50,001 pay US$ 1,100 per year;
• Companies with a share capital not exceeding US$ 50,000, some or all of whose shares without par value, pay US$350 per year;
• A penalty of up to 50% of the annual Government fee will be incurred if the license fee is not paid when due.

Though there is no requirement to file audited accounts with the authorities, a Company is required to keep financial records that reflect its financial state.

For more information on incorporation in this jurisdiction contact us.

EditorJurisdiction of the month: British Virgin Islands