Formation of Companies in British Virgin Islands

Introduction
The British Virgin Islands are a British dependency located in the Eastern Caribbean, about 80 kilometers East of Puerto Rico. English is the official language and the official currency is the United States Dollar. The Government is stable and promises to remain that way. There is good commercial and professional infrastructure and the Government is actively encouraging the development of the offshore finance business and has now upgraded the Companies Registry by installing state of the art technology.

Company law
The International Business Company Act (Cap.291), the IBC Act, is a modern piece of corporate law tailored specifically to the needs of international businesses. The Act makes it possible for the administration of an IBC to be undertaken either in the BVI or from another jurisdiction.

Points of Interest/Advantages
Incorporation under the IBC Act provides the following benefits and features

• IBC companies are exempt from all BVI taxes and stamp duty (except for registration fees and annual licence fee) even though the administration of an IBC may be from with in the BVI.
• There are no minimum issued share capital requirements.
• An IBC is required to have a Registered Agent and a Registered Office in BVI.
• Both registered and bearer shares can be issued (and converted from one to another)

As of the effective date of the Amendment Act, 2003, whenever a company issues a bearer share it will be required to deliver it into the custody of a custodian. There are two types of custodians: an Authorized Custodian and a Recognized Custodian, who must be approved by the Financial Services Commission (FSC) in accordance with the Financial Services Commission Act, 2001, which will be amended to provide for an approval and recognition process. It is intended that an Authorized Custodian will be either a BVI licensed bank or trust company. In addition, an overseas company that is regulated in a jurisdiction acceptable to the Commission may also qualify as an Authorized Custodian.

• Only one shareholder is required.
• Only one director is required. A company may serve as director.
• There are no nationality requirements for directors or shareholders.
• Board meetings of stockholders/directors/officers may be held anywhere in the world and may be conducted by telephone or through electronic means. Circular resolutions are acceptable.
• BVI annual license fee is lower than in many other jurisdictions.
• No public record is kept, of the identity of shareholders or directors.
• Directors have power to protect the assets of the company by transferring them to trustees, another company or legal entities for the benefit of the IBC, its beneficial owners or creditors.
• Registered Agents are authorized to authenticate the signatures of directors, officers, or agent.
• The IBC Ordinance allows that a company incorporated outside the BVI may be redomiciled in the BVI under the “continuation” features of this Ordinance.
• The books and records of the company may be maintained anywhere.
• No-accounts or annual summaries have to be filed with the Government, with the exception of the annual fee form to be completed and filed by the Registered Agent in BVI.
• IBCs may merge or consolidate with BVI or foreign companies where permitted by the law of the country of residence of the foreign company.

How to incorporate an IBC
Any person (natural or juridical) may singly or jointly with others (in the BVI or elsewhere) incorporate an IBC by subscribing to a Memorandum and Articles of Association. The usual procedure is for a nominee to act as incorporator. Our company, Kyriakides, Savvides & Associates offers the service to act as sole incorporator. When the company is registered, control of the company is passed over to the interested party by appointing as first directors (individual or corporate) those indicated by the client. The directors, in turn, arrange the issuance of shares and take the other decisions to commence business. Service of nominee directors/officers and/or shareholders is available. The length of time required for the corporation to be formed will be approximately five (5) working days from the date in which we receive final instructions.

An IBC not allowed to:

• Carry on business with residents of the British Virgin lslands;
• Own an Interest in real property situated in the British Virgin Islands, other than a lease of property for use as an office from-which to communicate with members or where books and records of the company are prepared or maintained:
• Carry on banking or trust business, unless it is licensed under the Banks and Trust Companies Act, 1990;
• Carry on business as an insurance or reinsurance company. Insurance agent or insurance broker, unless it is licensed under an enactment authorising it to carry on that business;
• Carry on the business of company management unless it is licensed under the Company Management Act, 1990, (which Act governs company management activities carried out in or from within the Virgin Islands only);
• Carry on the business of providing the Registered Office or the Registered Agent for companies incorporated in the British Virgin Islands.

It is necessary to insert in the Memorandum of Association an express statement that the company may not carry on the activities set out above.

Annual Franchise Tax
Annual Licence Tax to the government for companies with an authorized capital until
US$
50,000.00…………………………………………………US$300.00
An IBC must pay an Annual License Tax to the government. The amount of this tax depends on the authorized capital of the company. If the annual license tax is not paid due date on the corresponding last penalty date, the company is stricken-off from the Register. However, it may be subsequently restored by payment of fine. In accordance with the new law dated 17 April 2003 the annual franchise tax for a company that allows the issuance of bearer shares will increase to US$1000.00.

a. For companies incorporated during the first six months of the year:

• Payment of the License Tax is due by May 31st.
• After June 1st payment of the tax is subject to the following surcharges for non-payment on due date:
  > 10% until 31st July.
  > 50% until 31st October.

b. For companies incorporated during the second six months of a year:

• Payment License Tax is due on November 30th
• After December 31st payment of the tax is subject to the following surcharges for non-payment on due date:
  > 10% until 31st January.
  > 50% until 30th April.

Please note that on the next year following the year of incorporation, we shall send the client a reminder on when and how to pay the Annual License Fee and Register Agent and Office fee.

Amendments
The memorandum/Articles of Association may be amended by either a resolution of directors or of shareholders and the amendment filed with the Registrar of Companies.

Books, Records and Common Seal
An IBC is required to have a common seal (which may be kept outside or within the BVI) and an imprint thereof must be kept at the IBC’s Registered Office in BVI. Seals must be used if the company enters into a contract which, if entered between individuals, would be required by law to be in writing and under seal. An IBC shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the company, at the Registered Office of the company in BVI or at such other place outside the BVI as the directors determine.

Powers of Attorney
An IBC may grant general or special Powers of Attorney to any person, to act on its behalf to execute contracts, agreements, deeds and other instruments. These powers are not a matter of public records.

Certificates of Good Standing
Certificates of goodstanding for an IBC can be obtained upon application to the Registrar of Companies.

Register of Shares
No public records exist of shareholders. Every IBC is required to keep one or more Registers of shares and shareholders, and at least one copy thereof must be kept at the Registered Office of the Company in the BVI. To comply with the law, it is advisable that the Registered Agent be informed of any changes in the Shares Register.

Directors/Officers/Shareholders:
Only one shareholder is required. Only one director is required. Every company is required to appoint one or more directors within 30 days of its incorporation. A company may serve as a director.

Every company formed in the BVI is required to establish and maintain a Register of Directors. The Register must be kept at its Registered Office and will remain confidential in our files, as it is not requirement to file it at the Registry of Companies.

Transfer of jurisdiction
A BVI company may transfer its domicile to a foreign jurisdiction permitting such transfer. A company organized under any foreign jurisdiction may continue its existence as a BVI company upon approval of the necessary Resolution by its proper corporate body.
Upon the registration of the Articles of Incorporation with the Registrar of Companies such a company will then continue as a BVI company regardless of provisions to the contrary in the laws of its previous jurisdiction.