BVI companies are governed by the BVI Business Companies Act, 2004 (the Act), which has recently been amended by the BVI Business Companies (Amendment) Act, 2015 (the Amendment Act).
The Act permits several different types of companies in the BVI. The most common type is a limited liability company. It is also possible to establish an unlimited company (with unlimited liability) or a company limited by guarantee.
Companies in the BVI are regularly used as investment fund structures, investment business companies and insurance companies, but the most common use is group holding companies.
The BVI Financial Services Commission is responsible for regulating, supervising and inspecting all financial services in and from within the BVI. They also control the registration of companies.
This guide outlines the main features of limited liability companies. Please contact Oak Trust Group should you require further information on these or the other types of companies listed above. An important factor in deciding to use a particular type of corporate vehicle is the tax and regulatory treatment that will be applied to the company both in BVI and any foreign country. It is imperative that appropriate legal and tax advice is sought in all relevant jurisdictions to determine the type of corporate vehicle that will be best suited to your circumstances.
Oak Trust Group has produced this as a general summary based on publicly available information. This document is not intended as taxation or legal advice and this document should not replace professional tax or legal advice tailored to your circumstances.
Formation of Companies
Only a licensed BVI registered agent can apply for the incorporation of a company. Oak Trust Group has a relationship with a BVI registered agent to conduct incorporations. Incorporation is achieved by the registration of the proposed company's memorandum of association and articles of association, together with the registered agent's confirmation of consent to act for the company.
These submissions are made to the Registrar, also known as the Registry of Corporate Affairs, which primarily administers the Act and is responsible for ensuring that entities doing business in and from within the territory are duly registered and that the Register of Companies is properly maintained.
Setting up a company in the BVI will involve:
- Choosing a company name which is neither identical nor deceptively similar to one already used by another company in the BVI;
- Preparing the memorandum of association which sets out the constitution of the company (including type of company and details of share capital);
- Preparing the articles of association which sets out the regulations governing the internal organisation, management and administration of the company;
- Issuing share capital and maintaining a share register identifying the ultimate beneficial ownership of the company. Under the Act, no minimum share capital is prescribed for a company and a company may issue shares with par value, with no par value or a combination thereof and may also use fractional shares. A share is deemed to be issued when the name of the member is entered in the company's register of members. Shares may be issued fully paid, partly paid or unpaid;
- Setting a registered office in the BVI which must be a physical address. The Act also requires that a company always maintains a registered agent in the BVI and any company that fails to do so is guilty of an offence and is liable to be struck off the Register of Companies; and
- Electing at least one director. BVI companies may have a corporate director. There is no requirement for the director(s) to be resident in the BVI.
There are a number of annual considerations as follows:
- Annual licence fees – Government licence fees need to be paid to the BVI Government each year. Starting from the second year after incorporation, for all companies incorporated between 1st January and 30th June, the fee is due before 31st May; and for all companies incorporated between the 1st July and 31st December, the fee is due before 30th November. In addition to the licence fees, annual service fees are payable to the registered agent for secretarial and registered office services.
- Accounting records – every company must keep accounting records sufficient to illustrate a company's transactions and determine its financial position. The records must be kept for at least five years.
- Financial statements – there is a requirement to keep accounting records but there is no obligation to produce and maintain financial statements. The records kept must allow financial statements to be prepared. A BVI company is not required to file statutory financial statements.
- Audit – while the Act does not provide for an annual audit or the appointment of auditors, a company is at liberty to provide for the appointment of an auditor in its memorandum or articles of association.
- Shareholder meetings – the Act does not require a company to hold an annual general meeting of its members, all of which are subject to any contrary or varying provisions in the company's memorandum or articles of association.
- Registers – every company must keep registers containing specified details of its members, its directors, its resident agent and its secretary which must be kept at the company's registered office.
- Information available to the public – up until recently, a BVI company would only have to file its memorandum and articles of association with the BVI Registry of Corporate Affairs. A company was not required to file its register of directors, register of members, register of charges or an annual return with the BVI Registry of Corporate Affairs.
This has recently changed under the Amendment Act and a register of directors must be filed from 1 April 2016.
Basis – A company is considered to be BVI tax resident if its management and control is exercised in the BVI.
Rate – There is no corporation tax in the BVI.
Capital gains – The BVI does not levy tax on capital gains.
VAT – There is no VAT or sales tax system in the BVI.
Foreign tax credit – The BVI does not have any double tax arrangements in place.
Dividends – No tax is withheld on dividends paid to a non-resident.
Tax year and filing requirements – There is no requirement for BVI companies to submit a tax return since there is no corporation tax in the BVI.
Oak Trust Group Corporate Services
Our offices in Guernsey and Mauritius can offer incorporation services for companies in the British Virgin Islands, Guernsey and Mauritius, amongst other jurisdictions. We have vast experience in setting up and administering companies and we can offer the following services:
- Provision of directors
- Provision of company secretary
- Provision of registered agent
- Provision of registered office
- Provisions of nominee shareholders
- Bookkeeping, accounting and financial reporting
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.