Overview of Company Registration in the British Virgin Islands
BVI is an acronym for The British Virgin Islands, a British overseas territory situated in the Caribbean (the Francis Drake Channel) bordered by the east to Puerto Rico. Road Town is the capital city of the British Virgin Islands, having a population of over 30,000 people. The national currency of the British Virgin Islands (BVI) is the United States Dollar (USD), with English as its official language.
A BVI company is the term used for offshore companies registered in the British Virgin Islands., An International Business Company (IBC) may incorporate under the BVI territory and enjoy tax and bureaucracy perks.
Company formation in BVI is a major source of annual revenue for the government of this jurisdiction, as more than 50% of revenue is generated from the licensing fees paid by the companies. The BVI is a reputable offshore regulatory jurisdiction. The BVI Financial services commission is an autonomous regulatory authority responsible for the activities of the company and other related financial services on the Island.
Legislative Framework for Company Registration in BVI
Company registration in the British Virgin Islands is governed under the BVI Business Companies Act 2004, which has been recently amended and known as BVI Business Companies (Amendment) Act, 2022 and came in effect from 01.01.23.It deals with the formation and regulation of a company registered in the BVI. The government of this territory is a political democracy under a constitutional monarchy.
Benefits of Company Registration in the British Virgin Islands
Company Registration in the British Virgin Islands entails the following benefits
The legislation of BVI is quite modern, flexible and commercial-minded, which provides the much-needed corporate flexibility to the companies incorporated in this territory.
BVI Companies typically enjoy broad corporate capacity; they have the liberty of undertaking any lawful act or activity, as there aren’t any restrictions pertaining to corporate benefit or financial assistance restrictions. Efficient procedures apply for the authorisation of corporate activity.
Minimal capitalisation requirements
BVI Companies aren’t subjected to "thin capitalisation" rules or any capital maintenance requirements. The redemption of the shares or distribution of assets to shareholders becomes easy if a company maintains cash flow and balance sheet solvency. A BVI company has the power of providing financial assistance to a 3rd party for the acquisition of its own shares.
There is an absence of any income tax, capital gains tax, corporation tax, wealth tax or similar fiscal laws for a BVI company. While trading companies will normally make the payment of taxes in the usual way in countries where they involve in business, using a British Virgin Islands company as an intermediary holding company can create tax neutral layers in the corporate holding structure.
The register of directors or register of shareholders of a BVI company is not available publicly (the register of directors is filed with the BVI Registry), which helps in maintaining the confidentiality of the company registered in BVI.
The BVI benefit from the presence of all of the top-tier offshore law firms staffed with experienced corporate lawyers, the majority of whom trained with and practised at top-tier UK law firms due to being the largest offshore corporate domicile resulting in the professional handling of transactions and optimization of transaction fluency.
FinTech and Cryptocurrency
BVI is an attractive destination for initial coin offerings, crypto funds and FinTech transactions. BVI has launched a regulatory sandbox designed for encouraging BVI companies and other undertakings to develop and utilise innovative FinTech within a light-touch regulatory environment.
Types of Corporate Structures for Company Registration in the British Virgin Islands
The entrepreneur can choose any of the below-mentioned corporate structures for Company Registration in the British Virgin Islands.
Company limited by shares
This is the most common type of company registered in the British Virgin Islands. As the name suggests, a company limited by shares can issue shares, and its member's liability is separate from the debts and obligations of the company. Members of such a company are holders of its shares.
Company limited by guarantee
This type of corporate structure is typically opted by non-profit organizations. As per section 5 of the BVI Business Companies Act, a business can register a company limited by guarantee in two ways.
- A company limited by guarantee that is not authorized to issue shares
With respect to the liability of a guarantee member to the company, the guarantee is limited to the Amt. that the guarantee member has the liability to contribute as mentioned in the memorandum or any other liability expressly provided for in the MOA or AOA of the company; and any liability regarding repayment of distribution in case it didn’t meet the solvency test.
It must be noted that these liabilities would be applicable in the event of voluntary or insolvent liquidation according to the laws, and they are limited to the amount mentioned in the memorandum.
This type of company can be further classified into
An unlimited company authorized to issue shares The Company can issue an unlimited no. of shares. The unlimited member can also be a shareholder and shall have one vote unless the MOA or AOA provide otherwise.
The unlimited company is not authorized to issue sharesThe Company can’t issue shares, and thus, its members are not shareholders. According to the BVI Business Companies Act, the unlimited company not authorized to issue shares must file its annual return in the approved form of its directors.
Eligibility Criteria for Company Registration in the British Virgin Islands
An entrepreneur willing to register a company in the British Virgin Islands must fulfil the below-mentioned eligibility criteria
The applicant company can generate a company name in any language; however, the chosen name must be with Roman characters. The company name end can have any suffix.
A minimum of 1 director is required for company registration in this territory which can be an individual or entity of any nationality.
A minimum of 1 shareholder is required for company registration in the British Virgin Islands.
The appointment of at least 1 company secretary is also required for registering a company in BVI.
The requirement for minimum paid-up capital is 1 share of par value in any currency, native or foreign.
The Company must obtain a registered address carrying out business operations in the British Virgin Islands.The authority puts no restrictions on estate hire or purchase for establishing head offices and branches.
Irrespective of the type of company or business activity, every company must have a registered agent in the BVI. Registered agents serve as a link for the Registry of Corporate Affairs, the BVI International Tax Authority (ITA), and the company.
Necessary papers Required for Company Registration in the British Virgin Islands
The below-mentioned necessary papers are required for company registration in the British Virgin Islands
- Duly filled Application Form
- A scanned as well as a notarized copy of the passports of the to-be-appointed directors and shareholders
- A photocopy of notarized official necessary papers such as a driving license or photo ID card assures the Examiner that both copies and photos are true in likeness.
- Proof of Residence: Original proof indicating the Individual's name and address. The proof can be any utility bill or bank statement. The submitted proof must not be more than three months old.
- Initial letter of Introduction: The letter can be generated from a reputed lawyer or professional accountant
- Each Shareholder and the Company's director must complete, sign, and submit a BOD (Beneficial Owners Declaration) with the application.
- Memorandum of Association of the applicant Company
- Articles of Association of the applicant Company
Procedure for Company Registration in the British Virgin Islands
The procedure which must be followed by the applicant for company registration in the British Virgin Islands is discussed below
Choice and Reservation of the Company's Trade Name
For the first step, the applicant is required to choose a unique name for the proposed Company, followed by reserving that name with the BVI Registry. The BVI Commercial Registry shall search for the company name on the submitted name to ensure that the same isn’t similar to any other company registered in BVI.
Appointment of a Registered Agent for the Company
Next is the appointment of a registered agent at the time of incorporating business with the BVI Registrar.
Opening a Corporate Bank Account for the Company
It is mandatory for every company to open a corporate account prior to the incorporation of the in order to commence its business operations.
Submission of the relevant necessary papers
Subsequent to opening the corporate bank account, the applicant must arrange the relevant necessary papers, file the application and submit the relevant necessary papers along with the same to initiate the incorporation process.
Applying for required licenses for commencing the Business Operations
Upon the obtainment of the registration approval, the newly incorporated Company must officially check for other relevant licenses to commence its business. Such licences and permits can be obtained from the Financial Services Commission of the BVI.
Post Registration Compliances
A company registered in the BVI must abide by the below-mentioned post-compliance requirements.
Registered Agent / Registered Office
One of the most important compliance requirements is that of having a registered office and a registered agent at all times by the BVI Company, which shall be maintained by its own staff or the registered agent. The registered office should be a physical address in the BVI and not a PO Box, and its details of the same must be included in the first MOA and AOA.
Maintenance of Corporate Records
A BVI company must maintain its corporate records, which must be kept either at the registered office of the company or the office of the registered agent. The following corporate records must be maintained by such a company.
- MOA & AOA
- Records of the shareholders and other members
- Records of the directors
- Copies of all notices and other necessary papers that in the previous ten (10) years
- Copy of the register of charges
- Minutes of all meetings and resolutions
- The registered agent must be given the company had filed a written record of the physical address of the place or places where the records are kept.
Companies are required to maintain financial records (including accounts) which are sufficient to reflect and explain their transactions for facilitating the determination of the financial position of the company accurately (“Records”). The Records must be maintained for at least five years. If the Company is not regulated, the Records do not have to be audited, filed with any authority or in any particular format.
From 01.01.23, Companies must prepare an additional annual return containing prescribed financial information.
The annual return should be filed with the registered agent within 9 months of the Company's financial year-end.
The payment of the annual fees must be made on or by 31 May or 30 November each year by the company, depending on the date of incorporation.
A business company must ensure that its full name and, if it has one, its foreign character name is clearly mentioned on every written communication sent by or on behalf of the company and on every necessary paper issued or signed by or on behalf of the company, which creates or evidences a legal obligation of the company.
A business company is required to have a common seal, and an imprint of the same must be kept at the office of its registered agent.
Every business company must have a minimum of 1 shareholder and 1 director, who can be either an individual or a company. The directors need not be residents of the BVI.
The business company doesn’t need to appoint officers under the Business Companies Act. The Business Companies Act does not require that a business company hold an annual general meeting of its members.
The directors are empowered for the issuance of shares in a business company. The company’s MOA or AOA must either set a maximum number of shares the company is authorised to issue or mention that the company has the authorisation to issue an unlimited number of shares.
On incorporation, a business company must file the following necessary papers with the Registry of Corporate Affairs:
- The MOA and AOA are signed by a proposed registered agent as incorporator;
- The proposed registered agent’s consent to act as registered agent.
- The MOA, AOA and COI are available for public inspection at the offices of the Registrar of Corporate Affairs
The Economic Substance (Companies and Limited Partnerships) Act, 2018 (the “ES Act”) makes it mandatory for all Legal Entities conducting a Relevant Activity during a Financial Period for establishing economic substance in the BVI.