Changes in BVI IBC Act till 2003

In June 2000, industry practitioners were informed by the British Virgin Islands Chief Minister about the intention of the government to amend the BVI IBC Act (International Business Companies Ordinance – Cap. 291) that would restrict the mobility of bearer shares. This new law shall be aimed at making IBCs more transparent.

In November 2002, an Aide Memoire was issued by the Financial Services Commission in order to advise both industry practitioners and other interested stakeholders. The subjects of advising were contents, principles and purpose of the proposed bill.

Not the abolishment of bearer shares, but immobilisation was chosen as far as it is considered to be an effective way of keeping bearer shares and ensuring that beneficial ownership is known.
One of the reasons was bad experience of the Bahamas, where a big loss of businesscame as a consequence of the abolishment of bearer shares.

On the 17th of April, 2003, the International Business Companies (Amendment) Act, 2003, was passed by the British Virgin Islands Legislative Council. On the 5th of May, 2003, this act was approved by the Acting Governor.

The IBC (Amendment) Act 2003 introduces the following:

• a definition of bearer shares (in the IBC Act of 1984, there was no definition of bearer shares);
• requirement for bearer shares to be deposited with a Custodian or exchanged for registered shares (the M&A should be modified so that bearer shares are no longer allowed);
• annual license fees for a company having the right to issue bearer shares was increased from US$ 300 to US$ 1,000;
• principle that if client has bearer shares, which he wants to sell, the custodian may deliver the bearer share certificates only to another custodian agreeing to hold the certificates;
• requirement to maintain the Register of Directors (name, address, date appointed/ resigned/ removed) at the Registered Office of the company.
  

The deadline was stated – the 31st of December, 2004.

To be continued on BVI IBC Act changes 2004-2005 tomorrow.