Thursday, March 09, 2006

Changes in BVI IBC Act

Another consequences arising from international pressure and FATF and OECD criticisms rather than KPMG report are changes in British Virgin Islands IBC Act (now it is The BVI Business Companies Act). By international pressure should be understood the frequency of claiming that offshore financial centres are tax havens offering illegal shelter to tax dodgers and laundering dirty drug money to those who have it. This has been said and is still being said not particularly about the BVI, but about the offshore industry as a whole.

It's not a secret to anyone that offshore jurisdictions fight against dirty money laundering. The only difference is what each offshore centre considers to be dirty as well as what it gains and what it loses when introducing some changes.

In the beginning of the century many offshore jurisdictions started changing the legislation regulating offshore companies in order to make companies more transparent. Registration of the shareholders and directors was one of the spheres that was influenced by this most of all.

Some jurisdictions even abolished bearer shares (for example, the Bahamas after blacklisting* in 2000), but the BVI went another way. Under the new BVI BC Act, all bearer share certificates are required to be deposited with a custodian (Authorized Custodian or Recognized Custodian) and the annual government fees for companies with bearer shares have been substantially increased to US$ 1,100. The old companies are granted a grace period.

* NCCT Annual Report 1999 – 2000 contains the following information on Bahamas: “In particular, there is a lack of information about beneficial ownership as to trusts and International Business Companies (IBCs), which are allowed to issue bearer shares

To be continued on the BVI IBC Act changes 2003 – 2005 tomorrow.

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