BVI FSC Statistical Bulletin for Q2 2006

Soon after the new site launch BVI Financial Services Comission has published the Statistical Bulletin for the second quarter of 2006. Although it is stated on the bulletin that publication month is July 2006, actually it became available on 20th December 2006.

Legal/Enforcement and International Co-operation Division stats shows 1 Advisory warning, 8 enforcement matters, international co-operation matters with 8 formal requests requiring disclosure of non-public information and 6 informal requests requiring disclosure of public information. Division also provided advice to internal Division of the Comission in over 115 cases.

The Insolvency Services Division activities resulted in no change in the total number of BVI insolvency practitioners in the first quarter of 2006, however the Division licensed one new insolvency practitioner and revoked one licence.

BVI FSC statistics confirms that BVI is conservative banking jurisdiction having only 9 banking licences for banking operations in and from within the BVI. One new general banking licence was issued in the first quarter of 2006 and in total there were 6 General Banking licences and 3 Restricted Class 1 Banking licences on the 31st March 2006.

As regards Fiduciary services – at the end of the first quarter 2006 there were licenced 98 General Trust (3 new) and 103 Restricted Trust (2 new) services providers, 4 Authorised Custodians (1 new) and 107 Registered Agents. Also 1 new Company Management licence was issued totalling to 20 Company Management licences.

Investment Business stats confirms that the most popular type of funds constituted in the BVI is professional funds, and their number in the jurisdiction is still increasing. The 46% increase in the number of professional funds was fixed in the first quarter of 2006, if compared to the same quarter of 2005, and a 54% increase, compared to the previous quarter.

The first private fund was re-registered as a Segregated Portfolio Company in the reported period. It was soon after the Segregated Portfolio Companies Regulations were officially published on 22 December 2005. Totally there were 189 Segregated Portfolio Companies at the end of the first quarter 2006.

Insurance sector stats shows that 6 new Captive Insurers were licenced in Q1 2006.

The largest statistical figures reflect the activities at the Registry of Corporate affairs. Looking at stats we should take into consideration that starting from 1 January 2006 only BVI Business Companies were registered. Previously the most popular BVI company type was BVI IBC (International Business Company), but after new legislation passed the new companies are named BVI BC's (Business Companies). 17,892 new BVI Business Companies were incorporated in the first quarter of 2006. It is more than for the same period in 2005 when 15,772 BVI IBC's were registered. Number of dissolutions for Q1 2006 is 1,141.

The total number of BVI International Business Companies was 689,555, but the number of BVI Business Companies was 19,421 at the 31 March 2006. In total it is 708,976 world’s most popular business entities incorporated for international business.

BVI FDI in the Hong Kong: New Statistics, Facts and Figures

On December 18, the Census and Statistics Department has released the statistics on Hong Kong's Gross National Product (GNP) and External Factor Income Flows (EFIF) for the third quarter of 2006. The figures in general confirm the previous Foreign Direct Investment ratings and tendencies for Hong Kong published some days ago, and analysed in the previous blogposts.

According to the new preliminary statistics for the 3rd quarter 2006, the total factor income inflow into Hong Kong made $158.2 billion in the 3rd quarter of 2006, and increased markedly by 29.5% if compared to this period of 2005. Within total factor income inflow, the Direct Investment Income increased very little – just by 26.7% over the year 2005; the reason for this rise were generally increased earnings of some prominent local enterprises from foreign investments.

Analysing by country or territory, the largest source of Hong Kong's external factor income inflow in the third quarter 2006 is still China Mainland, its stock accounts for 27.9% of the total amount. The second position is again occupied by the British Virgin Islands, with a share of 18.7%. The other major direct investors were the US, with 11.0%, and the UK, with 7.2%.

The British Virgin Islands, along with the Mainland, were also the most important places for Hong Kong's external factor income outflow. In the third quarter of 2006, the stock of the British Virgin Islands made 15.4% of the total amount, while the stock of China Mainland was just some 6% higher and made 21.7%. Other major investors from this list are the Netherlands, at 11.3%, and the US, at 10.8%.

I have compiled the information on dynamics of BVI and China Mainland foreign direct investments to Hong Kong in the table below:

Period (Qtr)	Total ($M)	BVI ($M)	(%)	China ($M)	(%)
2004 4th	111,429	22,866	20.52%	29,529	26.50%
2005 1st	113,846	24,247	21.30%	28,593	25.12%
2005 2nd	132,008	34,811	26.37%	36,129	27.37%
2005 3rd	122,166	27,292	22.34%	30,652	25.09%
2005 4th	135,944	26,860	19.76%	39,400	28.98%
2006 1st*	149,209	28,165	18.88%	42,419	28.43%
2006 2nd*	163,840	29,492	18.00%	51,444	31.40%
2006 3rd*	158,243	29,620	18.72%	44,196	27.93%

$=Hong Kong Dollar

* Preliminary data

As we can see from the table in the last 2 years the level of BVI foreign direct investments to Hong Kong was increasing from quarter to quarter (except one extreme peak at the 2nd quarter of 2005). The fact that in percentage terms the part of BVI direct investments in 2006 is lower than in 2005 can be generally explained with the increase of direct foreign investments from Mainland China. Other countries have substantially lower % of FDI in Hong Kong.

Hong Kong FDI Statistics for 2005: Leading Positions of the British Virgin Islands

We have already discussed stable positions of BVI as the second largest foreign investor for Hong Kong and in the China, as well as the fact that Hong Kong and China remain the most important foreign investors for each other. The statistics for Direct Investment inflow and outflow for Hong Kong in 2005, published by the Census & Statistics Department, has confirmed the high ratings of the British Virgin Islands in this region.

First of all, the Census & Statistics Department has stated that both the market value of the stocks of inward and outward direct investment in Hong Kong rose significantly in 2005. The market value of Hong Kong's inward direct investment rose 15.2% on 2004 to $4.056 trillion last year, with the ratio to GDP at 293%. Hong Kong's outward direct investment also rose 16.6% to $3.654 trillion, with the ratio to GDP at 264%.

The stocks of inward and outward direct investment amounted to more than 2.5 times the size of Hong Kong's GDP each. This substantial size of investments has emphasized the status of Hong Kong as an international financial centre and regional business headquarters.

The British Virgin Islands accounted the second largest share of the total amount of inward direct investment in Hong Kong's economy. At the end of last year it took up 31.3% of the total stock, and this is just 0.1% less than the amount of direct investment inflow from the Mainland. The Netherlands are in the third place, with 8.1% of the total stock of inward direct investment in Hong Kong's economy. Other major investors are Bermuda with 6.7%, and the US, with 5.1% of the total.

On outward direct investment, the British Virgin Islands, with 44% of the total stock of investments, remained the most popular offshore destination for indirect channelling of direct investment funds. China Mainland remained the most important destination for Hong Kong's outward direct investment, with 40.4% of the total amount.

In 2005 the British Virgin Islands remained also the second major supplier of Hong Kong's direct investment inflow. The investment amount of the BVI made $47 billion, while China Mainland was the most important direct investor with $72.9 billion. In general, if analysed by economic activity, the largest share of the total direct investment inflow in 2005 was made by those engaged in real estate, investment holding and various business services.

Team BVI Members, Part I

The launch of 'Team BVI' was announced more than a month ago. The readers of my blog already know 3 members of Team BVI - Humphry A. Leue, Hon Dr. Kedrick Pickering and
Mark Chapman. Since the Team BVI has commenced to perform its functions, there were several arrangements where Team BVI members played very important role. I mentioned the seminar for London-based executives in the mutual fund industries and the meeting of the Overseas Territories Consultative Council. Today I would like to tell more details on the other members of Team BVI. In this connection I would like to thank the BVI International Finance Centre who kindly provided the list of all Team BVI members.

Mrs. Lorna Smith, another outstanding personality representing BVI government in the Team BVI, is the Executive Director of the BVI International Affairs Secretariat. Her focus area is International & Public Affairs. In April 2004 she was appointed Director Designate of the BVI Government’s London Office and took very active role in representing the interests of the BVI in London and Europe, popularizing BVI, it’s culture and services. BVI London office actively worked on a number of areas including Media Relations, Marketing and Brand, and relationship with Her Majesty's Government.

Mrs. Smith has found time to familiarize the House of Lords and the House of Commons with the BVI and successfully promoted BVI territory, which earlier was quite little known in London. As a Director of the BVI London office she suggested an idea to create "Friends of the BVI" group in parliamentary circles in London, and this idea was sucesfully implemented. She also actively worked with British Virgin Islands All-Party Parliamentary Group, registered in the UK in late 2004 when Mrs. Lorna Smith was Interim Director of the BVI London office.

At that time of her being in this post she also contacted with many prominent persons who later contributed much to the popularization of the British Virgin Islands. Among them there is such person as Sir Richard Branson, known for his support in promoting BVI.

Mrs. Smith also organized roadshows and other marketing activities aimed to popularisation of BVI financial services all over the globe. We should thank BVI London Office headed by Lorna Smith for launching a website providing one of the most comprehensive and regularly published BVI news.

After one year of very active work at the post of the director of BVI London Office she was followed by Ms Hadassah Ward and then by Ms Dawn Smith this summer. Lorna Smith returned to BVI and continued to work actively on BVI international relations as Executive Director of the BVI International Affairs Unit and BVI International Finance Centre.

New Legislative Acts Regulating BVI Business Companies Passed by BVI Legislative Council

British Virgin Islands Legislative Council has recently passed new legislative acts, amending the existing legislation. BVI Business Companies (Amendment) Act, 2006 amends the BVI Business Companies Act, 2004 (No. 16 of 2004) and adds certain miscellaneous provisions to the principal document. Several sections of the Act are amended; the section of the principal Act that concerns approval of forms by Commission is substituted, some changes are made in the licence fees. BVI Business Companies (Amendment) Act, 2006 was passed by the BVI Legislative Council on September 22, 2006.

Another legislative document is Company Management (Amendment) Act, 2006, amending the Company Management Act, 1990 (No. 8 of 1990). The provisions of this Act come into operation on January 15, 2007. The issues amended and replaced in the principal Act concern prohibition on unauthorized company management business, licence validity, fees, capital resource, disposing of or acquiring significant interest in licensee, exemption powers, approvals required, number of directors, preparation and submission of financial statements, auditing. The document was passed by the BVI Legislative Council on September 22, 2006.

BVI FSC Announces New Internet-Based Information System Launch

Some days ago the British Virgin Islands Financial Services Commission announced the establishment of a Company Law Review Advisory Committee, whose work will be connected with BVI offshore legislation. The new information released by the BVI FSC refers to the introduction of a new internet-based information system, featuring the electronic filing of documents. The announcement on this issue was made on 5 December 2006. FSC has informed that its existing registry and information system will be closed permanently.

The new “ Virtual Integrated Registry and Regulatory General Information Network'“ (VIRRGIN) will provide thorough electronic mechanism for handling, processing and receiving feedback on critical documents filed with the Registry of Corporate Affairs. It is stated in the press-release published by the Commission that the new system represents a “quantum leap” in the delivery of services provided by the Registry, and will make the processing of Registry documents more efficient, user friendly and fully electronic.

The new system will be launched in several phases. The first phase of the system will be delivered on 12 December 2006, for services provided by the Registry. In preparation for the transition, the access to the Registry's current online system will be permanently disabled at 3pm on Friday 8 December 2006.

BVI FSC regulator has noted that the BVI FSC is constantly seeking ways to better serve the industry, and this new system is another example of this vigilance. Actually, we may guess that the system will really improve service quality for industry practitioners and will be useful for clients.

The new internet information system is expected to require minimal end user computer resources and to be compatible with most systems. It will be subscription based and use will be complementary through February 28, 2007. After the completion of all phases of the system launch, it will have several new and improved features:

• Electronic filing of documents;
• Restricted access to licensed BVI based Registered Agents;
• Email confirmation for documents received by Registry;
• Online transaction queries for pending transactions;
• Electronically generated and issued defective notices with transaction reference codes;
• Electronically signed certificates and electronically stamped and returned M&As.

The BVI FSC is planning to issue additional information regarding the system and timelines through the end of the year.

PS BVI FSC has updated their website structure and design today.

Establishment of Company Law Review Advisory Committee Announced by BVI FSC

On December 1, 2006 the British Virgin Islands Financial Services Commission made an announcement that Executive Council acting on the advice of FSC has agreed to the Establishment of a Company Law Review Advisory Committee, pursuant to the provisions of the BVI Business Companies Act.

The Advisory Committee will keep the Business Companies Act (BCA) and other legislation relevant to company law as specified by the Commission. Another function of the Committee is also making recommendations for changes to the BCA. The Committee will also make recommendations to the Commission for development and reforming company law in the BVI.

The Committee includes wide range of persons with expertise and experience in many public spheres. The authority and reputation of Committee Members will make its deliberations especially valuable.

When looking for certain persons to be engaged in the work of the Committee, BVI Government and the Financial Services Commission had the purpose to ensure that both local and offshore interests are represented. Members are appointed for a period of three years.The appointments to the Committee from the Financial Services Commission are:

• Managing Director (Chairman)
• Director, Legal/ Enforcement
• Registrar of Corporate Affairs
• Director, Policy Research & Statistics

From BVI Government there are:

• Representative from the Ministry of Finance
• Representative from the A.G.’s Chambers

Following persons are deputed to the Advisory Committee from Private Sector:

• Richard Peters (Harney’s)
• Barry Goodman (Trident Trust Company)
• Michael Fay (WSmiths)
• Barbara O’Neal (O’Neal Webster)
• Anthony Lynton (Maples & Calder)
• Selina O’Neal (Equity Trust Company)
• Ron Potter (Deloitte)
• John Greenwood (Appleby Hunter Bailhache)
• Glenroy A. Forbes (Forbes Hare)
• Lewis Hunte (Hunte and Co.)
• Gareth Thomas (Codan Trust Company (BVI) Ltd.)

BVI Deputy Governor’s Office website launched

Today the BVI Deputy Governor’s Office has launched a website providing information about itself, one of the oldest units in the history of Government in the British Virgin Islands, established in 1800s.

The newly launched website, contains information about office’s role, structure and management, history, news, resources for the public, a directory of publications and speeches as well as online helpdesk.

The Office of the Deputy Governor supports and facilitates the BVI Governor in the execution of his constitutional functions. The main services provided by BVI Deputy Governor’s Office are managing the Public Service by promoting top management co-operation and development within the government services; furnishing the Governor with the requisite information and advice as requested; managing the administration of the Sister Islands; ensuring that International Obligations are met in compliance with treaties, conventions and Organizations; authenticating public documents (executing Apostilles under the Hague Convention); maintaining relationships with International Organizations; coordinating the affairs of those who provide external and internal security to the Territory; and facilitating the administration of the Courts.

Other services provided by BVI Deputy Governor’s Office include providing efficient passport, visa, nationality, and citizenship services to the public in concerted effort with the Passport Services; supporting the conduct of voter registration and elections when due; as well as supporting the Governor as he exercises his powers and duties dictated by Constitution and legislation.

Mrs. Dancia Penn, OBE, Q.C., was appointed as Deputy Governor of the Virgin Islands in September 2004. In her comments she said, “The Deputy Governor’s Office is the oldest department of Government, and so it is especially exciting to see that we are modernising the way we share information with the public,” Deputy Governor Dancia Penn, Q.C., said. “I hope that everyone in our community will take the opportunity to become better informed by visiting this website now, and in the future.”

Otto O’Neal was appointed Permanent Secretary in the Deputy Governor’s Office in July 2005. He commented that website is in keeping with the Office’s commitment to improving its communication with the public. “We recognise that the public needs to know more about the services that we provide, the policies that we implement, and the way in which we work,” Mr. O’Neal said. “This website is a key component in our strategy to enhance our communication.”

Automated Processing System to be Implemented by Customs

On December 4, 2006, The Customs Department in the British Virgin Islands will start using the Customs Automated Processing System (CAPS) to process incoming passengers at the Terrence B. Lettsome International airport as part of the project’s implementation stage.

Comptroller of Customs, Mr. Wade Smith says that the use of CAPS will offer several benefits to the BVI. First of all, it could improve Custom’s efficiency in declaration processing and performing compliance audits. Then, CAPS will provide a database for collecting statistics for development planning. And it goes without saying that the new system will increase revenue and improve protection of the BVI.

According to Project Director, Shaina Smith, the contract with IBM (International Business Machines) included the design, development and implementation of both software and hardware in co-operation with the Ministry of Finance, Customs and Information Systems Unit.

The Terrance B. Lettsome International Airport (Beef Island) situated 15 km from Road Town, Tortola, is the main airport serving the British Virgin Islands. So, now we can hope that both arrivals and departures from the BVI will take less time.

The Customs Automated Processing System is a business software solution developed by IBM that is used by customs administrations all over the world in order to computerise manual processes and to increase effectiveness and efficiency of the customs.