Tuesday, February 27, 2007

GoodBye to the BVI International Business Companies Act. Long live BVI Business Companies Act

On the 1 January of this year the British Virgin Islands Business Companies Act 2004 (the BVI BC Act) became the only Business Companies Act in the jurisdiction, after 2 years of transition period when the old BVI International Business Companies already on the register were permitted to operate under the International Business Companies Act or Companies Act. Now the International Business Companies (IBC) Act, which was enacted in 1984 and brought more than 700 thousand registered companies to the BVI, is completely replaced with the above-mentioned BVI BC Act.

The main changes implemented in the new legislation, which were noticed and most of all discussed by the community a year ago, concerned:
a) new bearer shares regime: The companies are allowed to issue bearer shares, but they must be kept by an Authorised or Recognised Custodian. The owner of the bearer shares must provide the following information to the custodian:
* full name of the beneficial owner of the shares,
* declaration that no other person has an interest in the shares, or full names of any persons having an interest in the shares.
b) the requirement to maintain the Register of Directors at the Registered Office of the IBC in BVI
c) new annual license fees reflecting different approach to companies with or without bearer shares kept fully or partially with BVI Custodian

These measures were enacted to make the British Virgin Islands legislation compliant with the international standards, including the 40 anti-money laundering recommendations of the Financial Action Task Force. The new legislation was also put in compliance with European Union (EU) Savings Tax Directive and EU Code of Conduct on Business Taxation.

However, the above list of changes in the new legislation concerning the BVI financial services is far from being complete. Many offshore specialists may confirm that this legislation is providing other positive changes for financial institutions and corporations, undertaking a wide range of structured, asset and project finance transactions in the British Virgin Islands.

As recently said Christopher Lloyd, a Senior Partner in Walkers’ BVI office: “The new regulations allow corporations much more flexibility in structuring their particular transactions in ways that are most advantageous to their business goals. At the same time, the rules incorporate sophisticated creditor protections.”

The new BVI BC Act also provides for statutory recognition of security over a BVI company's shares, which is usually the key component of complicated multiple-step financial transactions. This is one of the new legislation features that could be especially attractive and useful to financial institutions and corporations, that are looking for undertaking structured, asset, and project finance transactions.

No comments: