Memorandum of Understanding Signed Between BVI FSC and Jersey FSC

BVI Financial Services Commission and Jersey Financial Services Commission have entered into the Memorandum of Understanding. The information on this document (MoU) is posted on the official page of BVI FSC.

The JFSC is a statutory body established under the Financial Services Commission (Jersey) Law in 1998 ,and its purposes and functions are very much alike to those of BVI FSC. General function of the JFSC is supervision of financial services providers and financial products provided in or from within Jersey. This includes the authorisation and supervision of collective investment schemes, and fund functionaries, licensing and supervision of banks, insurance companies, investment business and trust company business, general insurance mediation business. JFSC also incorporates the Registry of Companies.

The main purpose of signing the Memorandum by the BVI FSC and Jersey FSC is providing a formal basis for co-operation, including for the exchange of information and investigative assistance. According to the document, each Authority will provide assistance to the other one, subject to its laws and overall policy; the assistance may include providing information in the possession of the requested Authority, confirmation and exchange of information, discussing issues of mutual interest, obtaining specified information and documents, inspections or examinations of financial services providers, and other issues.

Both the BVI FSC and JFSC believe that mutual co-operation will enable them to perform their functions more effectively. Each request for assistance on the above-mentioned matters will be assessed by the requested Authority to determine whether this MoU allows for providing such assistance. The criteria which will be taken into account by the requested Authority when making the decision are stated in paragraph 9 of the Memorandum. Also, for any of the reasons mentioned in this paragraph, the assistance may be denied in whole or in part.

The Memorandum of Understanding was signed by Robert Mathavious, as managing director and CEO of BVI Financial Services Commission, and John Harris, as the General Director of JFSC.

Public Statement issued by the BVI FSC

On July 13, the British Virgin Islands Financial Services Commission issued Public Statement signed by managing director/CEO Robert Mathavious. This Public Statement concerns Boston Life and Annuity Company Limited and has been issued in order to protect the public interest and the interests of those who are somehow related to Boston Life and Annuity Company Limited.

The BVI FSC informs the public that in April 2006 it received complaints from policyholders of the above-mentioned company. According to the complaints, the company had improperly terminated insurance policies under one of its programs to deprive policyholders of a refund. The Financial Services Commission started its investigations at once, and on June 2, 2006 it issued the Notices requiring documents and information from Boston Life and Annuity Company Limited and related parties.

According to the public statement, “in July 2006, the Commission retained the services of Krill Inc./ Kroll Associates Inc. to provide investigative assistance in the first instance providing an expert Forensic Accountant to review substantial records that the Commission had obtained in the course of investigations”.

In January 2007, Kroll was appointed by the Commission as an examiner to conduct further investigations into Boston Life.

Krill Inc./ Kroll Associates Inc. has assisted the Commission in the investigation, and the BVI FSC expects the investigation to be completely carried out in 3 months.

As far as the concerns have been recently raised, on July 13, 2007, the Commission issued a directive to the company. Currently, Boston Life and Annuity Company Limited is prohibited to enter into new contracts for insurance business for 90 days, until the notice by the BVI FSC.

BVI Business Companies Act amended

It is not such a long time since BVI the Business Companies Act was introduced and replaced BVI IBC Act completely at the beginning of this year.

Now the British Virgin Islands Financial Services Commission (BVI FSC) has announced several amendments being readied to the new Business Companies Act. Among other things, this will facilitate simplified provisions to transfer bearer share companies to non-bearer share companies.

Initially, provisions to transfer bearer share companies to non-bearer share ones were established for IBCs in 2003 to carry forward to Schedule 2 of the BVI Business Companies Act.

In accordance with the existing transitional provisions, companies are required to fully immobilise their shares by December 31, 2010. However, according to the BVI FSC, financial industry concerns that compliance with the transitional arrangements would place a heavy burden on the industry is taken into consideration. The BVI FSC observed that this could cause substantial inconvenience to the directors and owners of former IBCs when they pass resolutions amending their memorandum of association. Accordingly, the Commission has tried to find an appropriate solution in order to will carry out the immobilisation of all bearer shares before 2010 imposing the minimum administration on BVI companies.

According to an Order by the Executive Council, this should be achieved by deeming that the memorandum of a former IBC will be amended on the transition date in order to prohibit issuing bearer shares, unless the IBC elects that the deeming provision should not apply.

So, the transition of most bearer share companies to non-bearer share ones will be a straightforward process.

During 2008-2009, former IBCs which are bearer share companies will pay the same fee as non-bearer share companies.

The Commission has expressed its pleasure regarding its efforts to meet the international standards and, at the same time, remain an appealing and cost-effective domicile for international companies.

After enactment of the BVI Business Companies Act there already have been several amendments, also related to the schedule of the implementation of one or another new regulation. For example, in the beginning of 2006 several amendments including prolonging the deadline to comply with the bearer shares regime from 31st of December 2004 to 31st of December 2010 were introduced.

Before the BVI Business Companies Act, 2004 was enacted, BVI companies were administered under 2 statutes: the resident companies were administered under Cap. 285, while offshore IBCs – under the IBC Act 1984, Cap. 291. In order to eliminate accusations of ringfencing, the BVI Business Companies Act was enacted in the British Virgin Islands in 2004.

To inform the BVI company owners and stakeholders on the new company regime and its implications, the BVI FSC will be hold a series of public workshops.

The regulator has also announced that fees for companies registered under the Companies Act will be reduced to the level of companies registered under new legislation. Last year, the fees for companies registered under the Companies Act (Cap.185) was increased to a minimum of $350.00 in order to put Local BVI Companies on equal position with companies registered under the new BVI Business Companies Act. However, the legislators decided that BVI Resident Companies not re-registered under the BVI Business Companies Act when their annual fee was due will not be obliged to pay an increased fee in 2007. So, the Registrar of Companies should refund all overpaid fees.

This year, the annual fee payable by a BVI Resident Companies will, as previously, depend on the value of its assets. If the value of assets is less than $10,000, the annual fee will be reduced from $350 to $25.

The Companies Registry will identify all overpaid fees and notify all BVI companies eligible for a refund, which is to take abut a few weeks.

The new table of capital and annual licence fee payable by BVI resident companies is as follows:

Capital / Licence Fee
do not exceed $10,000 - $25.00
exceed $10,000 but do not exceed $50,000 / $50.00
exceed $50,000 but do not exceed $100,000 / $100.00
exceed $100,000 but do not exceed $200,000 / $200.00
exceed $200,000 but do not exceed $300,000 / $300.00

Source information on latest legislation changes and guidance note is available on BVI FSC site.

Former Attorney General of the BVI Appointed to the Senior Position in the BVI FSC

The BVI FSC has announced that the former Attorney General of the British Virgin Islands, Cherno Jallow, has agreed to take a senior management post in the Commission. He is appointed at the position of Director of Policy, Research and Statistics Division, whose duty will be to provide technical support, advice and overall support to the Commission. Mr. Jallow will also assist the Managing Director in the development and implementation of the Commission's strategies and objectives.

Cherno Jallow will provide assistance in formulating policies and legislation to balance the application of international regulatory standards with the development of BVI's Financial Services Sector. Mr Jallow will hold responsibility for the coordination and execution of the Commission's consultative mechanisms between public and private sectors, coordination of the Commission's AML/CFT programs and initiatives, and the Commission's response to international initiatives targeting the offshore financial centers and the BVI in particular. He will also provide advice to the government on behalf of the commission in the negotiation of Tax Information Exchange Agreements (TIEA) and other issues concerning financial services.

From 1999 to 2007 Cherno Jallow served as Attorney General of the BVI; in 1995-1999 he served as Parliamentary Counsel in the Attorney General's Chambers. The position of Director of Policy, Research and Statistics Division, to which he is appointed now, has been vacant since May 2006, when Mark McKenzie’s contract expired.

Commenting on his appointment, Mr. Jallow stated that, after working alongside the commission in his former capacity for a number of years, he is delighted to have the opportunity to leap the fence and make a full-time contribution to its work.

Robert Mathavious, CEO and managing director of BVI FSC, welcomed the appointment of Cherno Jallow, stating that “Over many years, Mr Jallow has been a tower of strength in dealing with the international challenges confronting the BVI’s financial services sector... Having Mr Jallow on our Senior Management team will be a real fillip to ensuring that the Commission is fully and professionally staffed to fulfill its statutory and regulatory mandates."

The responsibility of the BVI Financial Services Commission as an autonomous regulatory agency is regulating and supervising BVI financial services sector. In particular, the Commission's Division of Policy, Research and Statistics monitors international regulatory and legislative developments, makes financial industry statistics and researches industry related topics.

A Small Business Bureau to be established in BVI

BVI Chief Minister's Office has said that the British Virgin Islands government is planning to launch a Small Business Bureau and loan guarantee fund on July 30, which will be administered by the Department of Trade and Consumer Affairs. The initiative was highlighted by Chief Minister Orlando Smith on June 5, during his fourth annual State of the Territory Address. Mr. Smith said that this fund would provide local entrepreneurs with access to affordable loans. "Already, numerous enterprising local business people have filed applications for loans, and we expect to issue the first loans within the next eight weeks," he commented.

The head of the Department of Trade and Consumer Affairs Yvonne Crabbe confirmed that they are taking steps toward having the Small Business Bureau ready for its launch near the end of next month. Among them, there are efforts to constitute an SSB Board and a Small Business Loan Guarantee Committee. She said, “We are holding discussions and negotiations with the participating lending institutions regarding the Small Business Loan Guarantee, in an effort to make the terms and credit requirements more conducive to small businesses." The Attorney General's Chambers is preparing the necessary legal agreements that would have to be executed by the Small Business Bureau.

BVI is among top investors again – 2nd in Chinese FDI in 2007

In the middle of June, the Ministry of Commerce of China published data from the first 5 months of 2007 regarding foreign direct investment in China.

According to the released data, to support 15,072 newly established foreign investment enterprises, $25.26 billion was used in the above-mentioned period (January – May). To compare the figure with 2006, the dollar amount increased by 10%, however, the actual number of new ventures decreased by 4%.

The numbers for May show the same tendency – there was $4.9 billion in foreign capital invested, which is an increase of 8.7%, however, the number of new ventures dropped almost 10%.

During the 5-month period, the top 10 countries that contributed 86% of all the money invested into new Chinese ventures were as follows:

1. Hong Kong,
2. the BVI,
3. Japan,
4. South Korea,
5. Singapore,
6. the US,
7. the Cayman Islands,
8. Samoa,
9. Taiwan,
10. Mauritius.

It is common nowadays that the leading investors – Hong Kong and the British Virgin Islands – are the countries where many Chinese companies register for tax purposes, which could be at least one of the reasons why these jurisdictions were the top sources of FDI to China.