Wednesday, July 18, 2007

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.

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