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Newsletter | Articles
  Major new BVI Company Law comes into force
The BVI Business Companies Act 2004 (BVIBCA) came into force on 1 January 2005. On 1 January 2007 it replaced both the current IBC Act and the local Companies Act.
It addresses the ‘ring-fence’ issue – where a jurisdiction is considered to be a ‘tax haven’ because it offers differential tax rates to residents and non-residents. Differential rates have been eliminated by the introduction of a zero rate tax for residents and non-residents alike.
Under the new legislation, it is possible to incorporate companies limited by guarantee, hybrid companies and unlimited companies with or without a share capital. There is also provision for a restricted purposes company, which has application as an SPV. Insurance companies and mutual funds may incorporate as Segregated Portfolio Companies (elsewhere known as Protected Cell Companies).
Other features are:
- Foreign character names are now recognised
- Companies can be incorporated using their company number as a name – e.g. “BVI Company Number 2723451 Limited” -- which is really a device to assist those holding stocks of shelf companies.
- New provisions are contained concerning the registration of charges at the Registry of Corporate Affairs, a procedure that was widely regarded as unsatisfactory under the IBC Law.
- The concept of authorised capital is abolished, though a company has to specify the maximum number of shares that it may issue. This does not affect existing companies.
- Provisions regarding disclosure of directors’ interests and conflicts were completely re-drafted
This coincides with a reform of the BVI tax system whose main points are:
- All businesses in the Territory no longer pay any income tax on their profits
- Individuals no longer have to pay PAYE based income tax
- IBC licence fees were increased to $350 per annum for share capitals up to and including $50,000 and to $1,100 for share capitals over $50,000. New companies formed from 1 January 2005 with the ability to issue bearer shares pay an annual fee of $1,100.
- A payroll tax was introduced at a rate of 14%, with 6% paid by the employer and 8% by the employee. The first $7,500 remains tax free.
Action needed:
- Existing Bearer Shares must be lodged with an authorised custodian by 31 December 2010. New bearer shares (companies registered or continued after 31 December 2004) must be lodged immediately.
- A Register of Directors must be maintained for all new incorporations. Existing companies were ordered to have a Register in place by 1 January 2006.
- Re-registration of IBC’s as Business Companies was automatically processed by the Registrar as from 1st January 2007.
No amendments to the M&AA by the shareholders or filings by the directors or registered agents was necessary.
A full copy of the legislation (148pp 1.46Mb) is available for download.
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