British Virgin Islands Company Structures

Ordinary Resident Company

Formed for the purposes of carrying on local business, an ordinary resident company limited by shares must:

have two or more members
restrict the transfer of its shares
not invite the public to subscribe for its shares
must not have more than 50 members.

Residence depends on the location of management and control. Usually, if more than half of the directors are resident in the BVI, then so is the company. If a resident company carries on business in the BVI it must obtain a Trade License and pay a license fee depending on whether the shareholders are residents or foreigners.

Ordinary Non-Resident Company

An ordinary non-resident company limited by shares is subject to the same rules as a resident company.

Company Limited by Guarantee

A company limited by guarantee must have a minimum of two members. The Memorandum of Association contains a statement of the amount up to which the members guarantee the company's debts. The Articles can provide for the members to have differing 'shares' of the assets and liabilities.
There are advantages of incorporating a company limited by guarantee:

There is no list of members on the annual return
Control over assets can be achieved without the use of shares; in some jurisdictions, profits realised from such companies are classified as capital gains rather than as income. Specialist advice is required by anyone considering the use of a company limited by guarantee.
Companies can be resident or nonresident

Hybrid 'Cap 285' Company

A hybrid company under the Companies Act usually has a group of shareholding members which is distinct from the group of guarantors. The shareholders can have 100% of the voting power, and can execute a trust deed in respect of their shareholdings; under the BVI's trust legislation a trust Protector can be appointed to oversee the trustees' actions. If the company is set up correctly, then control and membership of the company is separated from beneficial interest, which is sometimes desirable. Hybrid companies can be resident or non-resident, as for companies limited by shares.

Public Company

A public company formed under the Companies Act is similar to a private company limited by shares except that it must have 5 or more members, and the restrictions listed above do not apply.

International Business Company

The International Business Company was the most widely used vehicle for offshore operations in the BVI; it normally took the form of a private company limited by shares.

The governing legislation is the International Business Companies Act 1984, updated by the International Business Companies (Amendment) Act 1990 and the International Business Companies (Amendment) Acts of 2003 and 2004, which immobilise bearer shares (see above) and impose record-keeping requirements on professional intermediaries.

Existing IBCs will be able to amend their Memoranda of Association to state that they are authorised to issue only registered shares and that these may not be exchanged for bearer shares. They will be required to file this statement with the BVI Registrar of Companies, along with a declaration that they have no bearer shares in issue.

Under the International Business Companies (Amendment) Act 2003, from December 31, 2004, all international business companies (IBCs) located in BVI are required to establish and maintain a Register of Directors, and must appoint their first director within 30 days of the IBC's incorporation. Other statutory requirements however remain minimal, and flexible:

Only one director and one shareholder are required;
Shareholders, directors and officers need not be resident in the BVI and there is no stipulation as to their nationality;
There is no minimum capital requirement; shares may be either registered or bearer and may be issued in any currency (bearer shares now have to be deposited with an authorised intermediary, who must record the identity of the beneficial owner);
Accounts need not be kept; however, if they are kept there is no requirement for an audit;
No returns are needed of shareholders, directors or officers;
Shareholders' and directors' meetings need not be held in the BVI and can be held by telephone;
The Memorandum and Articles of Association are the only documents to be held on the public record.

IBC status is granted subject to certain conditions:

No business may be transacted with residents in the BVI;
No ownership interest in real property in the BVI is permitted; property may be leased for office use only;
Banking or trust business may be carried on only if an appropriate license is issued;
Likewise, a licence is required to carry on insurance or re-insurance business;
Engaging in the business of company management or providing registered facilities for BVI incorporated companies is not permitted.

IBCs are permitted to own shares in other BVI companies, maintain bank accounts in the jurisdiction and employ the services of local professionals. IBCs are exempt from BVI taxes by statute.

It is usual to use a registered agent in the BVI to incorporate an IBC (eventually it is obligatory to appoint one anyway; there are about 70 of them, licensed by the Government). Fees for incorporation of an IBC are based on the company's authorised share capital. Normally, the incorporation process takes no more than one day; however, for banks, trust companies and insurers the process is lengthier.

British Virgin Islands Limited Partnership

Limited Partnerships are governed by the Limited Partnerships Act 1996; as regards general partnerships this act reproduces almost exactly the common law provisions of the English Partnership Act 1980, but the clauses dealing with limited partnerships follow modern US Delaware precedent.

It is obligatory to nominate a registered agent. Formation of a limited partnership is normally carried out by the registered agent. The agent files the Memorandum and Articles of Association with the Registrar of Limited Partnerships, who issues a Certificate of Limited Partnership. The partnership then exists; but if there is no certificate, the partnership will be deemed to be a general partnership.

The rights and limitations of limited partnerships under the Act mirror those of the International Business Company; however the Act distinguishes between local and international partnerships - local partnerships may transact local business but are not tax-exempt, while international partnerships are tax-exempt but barred from local business.

The BVI limited partnership legislation was designed to facilitate the use of such vehicles in investment and mutual funds. As is usual in limited partnerships, there are one or more general partners with unlimited liability and management responsibility, while limited partners are liable only to the extent of their capital contributions, and their identity does not need to be disclosed. It is possible for the same person to be both a general and a limited partner in the same partnership. A limited partner's interest in the partnership is assignable. There are no minimum capital requirements or prescribed debt:equity ratios.

Trusts

The Virgin Islands Special Trusts Act 2003 introduced the Vista trust.

In principle, trusts and all subsidiaries and underlying entities must be legally under the control and independent management of the Trustee. These obligations are often in conflict with the wishes of the typical owners of family businesses, who only need share holdings kept in trust. The Vista Trust includes provisions for the retention of shares by the Trustee irrespective of the financial advantages of disposal, even prohibiting the Trustee from intervening in the management of the underlying companies except in certain circumstances. There are certain provisions in the VISTA TRUST for the appointment and removal of directors of underlying companies to the Trust in accordance with the terms of the Trust instrument.