Why the British Virgin Islands?

A guide to setting up and doing business

A guide to setting up and doing business in the BVI

Why the BVI?

The British Virgin Islands (BVI) is a British
Overseas

Territory

and

is

the

worlds

pre-eminent corporate domicile.

Since the adoption of its pioneering Business
Companies Act 2004 over 500,000 companies
have been incorporated in the territory.
Approximately 850,000 companies have
been registered since 1984.
The BVI has a sophisticated and innovative legislative framework. This has made it a popular jurisdiction to incorporate
private and holding companies, as well as public companies prior to admission to international stock exchanges. Companies
incorporated in the BVI can list on the London Stock Exchange (LSE), LSEs AIM, the New York Stock Exchange,
NASDAQ, the Hong Kong Stock Exchange, the International Securities Exchange and the Toronto Stock Exchange.

Key facts
The BVI is the worlds leading offshore centre with more offshore companies than any other country.

The jurisdiction appears on the OECDs white list reflecting a high level of tax transparency, regulatory and
compliance standards.
The BVI is recognised as a leading financial centre. The BVI was 34th in the list of leading G2 international financial
centres in the Global Financial Centres Index (GFCI) published by the City of London ranked above Shanghai,
Bahrain, Qatar, Milan, Madrid and Mumbai.
A Financial Times survey confirmed the BVI as the second largest source of international foreign direct investment
globally, with upwards of US$125 billion invested through the BVI each year.

The BVI has zero-rated corporation tax, with no wealth, capital gains or estate tax for offshore entities.
The administrative burden and costs of incorporating or maintaining a company in the BVI are low. BVI companies
are operationally flexible. Corporate governance can be adapted to suit the structure.
The BVI has a familiar and established legal and court system based on English common law. This offers a stable
and certain framework for investors.
The BVI has no exchange controls. The local currency is the US dollar.

A guide to setting up and doing business in the BVI

Incorporating a company

The BVI provides flexibility in structuring mergers and

acquisitions, which enables a BVI company to merge

International investors are attracted to the BVI by the

with a foreign company. It is also possible to redomicile

strong regulatory framework, low tax and an established

an existing foreign company into the BVI, or to redomicile

legal system, which ensures that the territory is a neutral

an existing BVI company overseas.

and safe place to pool capital. This neutrality of venue

makes it an appropriate place for outside investors to

Directors duties are based upon English common law

establish a holding company or to invest into markets

which provides certainty.

where there may be political risk or legal barriers that

deter direct investment.

Hedge Funds

A recent trend has been the number of Chinese

based companies that have used BVI vehicles to float

The BVI is popular with Hedge Fund managers and is the

on NASDAQ and AIM as a means of raising funds.

second largest Hedge Fund domicile in the world.

The ability for BVI companies to list in Hong Kong

provides an important exit route enabling private equity
investors to realise their holdings in China and other

Insurance

emerging markets.
The BVI is the worlds fourth largest captive domicile for
BVI companies are often used as joint venture vehicles

enhanced insurance products and services. The BVI

in Asia and Russia as a result of the protection given

has introduced a new Insurance Act 2008, Insurance

to shareholders and the ability to ring fence liabilities.

Regulations 2009 and Regulatory Code which came into

There is no double layer of taxation beyond those that

force on 1 February 2010, replacing the Insurance Act

may exist in an investors home country.

1994 and the Insurance Regulations 1995.

This new legislative framework ensures that the BVI
remains an attractive environment for a range of
insurance services and products.

Working with you

We can assist and advise regarding incorporating and
establishing a BVI company, hedge fund or insurance
captive. As a leading corporate and wealth planning firm
with offices in the US, Europe, Asia and the Caribbean,
we are uniquely placed to advise regarding structuring
and incorporation of BVI companies.
This includes the wealth planning and tax consequences
of structuring an investment to planning a route to exit
and realisation of investments as part of an Initial Public
Offering (IPO), sale or private equity partnership.
3

A guide to setting up and doing business in the BVI

The Financial Services Commission

IOSCOs executive committee recommended the BVIs

membership having concluded that the BVI had complied

The Financial Services Commission (FSC) regulates

with all of the standards and requirements outlined in

financial services activities operating in and from within

the IOSCO Multilateral Memorandum of Understanding

the BVI, pursuant to BVI laws to ensure compliance

(MoU) concerning consultation, cooperation and the

with relevant international standards and conduct of

exchange of information. The BVI was the first country to

business practices.

be admitted to ordinary membership of IOSCO based on

changes it has made to its legislation under the MoU.

The FSCs mandate includes banking and fiduciary

business, investment business, insolvency services,

IOSCO is recognised as the international standard

insurance business, company management, company

setter for securities markets, and membership is widely

registration

FSC

sought after by securities regulators. Becoming a

seeks to promote accountability, transparency and

member of IOSCO is a very important accomplishment

good governance.

for the BVI as it confirms that it is one of the premier

and

intellectual

property.

The

and most effectively regulated offshore jurisdictions in

The

jurisdiction

has

benefited

from

collaboration

the world.

between the FSC and private sector stakeholders in

developing the financial services environment, which has
ensured that the BVI remains competitive and attractive

Commercial Court

for legitimate business.

The BVI has a respected and established Court system
based upon English common law. The territory is part of

BVI IOSCO membership

the Eastern Caribbean Supreme Court (ECSC) region.

In recognition of the BVIs international cooperation

A new specialist Commercial Court was created in the

framework and its long-standing commitment to comply

BVI in 2009 to reflect the importance of the territory as a

with international standards, the FSC was welcomed as

leading financial centre. The Court is a specialist division

an ordinary member of the International Organisation of

of the High Court of the ECSC and hears commercial

Securities Commissions (IOSCO) in April 2007.

and finance matters from the BVI.

4

A guide to setting up and doing business in the BVI

The

facilities

introduce a new investment business licensing regime

including video link and transcription technology and

Court

is

equipped

with

advanced

which regulate investment advisors, broker-dealers,

has established a reputation as a centre of excellence

market-makers and custodians. They also deal with

and fairness. Leading legal professionals and QCs

registration of public mutual funds, the recognition of

from around the world appear before the Court

private and professional funds and the control of offers of

dealing with complex cross-border commercial and

securities to the public in the Virgin Islands and creates

insolvency matters.

offences relating to insider trading and market abuse.

Appeals are to the Eastern Caribbean Court of

Persons carrying on Investment Business as defined

Appeal, with a further right of appeal to the Privy Council

by SIBA in or from within the BVI are required to be

in England.

licensed by the FSC. SIBA may affect non-BVI persons

or companies providing investment services to BVI
business companies unless they fall within exemptions

Anti-money laundering regime

The

BVI

introduced

enhanced

money

set out in SIBA.

laundering

The BVI also introduced the Financing and Money

regulations in 2008 supplementing the regime that

Services Act 2009 (FSMA) on 31 March 2010. FSMA

exists under the Proceeds of Criminal Conduct Act

ensures that the BVI meets or exceeds best practice for

1997 (PCCA).

financial regulation and complies with Recommendation

23 of the FATF. FSMA introduces a regime for the

The Anti-Money Laundering Regulations 2008 (as

licensing, regulation and supervision of financing and

amended), the Anti-Money Laundering and Terrorist

money services carried from or within the BVI, and

Financing Code of Practice 2008 (the Code) and the

criminal offences for non-compliance.

PCCA, provide a comprehensive regime to counter

money laundering and terrorist finance. This makes it
an offence to possess proceeds of crime, or to assist,

Trust law

conceal or tip off persons who hold proceeds of crime.

The BVIs trust laws are derived from English trust law.
The Code requires regulated firms to have rigorous

Principles of English common law and equity apply as

KYC and customer due diligence systems and controls,

supplemented by the trust laws of the BVI, the main

compliance

report

statutes being the Trustee (Amendment) Acts 1993 and

suspicious transactions. The regime is now broadly

2003, the Virgin Islands Special Trusts Act 2003, the

consistent with the 40+9 Recommendations of the

Banks and Trust Companies Act 1990, and the Financial

Financial Action Task Force (FATF).

Services (Exemptions) Regulations 2007.

manuals

and

infrastructure

to

Securities, investment business and

financial services
Consistent with the FSCs obligations as a member of
IOSCO, the BVI enacted the Securities and Investment
Business Act 2010 (SIBA) and the Mutual Funds
Regulations 2010. The legislation and regulations
5

A guide to setting up and doing business in the BVI

Considerable use has been made of the 2007 regulations

in the regulations and the registered agent determines

to establish private trust companies (PTCs) for holding

that the company qualifies as a PTC. The only documents

and consolidating family wealth whilst retaining significant

that need to be completed are the PTCs Memorandum

control over the trustees decisions by being directors

and Articles of Association along with a certificate from

of the PTC. PTCs are exempt from the requirement to

the first registered agent.

obtain a trust license providing that they carry on either

un-remunerated trust business or related trust business,

The 2007 regulations allow for the remuneration of

that they do not undertake any other type of business,

directors and officers of the PTC in so far as they are

and that their services are not made available to the

made for professional director services provided to the

general public.

PTC, and for certain costs and expenses incurred by the

PTC. The PTC must have at least one director but there

PTCs must also ensure that their Registered Agents

is no requirement for any of the directors to be resident

hold the appropriate Class I trust license issued under

in the BVI.

the Banks and Trust Companies Act 1990. The PTC will
be regarded as carrying on an unauthorised financial

It has now become commonplace for the ownership and

services business if the exemption is lost. New and

control of the PTC to be structured through a Vista trust

existing PTCs will have to adopt PTC within their name

under the Virgin Islands Special Trust Act, 2003.

to indicate their purpose.

Please contact us if you require further information about
There is no formal application process for exempt status.
Exemption is automatic if the company meets the criteria

any of the issues in this guide.

October 2010

Note: This document is produced as a general guide and does not provide a comprehensive view of the law. The content may have changed or be out of date,
and therefore should not be relied upon. You are recommended to seek specific advice regarding your personal circumstances. 2010

BVI key contact

Jon Wall partner
British Virgin Islands office
(Litigation, Arbitration and Insolvency)
t: +1 284 494 4949
e: jon.wall@withersworldwide.com

PO Box 145, Little Denmark 3rd Floor

Road Town, Tortola
British Virgin Islands
t: +1 284 494 4949

WithersLLP www.withersworldwide.com

f: +1 284 494 4947

London New York BVI Geneva Greenwich CT Hong Kong Milan New Haven Zurich

6
December 2011