19 September 2019 - Podcast
_Published in Global Business Magazine _
The British Virgin Islands (BVI) is a British Overseas Territory and is the world’s 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), LSE’s AIM, the New York Stock Exchange, NASDAQ, the Hong Kong Stock Exchange, the International Securities Exchange and the Toronto Stock Exchange.
- The BVI is the world’s leading offshore centre with more offshore companies than any other country.
- The jurisdiction appears on the OECD’s “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 ternational 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.
Incorporating a company
International investors are attracted to the BVI by the strong regulatory framework, low tax and an established legal system, which ensures that the territory is a neutral and safe place to pool capital. This neutrality of venue makes it an appropriate place for outside investors to establish a holding company or to invest into markets where there may be political risk or legal barriers that deter direct investment.
BVI companies are often used by individuals to hold real estate or assets because the ongoing costs and administrative burden of running a BVI company are comparatively low.
A recent trend has been the number of Chinese based companies that have used BVI vehicles to float on NASDAQ and AIM as a means of raising funds. 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 emerging markets.
BVI companies are often used as joint venture vehicles in Asia and Russia as a result of the protection given to shareholders and the ability to ring fence liabilities. There is no double layer of taxation beyond those that may exist in an investor’s home country. The BVI provides flexibility in structuring mergers and acquisitions, which enables a BVI company to merge with a foreign company. It
is also possible to redomicile an existing foreign company into the BVI, or to redomicile an existing BVI company overseas.
The BVI is popular with Hedge Fund managers and is the third largest Hedge Fund domicile in the world.
The BVI is the world’s fourth largest captive domicile for enhanced insurance products and services. The BVI has introduced a new Insurance Act 2008, Insurance Regulations 2009 and Regulatory Code which came into force on 1 February 2010, replacing the Insurance Act 1994 and the Insurance Regulations 1995.
This new legislative framework ensures that the BVI remains an attractive environment for a range of business.