The following is a brief summary of the significant features of a British Virgin Islands International Business Company ("IBC") together with an outline of the incorporation procedure under the International Business Companies Ordinance. The summary includes a schedule containing details of current Government fees.
SIGNIFICANT FEATURES OF IBCS
- Subject to any provisions in the Memorandum or Articles of Association (which together form the constitutional documents of the IBC) and to the prohibitions contained in the International Business Companies Ordinance 1984 (which are set out in paragraph titled "Objects or Purpose" below), an IBC has statutory power to engage in any lawful activity, irrespective of corporate benefit.
- An IBC is exempt from the provisions of the British Virgin Islands Income Tax Ordinance.
- An IBC is exempt from British Virgin Islands tax or stamp duty on documents in respect of transactions carried out by it or relating to its shares or debt obligations.
- Confidentiality and Disclosure - No public record is maintained as to the identity of shareholders or directors. A copy of the shareholders' register must be kept at the registered office of the company. It is open to shareholders to request inspection of the register, and if refused by the company, application may be made to the court for an order to allow inspection. Nominee shareholders may be used.
- Public records of IBCs consist only of the Certificate of Incorporation, the Memorandum and Articles of Association (for details of which see Section titled "Formation" below), the name and address of the registered agent and the record of payments of the annual fees.
- An IBC may have a single shareholder and it may also have a single director, both of which may be corporate and non-resident. Resolutions of either may be consented to in writing in the manner provided for in the Articles of Association.
- Companies incorporated under the British Virgin Islands Companies Ordinance or under the laws of a jurisdiction outside the British Virgin Islands may be "converted" to "continue" as IBCs. In the case of a foreign company, it may continue as an IBC notwithstanding any provision to the contrary in the laws of the jurisdiction under which it is incorporated.
- A foreign company may provisionally continue as an IBC conditional upon instructions for continuation being given to the Registrar by a nominated third party.
- An IBC may change its domicile to another jurisdiction.
- An IBC may fully indemnify directors, officers and liquidators from corporate funds.
- Reduction in authorized and paid-up capital requires the minimum of formalities compatible with the protection of creditors and minorities.
- An IBC may merge, consolidate or enter into arrangements with other IBC's, companies incorporated under the British Virgin Islands Companies Ordinance and with foreign companies.
- An IBC may issue bearer shares.
- An IBC may purchase and own its shares.
- Shares may be issued with or without par value.
- The International Business Companies Ordinance makes no distinction between private and public IBC's.
- Subject to the provisions in the Memorandum and Articles of Association, the members may, by a simple majority, amend the Memorandum and Articles of Association, increase the authorized capital, change the name, go into voluntary liquidation, etc. The power to amend the Memorandum and Articles of Association may be given to the directors.
- The directors may protect the assets of an IBC for the benefit of the company, its creditors and its members and for any persons having direct or indirect interests in the company by transferring the assets of the IBC in trust to trustees, or to another company or legal entity.
- Where a governmental authority in any jurisdiction outside the British Virgin Islands, expropriates or imposes confiscatory taxes upon the shares or other interests in an IBC, the IBC or any person holding shares or other interests may apply to the High Court for an order that the IBC disregard such action and continue to treat as shareholders or interest holders those persons whose shares or interests were subject to the action by the foreign governmental authority.
- There are provisions within the IBC Ordinance covering the rights of minority shareholders.
- An IBC may rescind voluntary winding up proceedings after the commencement thereof.
- An IBC may apply to a Judge in chambers, without the necessity of joining any other party, for a declaration on any question of interpretation of the Ordinance or of its Memorandum or Articles of Association.
- An IBC does not have to file annual returns.
A British Virgin Islands International Business Company is formed by filing a Memorandum of Association ("Memorandum") and Articles of Association ("Articles") with the Registrar of Companies. The Articles, which are similar to By-Laws in the United States, must be filed simultaneously with the Memorandum, which is similar to a U.S. Certificate of Incorporation.
Memorandum of Association
The Memorandum must contain the following mandatory information:
i) The proposed name of the corporation. This can be in any language. The proposed name must include one of the following words, phrases or abbreviations:
- "Limited" or "Ltd";
- "Corporation" or "Corp";
- "Incorporated" or "Inc";
- "Societe Anonyme" or "S.A."; or
- "Sociedad Anónima" or "S.A.";
ii) The name of an IBC must not:
a) contain the following words:
(cc) Building Society
(dd) Chamber of Commerce
(oo) Trust Company
(pp) Trust Corporation
(qq) Trustee Company
(tt) Savings and Loans
(vv) Surety; and
unless special written permission is granted by one or more of the following, namely the Registrar of Companies, the Commissioner of Insurance and the Governor in Council;
b) suggest or imply the patronage of Her Majesty or any member of the Royal Family or any connection with Her Majesty's Government or any department thereof or any connection with a municipality or other local authority or with a society or body incorporated by Royal Charter;
c) be indecent, offensive or, in the opinion of the Registrar, objectionable.
iii)A name intended for future adoption may be reserved for 90 days.
Registered Office Address
This must be a British Virgin Islands address. HWR Services Limited (an affiliate of Harney Westwood & Riegels) can provide this service.
Registered Agent's Name and Address
HWR Services Limited can provide this service.
Objects or Purpose
i) An all purpose clause is permitted.
ii) To qualify for registration as an IBC, the Company may not:
- carry on business in the BVI (but it may maintain BVI bank accounts and receive interest and may own shares in other BVI companies);
- own an interest in real estate in the BVI (other than a lease of an office);
- carry on banking or trust business unless it is licensed to do so under the Banks and Trust Companies Act, 1990;
- carry on business as an insurance or a reinsurance company, insurance agent or insurance broker, unless it is licensed under an enactment authorizing it to carry on that business;
- carry on the business of company management, unless it is licensed under the Company Management Act, 1990; or
- carry on the business of providing the registered office or the registered agent.
Currency of Issued Shares
Shares may be issued in one or more foreign currencies.
The aggregate amount of the par value of all shares that the company is authorized to issue and the amount, if any, to be represented by shares without par value must be set forth.
Classes and Series of Shares
A statement must be included as to the number of classes and series of shares, the number of shares in each and their par value, or that the shares are without par value, if applicable.
Designation of Powers
The powers, preferences, rights, qualifications, limitations or restrictions of each class and series of authorized shares must be designated. Alternatively, an express grant of authority to the directors to fix the same by resolution may be included.
Registered and Bearer Shares
A statement indicating whether the shares are to be designated as either registered or bearer shares and the number of each to be issued given, or an express grant of authority to the directors to fix the same by resolution must be included. A statement must be included indicating any particular restrictions on the transferability of registered shares, usually this is subject to the prior or subsequent approval of the members or by directors.
Exchange of Shares
Registered Shares and Bearer Shares may be exchanged for each other.
Notice to Holders of Bearer Shares
A statement as to the manner in which notice to members is to be given to the holders of bearer shares must be included, if applicable.
No Prohibited Activities
A statement must be included that the company will not carry on the restricted activities set forth above. Such statement must set forth verbatim those activities as described by Section 5(1) of the Ordinance, unless the company is licensed to carry out one or more of the restricted activities.
The Memorandum must be subscribed by the registered agent in the presence of another person, who must sign his or her name as a witness.
Articles of Association
The Articles must prescribe regulations for the company, must be subscribed by the registered agent in the presence of another person who must sign his name as witness, and must be submitted for registration (filing) together with the Memorandum.
A minimum of one is required. Directors may be corporations or individuals. HWR Services Limited can provide directors in suitable cases. Directors' meetings can be held anywhere in the world and can be conducted by telephone. Annual meetings are not required.
The Memorandum and Articles can be filed within 24-48 hours. Once filed, a Certificate of Incorporation is issued by the Registrar of Companies.
Good Standing Certificate
These are available and can be obtained for an additional fee.
Previously incorporated "shelf" corporations are available.
STANDARD GOVERNMENT FEES (AS AT FEBRUARY 1999)
Government Registration Fee on Incorporation (including maintenance for calendar year of incorporation):
a) All shares are par value and authorized capital is $50,000 or less $300.00 b) Authorized capital exceeds $50,000 $1,000.00 c) Some or all shares have no par value and authorized capital is $50,000 or less $350.00 d) All shares have no par value and there is no authorized capital $350.00
Maintenance for Subsequent Calendar Years
As 1 above.
If you would like further information on International Business Companies or the other corporate vehicles available in the British Virgin Islands or details of how Harney Westwood & Riegels can help you with your incorporation enquiries, please contact Richard Parsons and/or Adel Clyne.
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