Why and how to set up an Offshore Company in BVI
BVI: One of wealthiest places on earth
When Columbus first spotted the Virgin Islands in 1493, little did he know it would become one of the wealthiest places on earth – thanks to a robust offshore environment.
When he spotted the small islands on his second trip to the Americas in 1493, he named them: Santa Ursula y las Once Mil Vírgenes later shortened to Las Vírgenes (The Virgins) and finally named the British Virgin Islands.
There is evidence that there has been some human inhabitants of the British Virgin Islands dating back to 1500 BC. However, when Columbus passed through, the Island was inhabited by the Arawak. After being conquered by the Carib, the Dutch, and finally the English, the islands gained separate colony status in 1960 and became an independent autonomous nation in 1967.
The small coastal outcropping in the Atlantic has a population of only about 28 thousand, but there is an enormous amount of wealth stored bank accounts, and held by corporations and trusts in this offshore, tax free jurisdiction.
Company formation is big business in BVI, in fact 51.8% of the Government’s annual revenue is derived from license fees for offshore companies. There are currently over 500,000 IBC’s registered in BVI. Many of the directors of these companies are from Asia and Latin America.
The British Virgin Islands offer distinct advantages over other jurisdictions. The most popular entity is known as a BVI (British Virgin Islands) IBC (international business company).
Reputable Regulatory Environment
The British Virgin Islands are leaders in the offshore regulatory environment. They have a distinct combination of oversight and a laissez faire approach which makes it both easy to do business – yet reputable with banks and other jurisdictions around the world. In other words – its not cowboy country, but you are free to do as you please within reason, assuming your activities are legitimate and legal.
- All of this makes it very simple and easy to bank with a BVI company.
- Reputable compliance and regulatory body.
- Clear laws and established company formation jurisdiction.
Strong Asset Protection
Most IBC’s are used as asset protection vehicles, very often in combination with a trust as a holding company. The directors of the BVI IBC may protect the assets by transferring its assets to another company, trust, foundation, association or partnership; the directors can also merge or consolidate with any other company or can re-domicile the IBC to another jurisdiction entirely.
- The ability to transfer domicile
- Private and Secure
- Offshore Asset Protection Trusts Common
- Hybrid Legal Entities Common
- Great for estate planning, holding companies
- Very good for active business
Low Compliance Threshold
The International Business Companies (Amendment) Act 2003 states that all all international business companies formed in BVI must establish and maintain a Register of Directors, whereby the initial director is appointed within 30 days of incorporation. Further statutory requirements are minimal, and flexible.
- No corporate secretary
- No minimum capitalization required
- No local director required
- IBC’s can re-quire and re-issue their own shares.
- Shares can be issued for a consideration other than cash, with or without par value, and be denominated in any currency.
Simple Corporate Maintenance
- Annual Meetings in BVI not required
- No Yearly Audits
- Only one shareholder is required.
- You are permitted to run a BVI as a single directorates.
- Corporate Books, minutes and records can be stored anywhere.
- You do not need to have meetings in British Virgin Islands, in fact there is no statutory requirement to hold annual general meetings.
Incorporation can take place within one or two days. Shelf companies can be transferred even quicker as needed.
Nominee directors and shareholders are commonplace, and can be used to further increase privacy at a slightly higher price, in order to ensure the utmost privacy and protection.
BVI is one of the few places in the world where bearer shares are still commonly used. Although they have undergone significant changes within the past decade (specifically the BVI Companies Act, 2004, as amended) bearer shares still exist. The main requirement for bearer shares is that an “Authorized Custodian” maintain the following on file:
- the full name of the beneficial owner of the shares; and
- the full name(s) of any other person(s) having an interest in the share(s) or a statement to the effect that no other person has any interest in the share(s).
BVI International Business Companies are exempt local taxes and stamp duty, even if they are administered in BVI. Only registration and annual license/franchise fees will apply.
The British Virgin Islands have modern infrastructure and good telecom systems. They also speak english and use a legal system derived from English common law. The BVI Government is quite responsive to the needs of offshore companies, and has fostered a pro-business environment. The legislation is flexible, with the goal being to entice legitimate offshore activities, and to keep out money-laundering and other criminal activity.
BVI Company Formation
One of the following company types should be formed in order to facilitate offshore operations:
- BVI NonResident Private Company Limited by Shares
- BVI NonResident Private Company Limited by Guarantee
- NonResident Hybrid Company
- International Business Company (IBC)
- International Limited Partnership (ILP)
- BVI Trust (often reffered to as a vista trust).
The most widely used vehicle for offshore operations is the IBC. Normally a private company, limited by shares. IBC status is permitted once certain stipulations are met:
- No local business activities are permitted
- Local ownership interest in real property in BVI is prohibited
- The company may lease property for office use only
- There is no banking, trust, or insurance business without special permit/license
- Company management or provision of registered office for BVI incorporated companies is not permitted.
The IBC Ordinance allows a company incorporated outside of the BVI to be re-domiciled
in the BVI under the ‘continuation’ features of this Ordinance;
4 Step Process of Incorporating in BVI
Step 1) Application form is submitted with the Company preferred name.
Corporation documents may be in any language. The company name shall include the word(s):
Limited, Corporation, Incorporated, an equivalent, or an abbreviation thereof.
Additionally, details of the beneficial directors and shareholders must be included such as nationality, country of residence, address, and profession.Other details, such as a professional recommendation or reference is also required.
Step 2) Due Diligence Documents Submitted
The following must be prepared for each and every beneficial directors and
- Scanned and notarized copy of the passport.
- A photocopy of another official document (such as Driving License, ID Card etc)
notarized. This is to ensure the passport conforms to a true likeness that the passport is legitimate.
- An original proof of residence showing the name and address of the individual is
required. Most commonly this is provided in the form of a utility bill or bank statement which includes a name and address. This document must be current within 3 months.
- An original letter of introduction is required. This letter can be from a bank, lawyer,
accountant or similar profession.
- A Beneficial Owners Declaration (BOD) should be completed and signed by all shareholders and directors.
Step 3: Invoice created. Upon receipt of funds, incorporation process shall commence.
At this point, the Memorandum and Articles of Association and any other associated documents
that have be drafted are required to be sent to the Registrar in order to qualify as a BVI IBC.
The Memorandum of Association will include the following:
- Name of the company
- Address of the registered office
- Function and objectives of the company
- Share capital of the company
- Explanation of liability
No additional documents are required for incorporation. The documents will not state the identity of the directors or shareholders therefore maintaining privacy.
Step 4: Company formed, company formation documents couriered to a worldwide location of you choice.
After company is duly registered, the corporate documents will be mailed to a destination specified on the order form. You can now open a bank account in a bank of your choosing around the globe, or we can introduce you to one in our network.
More About BVI company
Rumor has it that different industries in BVI are protected by some very connected people, and that’s all I have to say about that. who keep there money there, and this will be one of the last offshore havens available in the world.
BVI Offshore companies and trusts are still highly relevant, although there may not be the new offerings of LLC’s and asset protection trusts afforded by other more modern jurisdictions such as Nevis – the jurisdiction is far from antiquated. In fact, the age of the BVI as a tax haven seems to be a strength more than a weakness in most respects.
Interestingly enough, a BVI company is not commonly paired with a BVI bank account – because they are very difficult to set up from abroad. The irony is that if you show up in person on your yacht – you can stroll into a bank in your flip flops and easily sign up an account. However, the due diligence procedures AML, KYC and a host of other due diligence acronyms will slow, or even prevent you from opening an account. One friend had to wait six months to open the account, and his initial deposit was in excess of 5 million. Once you do set up an account, the minimum deposit is high, but it is supposed to be secure and secretive.
Bearer shares used to make an account anonymous – whereby whoever held the blank shares would control the company. Nowadays, this is essentially an exercise in futility as the registered agent on the file will always retain the name of the directors and shareholders on the company file. BVI is still about as private as you can get, and your name can’t be searched – as there is no corporate database. Just don’t believe anyone who tells you their offshore company is a ‘secret’ account. Essentially, those type of accounts are all but closed.
Why set up a BVI company if it is hard to bank in country? Because it is essentially the most popular, oldest, and most reputable offshore jurisdiction, meaning that the company documents are accepted at banking institutions worldwide. Particularly in Asia, a British Virgin Island company is a very popular legal entity. Strolling into specific banks in Singapore, you would have no problem opening the account. Furthermore, this company can also be opened from abroad.
November 2014 Update – BVI has continued to increase thier tax treaties and reporting requirements. If you are looking for a more protective or private incorporation or legal entity structure, I advise looking elsewhere. If you have nothing to hide, BVI is a great legal entity to form. There are other jurisdictions which are more private and have protective laws, Nevis is one such jurisdiction.
To reiterate, a BVI company is:
- Somewhat private
- Great for Fund Managment
- Good for additional shareholders due to courts
- Strong, somewhat reputable Jurisdiction
- Great Banking options
- Good with Asian Banks and can also be used with other banks i.e. Turks and Caicos Islands, St Vincent, Malta, etc.
Form a BVI company today
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If you want to consider other options to incorporate your company and open a bank account, you can check our free tools: incorporations.io / bankaccounts.io. If you need advice on how to properly structure your corporation, you may check how we can help you to optimize your business and reach more freedom, privacy and wealth.