BVI allows for speed and efficiency in the incorporation process, with approval via an online interface generally within 24 hours. Compared to other offshore and mid-shore jurisdictions, BVI is also extremely cost effective: a vanilla BVI company can normally be incorporated for around US$1,400 inclusive of disbursements. Neither directors nor shareholders are required to be published publicly and there are no restrictions relating to corporate benefit. Furthermore, BVI does not impose “thin capitalisation” rules or impose any general maintenance of capital requirements.
Another benefit is that there is no income tax, corporation tax, capital gains tax or wealth tax. Using a BVI company as an intermediary holding company can create tax neutral layers in a wide variety of structures.
The BVI Business Companies Act of 2004 offers a wide choice of corporate vehicles.
Company limited by shares
A company limited by shares is one that can issue shares, its members are the holders of such shares, and the liability of the members for the debts of the company is limited. The company has separate legal personality from its members, meaning they are not liable for the company’s debts and may not be sued by any creditor.
The memorandum of association must specifically state the maximum number of shares that the company is authorised to issue (including unlimited shares), the classes of shares and the rights, privileges, restrictions and conditions attaching to each such class. There must also be at least one shareholder at all times.
Company limited by guarantee not authorised to issue shares
While traditionally used in other jurisdictions for charitable and trust purposes, BVI also offers business enterprises the opportunity to incorporate as a company limited by guarantee. Rather than having shares,members are referred to as guarantee members. Guarantee members are only required to contribute to the company’s assets if the company goes into voluntary liquidation. The company’s memorandum can also provide for any additional liability to the company, which can be a useful mechanism for providing for annual payments or subscriptions by members.
Similar to a company limited by shares, members of a company limited by guarantee are not liable for the company’s debts. Rather than having a vote for each share held, however, each guarantee member is typically entitled to one vote.
Company limited by guarantee and authorised to issue shares
This hybrid corporate vehicle is a guarantee company but with the flexibility of being able to issue shares. It must have at least one guarantee member, but may also have shareholders. A shareholder’s votes correspond to the number of shares held, while each guarantee member receives one vote.
The memorandum must state the amount which each guarantee member is liable to contribute to the company’s assets upon a liquidation; the maximum number of shares the company is authorised to issue; and the classes of shares and the rights and privileges attaching to each class.
Unlimited company not authorised to issue shares
This new type of company does not issue shares, so there are no shareholders. Members have unlimited liability for the company’s liabilities and are therefore referred to as unlimited members. The liability of unlimited members is a liability to the company to contribute to its assets in liquidation. The Companies Act does not expressly restrict the liability to when the company goes into liquidation so that the memorandum could provide for the member to contribute to the assets of the company while it is a going concern.
Unlimited company authorised to issue shares
It is also possible to incorporate an unlimited company that can issue shares. Its memorandum must state that it is such a company, and it must also state the maximum number of shares that it is authorised to issue, the classes of shares, and if more than one, the rights and restrictions attaching to each class. It must have at least one member who is an unlimited member, who has unlimited liability for the liabilities of the company.
Restricted purposes companies (SPVs)
Restricted purposes companies are an innovation under BVI law to provide special purpose vehicles especially for securitisation and off-balance sheet financing work. A restricted purposes company may also be a segregated portfolio company. In order to create a restricted purposes company, three requirements are necessary: the company must be a company limited by shares; the incorporation memorandum must state that it is a restricted purposes company; and the memorandum must state the actual purposes of the company.
Additionally, a company must be incorporated as a restricted purposes company from the outset; a company cannot subsequently register as one. Once incorporated, a restricted purposes company may not modify its memorandum to state that it is any other type of company.
Segregated portfolio companies (SPCs)
Insurance companies and mutual funds are allowed to incorporate as segregated portfolio companies (SPCs), and there is a provision to enact Regulations to allow other types of companies to incorporate or register as SPCs. These companies are a highly specialised and regulated, allowing for the compartmentalisation of different classes of assets and liabilities within a single corporate entity.