The British Virgin Islands' (BVI) corporate statute is ideally suited for international listings. BVI companies have been used widely for listings on international stock exchanges in New York, London, Singapore and Oslo. They have been especially popular for listings on the world's most successful growth market, the LSE's Alternative Investment Market (AIM).

As the world economy continues to strengthen, there has been notable growth in equity fundraising, with the first half of 2014 seeing more capital raised on AIM than in 2012 and 2013 combined. This bodes well for those looking to go to market with an IPO or to raise additional capital by means of a rights issue or placement.

BVI companies continue to be popular vehicles for IPOs, particularly in the mining and natural resources sectors, although the past year has seen an increase in IPOs from other sectors including retail, media and professional services.

The reasons for their popularity in relation to the equity capital markets include their versatility, low start-up and maintenance costs and the BVI's zero tax regime. BVI companies enjoy a flexible and business-friendly approach to corporate governance, funding, and share capital requirements without sacrificing shareholder rights and remedies which are of increasing importance to institutional and individual investors.

On the following pages you will find a summary of some of the key features of the BVI Business Companies Act, 2004 (as amended).

Key features of company law legislation in the BVI

Types of vehicles

1. Company limited by Shares

2. Company limited by guarantee that is not authorized to issue shares

3. Company limited by guarantee that is authorized to issue shares

4. Unlimited Company not authorised to issue shares

5. Unlimited Company authorised to issue shares

6. Segregated Portfolio Company

7. Restricted Purpose Company

Capacity and powers

A company is a legal entity in its own right separate from its members.

Company has full capacity to carry on or undertake any business, activity or transaction

Share capital

Shares may be issued with or without a par value and may be issued in any currency

Capital maintenance requirements

None (but share buybacks are subject to a solvency test)

Amendment to the Memorandum and Articles

Either by a resolution of directors (if permitted by the Memorandum of Association) or by a resolution of Members

Types of shares

1. Convertible, common or ordinary;

2. Redeemable at the option of the shareholder or the company or either of them;

3. Shares which confer preferential rights to distributions;

4. Shares which confer special, limited or conditional rights, including voting rights

5. Shares which confer no voting Rights

6. Shares which participate only in certain assets of the Company (for example, tracker shares)

Financial assistance

No restrictions

Other features

Multi-currency, fractional shares available. Shares may be in registered form, and the issue of share certificates is not compulsory

Treasury shares

Yes

Transfer of shares

Yes

Offering document

Required for companies regulated under the Securities and Investment Business Act, 2010 if conducting "investment business"

Distributions and solvency test

Distribution of assets to members possible, subject to a solvency test (ability of company to pay its debts as they fall due and that the value of the company's assets exceed the liabilities)

Minimum number of members

One

Annual General Meetings

Not compulsory

Minimum number of directors

One

Corporate directors

Yes

Local directors

No

Location of directors

Anywhere

Directors meetings

Physical and participation by electronic means permitted

Members and directors written resolutions

Yes

Company administration

Registered Agent required; Registered Office to be located in the BVI although transfer agents/share registrars may be located elsewhere

Company records

1. Memorandum and Articles of Association of the Company

2. Register of members

3. Register of directors

4. Copies of all notices and other documents filed by the company in the previous ten years

5. Minutes of meetings and resolutions of members and of classes of members and committees of members

6. Minutes of meetings and resolutions of directors and committees of directors

7. Register of Charges

8. Company Seal

Financial records

Records that:

(a) are sufficient to show and explain the company's transactions; and

(b) will, at any time, enable the financial position of the company to be determined with reasonable accuracy.

Audit

Not compulsory

Taxation

No income, capital gains, corporation or stamp taxes

Annual Returns

No

Business combination/public to private

Yes, statutory merger and consolidation available as well as Plan of Arrangement and Scheme of Arrangement.

Time for incorporation

One day

Minimum annual Government fees

US$350 rising to US$1,100

OECD status

White-listed

Reputation

The BVI is the largest offshore corporate domicile in the world

Ease of doing business

Very creditor friendly and stable common law jurisdiction; company can be incorporated in one day; tried and tested corporate legislation

Regulatory approval for listings

No prior regulatory approval required in the BVI

Dematerialised shares

Shares in BVI companies are capable of being held in dematerialised form (no BVI stamp duty applicable)

Multi-currency shares

Yes

Public and private companies

No distinction

Ability to trade shares via CREST

No, but can trade Depositary Interests/ADRs and ADSs as well as GDRs instead

Takeover Code

None. No Stock Exchange in the BVI. Although aspects of City Code (UK) and Combined Code on Corporate Governance and United States Securities Act may be incorporated into the Memorandum and Articles of BVI companies.

Direct taxation

No income, capital gains, corporation or stamp taxes

VAT implications

Nil

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.