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.