A former British colony until they were granted autonomy in 1967, the British Virgin Islands (“BVI”) has become renowned as a global business center for multinational corporations and individuals. BVI company law is extremely business friendly and incorporated BVI companies are able to take advantage of the multitude of financial services available in the country. Company formation in the BVI has thus become a popular destination for international businesses and individuals around the world.
BVI company registry requirements are among the most relaxed in the world. To incorporate a company, you need a minimum of one shareholder. This shareholder can either be a person or another company or trust. In addition, at least one director i s required for company formation although there are no residency requirements regarding a BVI company’s director, and the position of company secretary is optional. Lastly, the BVI does not impose a minimum requirement for authorized capital shares
No. You can incorporate your BVI company from abroad with the help of a professional service provider!
If you are incorporating a company as an individual, a residential address is required. For companies who wish to incorporate a subsidiary in the BVI, a registered office address or business address is required.
The ES Laws were introduced by the Organisation for Economic Co-operation and Development (“OECD”) with the intention to address profits being earned by offshore companies in jurisdictions such as those mentioned above. The laws state that profits being earned by offshore companies need to be aligned to where the business or profit-generating activities are being carried out, thus potentially affecting the tax outcome.
Effective from 1 January 2019, the law stipulates that companies who carry out “relevant activities” in the countries where the ES Laws are applicable, will be required to maintain an increased level of substance in their incorporated jurisdiction. Such activities are broadly defined to include a wide range of business activities, including fund management, distribution and service center businesses, holding company businesses, finance and many more. In the past, most companies did not maintain much substance in their jurisdiction. Companies who wish to incorporate must now take this new law under consideration.
To determine if your company registered in one of the above jurisdictions is conducting “relevant activities” applicable under ES Laws, one must determine whether they meet the various criteria set for each industry.
As the laws and criteria for each “relevant activity” varies among each industry, it is recommended to obtain assistance from a recognised company formation specialist such as FastLane to help determine how the ES laws affect your business and long-term plans.
All registered BVI companies would have some of their information available to the public via the BVI Registrar of Businesses, and a court could access other information through the customers’ BVI registered agent. The disclosed information generally includes the company’s registered office, registration number, company status, date of incorporation, and authorised capital. Furthermore, the public record of a BVI registered company also contains the following information:
Due to the requirement in the BVI, only a few documents and information about the company can be obtained from a search of the records kept by the registrar. A search of the registrar’s records for the company will generally only reveal: • the name and address of its registered agent;
The BVI does not have any strict reporting requirements, so an IBC does not have to prepare financial statements or company accounts. There is no need to employ auditors. The company should only keep the records it considers necessary for its own use by its directors, and these can be stored anywhere in the world.
There is no need to file annual returns for an IBC.
Registers of Directors and Shareholders must be kept at the Registered Office of the company. IBCs are not required to maintain a register of officers, nor are annual returns required.
A BVI company is not required to submit any other form of annual return or financial statements to the BVI government, so this has greatly simplified the management of a BVI company.
To maintain your operation, you need to renew your BVI company. Your registered BVI company must be renewed on time in order to maintain its Good Standing and to ensure compliance with local regulations.
As per BVI regulation, business owners have to pay an annual renewal fee to the government of the BVI starting from the second year of the company’s incorporation date. The company renewal fee is due at two different renewal periods:
According to the BVI Business Companies Act 2004, the owners cannot pay the renewal fee directly to the Government. The Government will only accept the fee through a Registered Agent.
In the event that you fail to pay the fee on time, your BVI company can lose its Good Standing status and be struck-off from the Registry. When a company is struck-off, it cannot trade or enter into new agreements, and its directors, shareholders, and managers are prohibited by law from taking any action with its assets until the company is restored to Good Standing.
Moreover, late penalties will be applied for non-payment of an annual renewal fee.
It is possible for business owners to restore a company after it has been struck off, but they must pay substantial fees to the government, including all past-due renewal fees based on the number of days overdue, as well as a penalty fee.
Consequently, paying the renewal fee on time is vital for your registered BVI company. Paying renewal fees after the expiration date will cause many problems that can affect your operation.
Yes, you can open a bank account for your BVI company in Hong Kong.
For those who own foreign companies, the owner needs to submit required documents to the banks including Certificate of Incorporation, Certificate of Incumbency, Memorandum of Association and Articles of Association. The authorities can be required to submit further documentary proofs. All documents submitted must be in English.
Opening a bank account for your BVI company in Hong Kong will help your business to manage transactions, as well as make any necessary payment, allow you easy access to new customers and business opportunities in Hong Kong.
Also known as “Pure Equity Holding Entity” (PEHE).
To qualify as a PEHE or “Holding Business”, the entity should only be holding equity participations in other entities, and should only earn dividends and capital gains.
If the entity holds any other assets or investments, such as property, (residential or commercial), investment portfolios, interest bearing bonds, etc., it would not be considered a PEHE.
Essentially, for an entity to be classified as PEHE (Passive), they must be holding equity participations and that is the only activity they are involved in during the financial period.
A PEHE (Passive) meets adequate substance requirements, if it:
(a) complies with its statutory obligations under the BVI Business Companies Act, 2004 or the Limited Partnership Act, 2017 (whichever is relevant); and
(b) has adequate employees and premises for holding or managing its equity participations.
Additionally, the BVI International Tax Authority (ITA) has stated that the appointment of a Registered Agent and the performance of those services will be considered when assessing economic substance indicators for a PEHE. PEHE that are passively managed are described above. The BVI entity should have adequate and appropriately qualified employees, as well as suitable premises, to carry out its equity participation management functions.
