Hedge Funds and Alternative Investments

The BVI: The Premier Corporate Domicile

By BVI Finance (01/03/2015)

The British Virgin Islands (BVI), as one of the world’s leading finance centres and meeting the changing needs of international businesses and high net worth individuals (HNWIs), has managed to create a stable, well-regulated and neutral jurisdiction that makes a significant contribution to the liquidity of the global economy.  The BVI is well regarded as a compliant, transparent and safe jurisdiction, perfectly positioned to be your international business partner for financial services.

As the premier corporate domicile, where approximately 500,000 active business companies reside, the BVI offers wealth management solutions in trust and estate planning, funds and investment business, captive insurance, ship and aircraft registration services as well as advisement and support services from some of the world’s leading trust companies, law firms and accounting firms who are based in the territory.

Tough Act to Follow

The British Virgin Islands (BVI) is a modern forward-looking International Financial Centre with well regulated, internationally recognised high quality services. In order to meet the demands of the new global economy, it is important to pursue a twin track approach; developing a business-supportive environment, while also meeting international demand of transparency and governance.

The International Business Company (IBC)Act 1984 became the crown jewel of the BVI offshore offerings and resulted in a thriving financial services industry for the jurisdiction. The IBC Act has remained the benchmark against which the company registration and incorporation laws of other jurisdictions across the world are judged. It is important to note that while others have tried  to copy this Act, no jurisdiction has succeeded in matching its impact and attraction as the BVI did.  The BVI has continued to enhance its offering with a new piece of legislation, the BVI Business Companies ( Act 2004 (amended in 2012) and the BVI Business Companies Regulations 2012.  Both these regulations have helped to streamline, clarify and improve the administration of the affairs of BVI Business Companies. 

A study was completed in 1999 on behalf of the United Kingdom by accountancy firm, KPMG, which estimated that the BVI had amassed  41 per cent of the global market share for offshore vehicles.  By 2004, the BVI would have the 12th highest GDP per head of population in the entire world.

The IBC Act proved to be such a boost to the BVI’s economy that it was copied and implemented by other countries seeking to attract new business from the finance sector.  News of its success as model legislation for the influx of wealth spread across the Caribbean and beyond, resulting in subsequent similar legislation in several jurisdictions.  The IBC Act was used as a template by The Bahamas and Belize, copied nearly verbatim by Anguilla’s IBC Act, St Kitts and St Lucia enacted similar legislation and St Vincent and the Grenadines IBC Act was heavily influenced by BVI’s Act.

The success of the IBC Act has been instrumental in developing our financial services industry. It streamlined the incorporation procedure, removed the requirement of corporate capacity, abolished the need for corporate benefit, recognised that companies could exist without members, and permitted companies to provide financial assistance for the acquisition of their own shares.  It provided for true statutory mergers and created new statutory tools for restructuring and reorganisation. 

The BVI for Financial Services

The BVI is committed to offering the very best service structure and constantly looks to differentiate itself in the market. The government is committed to proving the territory’s leadership in the industry and will aim to set the Territory apart from its competitors through the development of innovative offerings and by complying with international standards of regulation. A number of recent changes to the legislative regime have further demonstrated this commitment:

Approved Manager Regime

The Approved Manager regime, which came into force in December 2012, provides for eligible fund managers and advisers to submit a simple and short application to the Financial Services Commission and then automatically commence business seven days later (unless the Commission raises an objection during that period). This compares to a minimum of four weeks to process an application for a Part I license. Under the regulations, an Approved Manager can act as the investment manager or investment adviser to any number of private or professional funds recognised under SIBA, as well as any number of closed-ended funds domiciled in the BVI, which have the key characteristics of a private or professional fund. The Approved Manager can also act for non-BVI feeder funds into BVI master funds.

The key restriction is that aggregate assets under management of all of the open-ended funds cannot exceed US$400 million and the capital commitments of all of the closed-ended funds cannot exceed US$1 billion. An Approved Manager will also be subject to a small number of ongoing obligations, and the Commission has powers to take enforcement action against an Approved Manager should it determine it to be necessary.

BVI Aircraft Registry

The BVI is poised to take on a new area of business since the Mortgaging and Aircraft Engines Act 2011.

The new law complements the jurisdiction’s status as a US Federal Aviation Authority Category One aircraft register under the International Aviation Safety Assessment programme, by creating a framework for registration in the British Virgin Islands of security over aircraft and, separately, aircraft engines. The BVI government is confident that the aircraft mortgage register will leverage off the BVI’s successful record in registering companies and will make the BVI a leading offshore centre for aircraft registration.

BVI Shipping Register

The BVI is an acknowledged Category One Red Ensign register, which means that the jurisdiction is one of only 10 centres around the world where mega and super yachts (to 3000 gross tonnage) and general cargo ships of unlimited tonnage, can be registered.

Our facilities include registration of ships, mortgages, discharge of mortgages, change/transfer of ownership and full business, legal, telecommunications and courier services.  Ships flying the BVI Red Ensign flag are British ships and are entitled to British Diplomatic and Consular support and Royal Navy Protection.  The BVI also has access to the range of technical expertise of the UK Maritime and Coast guard Agency. 

Captive Insurance

The BVI has also matured into a major international insurance centre and a highly favored domicile for enhanced insurance products and services.  We remain fully compliant with the International Association of Insurance Supervisors’ Core Principles which simplifies our regime and increases transparency.  We have developed the most business friendly environment for insurance managers and their captive clients.

Funds and Investment Business

BVI plays host to many fund managers and administrators, as the world’s second largest hedge fund domicile with clients from the US, UK, Europe, the Middle East and Asia. 

The BVI is a member of the International Organisation of Securities Commissions, further enhancing its attractiveness to clients from emerging market jurisdictions.  There is no requirement for service providers of the BVI fund such as the manager, administrator or custodian to be resident in the BVI.  However, several international service providers are present to provide services locally.

Trust and Estate Planning

The BVI has solidified its position as the location of choice for international trust settlements and operations.  The 2013 amendments were a welcome overhaul of the BVIs trusts and estate legislation. The regime now provides for greater flexibility in the establishment and administration of BVI trust structures.

VISTA and PTCs remain important innovative tools in building appropriate asset protection and succession structures for international private clients and their families.

Professional Services

The world’s foremost legal and accountancy firms all have a presence in the BVI and there are clear signs of a growing demand for their services, particularly in the areas of funds, insolvency practice and litigation.   

The BVI (in 2014) has also been given the green light as an Arbitration centre since the recent passing of the Arbitration Act 2013, which modernises the previous principles of arbitration and facilitates fair and speedy resolution of disputes without unnecessary delay or increased expense.  The Commercial Court has made decisions on high profile cases and set numerous precedents since its development in 2009.

Your International Business Partner

The BVI is a popular jurisdiction for investors from emerging markets such as China and the other BRIC countries. Many industry leaders have noted that no other corporate vehicle has had quite the impact in Asia as the BVI Business Company (which in China is simply referred to as a BVI).  

It is standard practice for the expanding class of HNWIs, businesses and even governments of the BRIC countries to acquire BVI Business Companies for a multiplicity of investing and other cross-border transactions.  Hence BVI is an integral partner for business in these jurisdictions.

BVI trusts, fiduciary services, funds and investment business are also popular in the BRIC countries for wealth management, investing, structuring ownership and control, as well as for planning for the succession of assets. BVI structures are easy to use, flexible, widely accepted and cost-competitive across the world, helping the BRIC countries to stimulate their economic growth and increase the creation of wealth.

The BVI Finance is committed to maintaining the Territory’s position as a well-regulated, pre-eminent, progressive jurisdiction for international business services.  The reputation of the territory has expanded across the world and many developing markets have come to realise the advantage of doing business in the BVI.  Leading by example, we will continue to prove that our multi-faceted products and services remain innovative, attractive and cutting edge; catering to our client’s every need.  Simply put, as regards our HNWI and business affiliates, we are an accommodating, invigorating and inspiring international business partner and centre for all your financial services’ needs.