Why Incorporate in the British Virgin Islands.

When founding a registered business, be it a partnership or a corporation, the beginning stages are exciting and often less focused on the business aspects and more on the sales, advertising or innovation sides of the table. This can in the long run be detrimental to the business’ future needs, such as confidentiality and expansion. Many such start-ups will simply form their entity in the location that they operate in from the get-go; however, the start-ups that have good advisors may choose offshore financial centres as the perfect place to grow their business. The most popular offshore financial centre, with good reason, is the British Virgin Islands (hereinafter “BVI”).  The BVI has over 800,000 incorporated businesses and one of the most modern and progressive company laws in the world, the BVI Business Companies Act of 2004.

Choosing the BVI. As with many offshore financial centres, the BVI offers those who incorporate within its borders many benefits. A start-up would find the speed and cost associated with incorporation to be less compared to other options, that there is a wealth of legal, business and accounting experts to be had, a tax neutral environment, and no requirement that any of the directors reside in the BVI. Moreover, there is a huge decree of freedom with decision-making, whether the directors or the shareholders make the decisions. Many of the provisions in the BVI Business Companies Act can be disapplied in the Articles or Memorandum creating the opportunity for more control. There are of course, many more advantages with being incorporated in the BVI but these are just a few.

Recordkeeping Requirements. A few recent changes in legislation have altered the way BVI businesses need to keep records and supporting documentation. Under the BVI Business Companies Act of 2004, a BVI business must keep records to show and explain its transactions which enable the financial position of the company to be determined within reasonable accuracy at any time. This not only extends to corporations but also to limited partnerships. The terms required to keep these records is five-years. Whilst there is no requirement that the records be kept in the BVI, the registered agent must be apprised of the location and notified within two-weeks of any change to the location.

If you are considering founding your business in an offshore financial centre, the BVI or are already incorporated in the BVI and need to review your recordkeeping policies, please contract us and we’ll be glad to advise you further.