BVI company registration
The BVI Business Companies Act also referred to simply as “the Act,” is the statute that is used to incorporate businesses in the British Virgin Islands, both offshore and locally. The Registrar of Corporate Affairs must receive a copy of the company’s Memorandum and Articles of Association from the company’s registered agent. “An application for the incorporation of a company may only be filed by the proposed registered agent, and the Registrar shall not accept an application for the incorporation of a company filed by any other person,” it states in the document. “An application for the incorporation of a company may not be filed by any other person.”
BVI company incorporation
Incorporation of the company is effective from the date the Memorandum and Article of Association are filed with the Registrar. If the incorporation conditions comply with the Act, the Registrar issues a certificate of incorporation and allows a unique number to the company. There is no requirement under the Act to issue shares at the time of incorporation, and neither the company is required to have a director at the time of incorporation. However, the appointment of a director is mandatory under the Act. The Registered Agent is required to appoint the company’s first director, and such a director has the authority to issue shares to the shareholders.
“Subject to this Act and to the memorandum and articles, shares in a company may be issued, and options to acquire shares in a company granted, at such times, to such persons, for such consideration and on such terms as the directors may determine.”
In addition, there is no such criterion for approved share capital, which means that there is no requirement for a minimum amount of share capital. In accordance with the Act, a share may be issued either with or without a par value attached to it. When a corporation issues a share that has a par value, the consideration for such a share might come in any form; nonetheless, it should be at least equal to the par value of the share.
The regulatory framework of BVI
BVI’s legal system for business establishment stems from Delaware General Corporation Law, and as such, the Act follows principles and concepts similar to English Law. A company under the Act may incorporate as a company limited by shares; a company limited by guarantee that is not authorized to issue shares; a company limited by guarantee that is authorized to issue shares; an unlimited company that is not authorized to issue shares or an unlimited company that is authorized to issue shares. In addition, the Act allows “restricted purpose company” for incorporation in BVI, subject to some additional disclosure (a statement that the company is a limited purpose company and its purpose) that has to be made in the Memorandum of Association. Additionally, the BVI Business Companies (Amendment) Act, 2018 has extended the classes of companies that may be Segregated Portfolio Companies (SPC).
BVI Limited Partnership Act 2018
The Limited Partnership Act of 2018 is complied with by any limited partnership business that is recognized in the British Virgin Islands. In accordance with the provisions of the Limited Partnership Act of the BVI, a limited partnership can start out either with or without a separate legal identity from its participants, depending on the preferences of the founding general partner. A general partnership is also recognized in the British Virgin Islands, and its operation is governed by the Partnership Act of 1996. In this configuration, a partnership does not have a distinct legal personality from its constituent members, and all partners have complete culpability for the debts incurred by the partnership.
BVI economic substance act
A corporation is required to comply with the BVI Economic Substance Act and perennially submit or report relevant information pertaining to the operation of the business. For the purposes of taxation, the entity must disclose a degree of economic substance within the British Virgin Islands if it conducts activity that falls within the definition of “Relevant Activities.” If the corporation has its tax residence outside of the British Virgin Islands (BVI) or any of the “Listed Jurisdictions,” then the duty to demonstrate that it possesses substance will not apply to the company.
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