View source for BVI Business Companies Act

{{Use British English|date=November 2013}}
{{Use dmy dates|date=August 2017}}
[[File:British Virgin Islands Companies Registry (2).jpg|thumb|300px|right|The British Virgin Islands Companies Registry (part of the Registry of Corporate Affairs).]]
The '''BVI Business Companies Act''' (No 16 of 2004) is the principal [[statute]] of the [[British Virgin Islands]] relating to [[British Virgin Islands company law]], regulating both [[offshore company|offshore companies]] and local companies.  It replaced the extremely popular and highly successful [[International Business Companies Act]].  It came into force on 1 January 2005.<ref>{{Cite web|url=http://www.bvifsc.vg/Home/LegislationResources/tabid/358/ctl/ArticleView/mid/1079/articleId/434/language/en-AU/BVI-Business-Companies-Act-2004-with-2005-Amendments.aspx|title=BVI Business Companies Act 2004 (with amendments)|publisher=BVI Financial Services Commission|accessdate=30 August 2016|archive-url=https://web.archive.org/web/20160819030208/http://www.bvifsc.vg/Home/LegislationResources/tabid/358/ctl/ArticleView/mid/1079/articleId/434/language/en-AU/BVI-Business-Companies-Act-2004-with-2005-Amendments.aspx|archive-date=19 August 2016|url-status=dead}}</ref>

The decision to replace the International Business Companies Act was driven by two things.  Firstly, there was a general perception that the older legislation was becoming a bit dated, and needed modernising.  Secondly, the [[OECD]] and other multinational organisations had expressed concerns about ring-fenced tax regimes in [[tax haven]]s,<ref>Under the old International Business Companies Act, [[company law|companies]] were essentially exempt from [[taxation in the British Virgin Islands]].</ref> such as that under the older legislation and were putting jurisdictions under pressure to repeal them.  The [[British Virgin Islands Financial Services Commission]] dealt with both issues in a single legislative swoop.<ref name=IBC>{{cite web|url=http://www.mondaq.com/x/327344/offshore+financial+centres/The+IBC+Act+The+Building+Of+A+Nation|title=British Virgin Islands: The IBC Act – The Building Of A Nation|publisher=Mondaq|accessdate=30 August 2016|date=20 July 2014|author=Colin Riegels}}</ref>

The BVI Business Companies Act is actually based upon a [[New Zealand]] statute (as opposed to the International Business Companies Act, which was based on [[Delaware]] corporation law).  Conscious of how widely the earlier legislation had been copied by other tax havens, the BVI Business Companies Act was drafted with a large number of forms and procedures which specifically tied it into the Territory's regulatory structure, thereby making it much harder to simply copy and enact.

==Name==

The name of the statute actually commences with "BVI".  That statute is often mistakenly referred to as simply the "Business Companies Act" due to a common misinterpretation that the "BVI" is a description of the jurisdiction of enactment rather than actually part of the name.

The letters BVI were deliberately inserted as part of the branding exercise, and it was hoped that companies formed under the new legislations would be referred to as "BVIBCs".  This would neatly merge the common acronym under the old legislation ("IBCs") and the common reference used in [[Hong Kong]], the which has the largest geographical concentration of British Virgin Island companies (where they are often referred to simply as: "BVIs").

Ultimately the phrase "BVIBCs" proved to be too much of a mouthful, and in the offshore financial industry, it is more usual to refer to entities formed under the Act as "BCs", or simply "BVI companies".<ref name=IBC />

==Features==
{{Main|British Virgin Islands company law}}
The Act contains a number of specific features which are designed to make the British Virgin Islands more attractive as an [[offshore financial centre]].  These include:
* considerably restricting the requirement for [[corporate benefit]]
* abolishing [[financial assistance (share purchase)|financial assistance]] in relation to company shares
* abolishing the concept of a [[share capital]] in relation to company shares (and thereby ''en passant'' removing requirements relating to maintenance of capital and distributable reserves requirements for [[dividend]]s)
* removing restrictions in relation to the declaration of [[dividend]]s
* increasing the types of company that can be formed<ref>Under the old International Business Companies Act, it was only possible to form a company limited by shares.  Under the new Act it is possible to form a company limited by shares, an unlimited liability company, a company limited by guarantee which can issue shares, a company limited by guarantee which cannot issue shares, a restricted purpose company and a [[segregated portfolio company]].</ref>
* modernising the regime for registration of [[security interest]]s
* the Act introduces statutory [[Derivative suit|minority shareholder protections]]
* companies are no longer required to have a stated corporate object, thereby obviating a number of difficulties relating to ''[[ultra vires]]'' and [[Board of directors#Duties|director's duties]].

==Transitional arrangements==

The intention of the legislation was to eventually consolidate all British Virgin Islands company law into a single statute.

Prior to the BVI Business Companies Act coming into force, it was possible to incorporate a [[company (law)|company]] under two different statutes: the International Business Companies Act (Cap 291) and the Companies Act (Cap 285).

After the BVI Business Companies Act came into force on 1 January 2005, it was possible to incorporate a company under any of the three statutes.  It was also possible for a company which had been originally incorporated under the International Business Companies Act or the Companies Act to adopt new [[constitutional documents]] and voluntarily re-register under the BVI Business Companies Act.

After 1 January 2006, it was no longer possible to incorporate a company under the International Business Companies Act or the Companies Act, but companies which had been originally incorporated under those Acts continued to be regulated by them.

After 1 January 2007, all companies which had been originally incorporated under the International Business Companies Act were compulsorily re-registered under the BVI Business Companies Act.  Detailed transitional provisions were enacted in Schedule 2 of the new Act to deal with discrepancies between the two sets of legislation.

After 1 January 2009, all companies which had been originally incorporated under the Companies Act were compulsorily re-registered under the BVI Business Companies Act.  Initially it was proposed that this transition date would occur on 1 January 2008, but on 31 December 2007 emergency legislation was passed, pushing it back by a year so that the transitional provisions set out in Schedule 2 of the Act could be further amended and modified.

==Amendments==

The Act has already been amended multiple times in its relatively brief life.<ref>Most recently by the BVI Business Companies (Amendment) Act 2016. {{Cite web|url=http://www.bvifsc.vg/Home/LegislationResources/tabid/358/ctl/ArticleView/mid/1079/articleId/1581/language/en-GB/BVI-Business-Companies-Amendment-Act-2016.aspx|title=BVI Business Companies (Amendment) Act, 2016|publisher=BVI Financial Services Commission|accessdate=30 August 2016|archive-url=https://web.archive.org/web/20160911131806/http://www.bvifsc.vg/Home/LegislationResources/tabid/358/ctl/ArticleView/mid/1079/articleId/1581/language/en-GB/BVI-Business-Companies-Amendment-Act-2016.aspx|archive-date=11 September 2016|url-status=dead}}</ref>  Although some of the amendments relate to fine tuning legislation, and others relate to introducing new features (such as minority shareholder rights), a great many other amendments have been necessary to fix issues brought about by the transitional arrangements.  Registration procedures for [[security interest]]s have proved particularly difficult to resolve.<ref>Up until late 2007, it was not possible to de-register security which had been registered under the old International Business Companies Act, but was released subsequent to the repeal of that legislation.  Similarly, amendments to security registered under the old Act could not be filed either.  These difficulties were corrected by the BVI Business Companies (Amendment of Schedules) (No. 2) Order 2007 (SI No 80 of 2007).</ref>

==Replications==

Although the predecessor International Business Companies Act was widely copied by other offshore jurisdictions, it was assumed that the BVI Business Companies Act would not be similarly replicated, as the architecture of the legislation integrated it very closely with the systems and procedures of the British Virgin Islands corporate registry.  However, in 2006 the [[Isle of Man]] passed new company act, the [[Isle of Man Companies Act 2006|Isle of Man Companies Act]], which was nearly a word-for-word copy of the BVI Business Companies Act.

==External links==
* [https://www.bvifsc.vg/sites/default/files/bvi_business_companies_act_2004_with_2005_amendments.pdf BVI FSC legislation library]
* [https://web.archive.org/web/20111001051510/http://www.itpa.org/open/archive/petersbvibca.html Article on the BVI Business Companies Act]
* [https://web.archive.org/web/20071006182219/http://www.harneys.com/files/legal-guides/Company%20law%20comparison.pdf Article comparing BVI Business Companies Act to International Business Companies Act]
* [https://web.archive.org/web/20071006182233/http://www.harneys.com/files/legal-guides/key%20features.pdf Article - key features of the BVI Business Companies Act]
* [https://www.harneys.com/news-and-deals/seminal-global-offshore-industry-legislation-to-reach-its-30th-anniversary-in-august/ Video: The Story of the IBC Act]
* [https://bvi.gov.vg/media-centre/amendments-bvi-business-companies-act-2004-0 BVI Business Companies Act, 2004]
* [https://bvi.gov.vg/content/bvi-business-companies-amendment-act-2006 BVI Business Companies (Amendment) Act 2006]
* [https://eservices.gov.vg/gazette/sites/eservices.gov.vg.gazette/files/newattachments/G00760_BVI%20BUSINESS%20COMPANIES%20(AMENDMENT)%20ACT%202015%20(2).pdf BVI Business Companies (Amendment) Act, 2015]
* [https://gruendungskanzlei.eu/firmengruendung-british-virgin-islands/ Formation requirements and taxation] (in German)

==Footnotes==

{{Reflist}}

{{DEFAULTSORT:BVI Business Copmanies Act}}
[[Category:British Virgin Islands company law]]
[[Category:Law of the British Virgin Islands]]
[[Category:Offshore finance]]
[[Category:2004 in law]]
[[Category:2004 in the British Virgin Islands]]