Types Of Company In the British Virgin Islands In 2023
While setting up a business entrepreneurs often prefer a location that will turn out to be the most advantageous for their business operations. One such jurisdiction that is favored by investors is the British Virgin Islands. The British Virgin Islands are a popular location for business registration because of their advantageous tax regime and a high degree of privacy.
However, for establishing a firm in the British Virgin Islands, an investor must select the type of business that they wish to incorporate. There are several types of company in the British Virgin Islands, all of which have their benefits and characteristics. To choose the most suitable entity you need to be informed of the types of business entities in the British Virgin Islands.
Through this article, we will be discussing the numerous types of company in the British Virgin Islands, shedding light on the various options and structures that entrepreneurs can consider for their business ventures in this jurisdiction.
What are the various types of company in the British Virgin Islands?
The BVI Business Companies Act of 2004 governs the formation of BVI Business Companies (BVI BC).
Five different types of business entities in the British Virgin Islands that can be established under this Act are:
- A corporation limited by shares
- A corporation limited by guarantee that is not authorized to issue shares
- A corporation limited by guarantee that is authorized to issue shares
- An unlimited corporation that is not authorized to issue shares
- An unlimited corporation that is authorized to issue shares
The BVI permits the registration of businesses in more formats than those mentioned above, including:
- Segregated Portfolio Company
- Restricted Purpose Company
- Limited Partnerships
- International Business Companies (IBCs)
1. Corporation Limited by Shares
A company limited by shares is one of the most preferred types of company in the British Virgin Islands. Such types of BVI companies are capable of issuing shares. Those who possess shares in a corporation are its stockholders or proprietors. The stockholders possess an independent legal status, implying that their legal responsibility is restricted to the value due on those shares and its directors manage the day-to-day activities of the firm.
Characteristics
- Such types of business entities in the British Virgin Islands must have a minimum of 1 shareholder along with a director, who might both be the same individual.
- The maximum obligation of a stockholder is the outstanding balance on their owned shares.
- The first director(s) of the firm have to issue their initial shares of the organization after being appointed.
2. Company Limited by Guarantee
An organization is permitted to establish as a corporation limited by guarantee in one of two ways as per section 5 of the BVI Business Companies Act:
- A corporation limited by guarantee that is not authorized to issue shares
- A corporation limited by guarantee that is authorized to issue shares
Such types of company in the British Virgin Islands is frequently employed by nonprofit institutions. Such types of BVI companies require a minimum of 1 member to be a guarantee member. Each guarantee member is only allowed one vote on any decision unless specified differently in its memorandum or articles. The stockholders and guarantee members of such types of business entities in the British Virgin Islands each have their own distinct legal identities.
3. Unlimited Company
In such types of BVI companies, a minimum of one of the members is required to be an unlimited member, with limitless accountability for the obligations of the organization. The accountability of the limitless members is believed to be their obligation to contribute to the firm assets in liquidation.
There are two primary types of unlimited corporations:
A. An unlimited corporation authorized to issue stocks
Such types of business entities in the British Virgin Islands can issue an infinite number of stocks. Its limitless members can also be shareholders, and each has one vote as long as the memorandum or articles convey differently.
B. Unlimited corporations not authorized to issue stocks
In such types of companies in the British Virgin Islands, members are not stockholders because the corporation does not offer stock. According to the BVI Business Companies Act, an unlimited corporation that is not authorized to distribute stocks is required to file yearly statements in the permitted format on behalf of its directors.
4. Restricted Purpose Company (RPC)
A restricted purpose company is expressly created to carry out a specific function or operation that is described in its Memorandum of Association. Such types of business entities in the British Virgin Islands provide a solid legal foundation for carrying out operations with limited liability and simplified administrative procedures. The objective of establishing such types of company in the British Virgin Islands could be any legitimate activity, such as retaining certain assets, performing a particular endeavor, or functioning as a special purpose vehicle for a transaction.
Those wishing to form a restricted-purpose corporation in the BVI must meet the following criteria:
- The corporation has to be a company limited by shares.
- The business’s memorandum should specify that it is an RPC and also describe the organization’s genuine goals.
Advantages of RPC
- RPCs gain from the jurisdiction’s substantial degree of secrecy and confidentiality. Stockholder information is not made public, and nominee directors and stakeholders can be nominated for increased privacy.
- Shareholders benefit from an enhanced degree of asset protection provided by RPCs.
5. Segregated Portfolio Companies (SPCs)
SPCs, or Segregated Portfolio Companies, are distinct organizations in the British Virgin Islands that offer an effective framework for managing and separating assets and liabilities. SPCs are types of BVI companies that can develop separate portfolios inside a single legal organization. Each portfolio works autonomously, protecting assets and liabilities from the uncertainties associated with other portfolios. Such types of company in the British Virgin Islands are especially useful for investment funds, as each portfolio can signify a unique investing strategy or customer.
Advantages
- SPCs enable the separation of diverse portfolios inside a single legal organization, thereby protecting against cross-liability.
- SPCs have the same tax advantages as regular BVI corporations, such as no tax on corporate earnings, capital gains tax, or withholding tax.
- Simple administrative requirements for SPCs make them more appealing for use in investment management.
6. Limited Partnerships (LPs)
The Limited Partnership Act of 2017 allows for the formation of limited partnerships in the BVI. To form such types of company in the British Virgin Islands, it is essential to draft a formal limited partnership contract outlining the privileges and responsibilities of the partners. The document may also regulate the workings of the limited partnership and how its operations are to be carried out. The corporate address and authorized agent of such types of business entities in the British Virgin Islands must always be located in the nation.
Advantages
- LPs give partners the ability to create specific contracts for profit-sharing, managerial roles, and departure plans.
- The responsibility of limited partners is determined by the sum of money they invest in the firm, protecting their assets.
7. International Business Companies (IBCs)
IBCs are another one of the most preferred types of company in the British Virgin Islands. IBCs offer an appealing choice for global company operations due to their simple incorporation procedure and adaptable corporate governance. To establish an IBC in the BVI, the business must be registered with the Financial Services Commission (FSC) of the territory. To complete the process, a registered agent must be chosen and the necessary paperwork must be submitted.
Advantages
- IBCs are not subject to local corporation taxes, which guarantees the firms a favorable tax environment.
- IBCs can be swiftly established and have minimum reporting responsibilities.
- IBCs profit from tight secrecy regulations that protect the confidentiality of stockholders and directors.
Conclusion
The British Virgin Islands (BVI) are well known as a top offshore financial hub and a popular location for people and companies wishing to expand internationally. The best business structure for your operations must be chosen before you can establish a corporation in the British Virgin Islands. There are many different types of BVI companies, from limited partnerships to IBCs to restricted-purpose corporations. Each type of business entity in the BVI has its requirements and benefits. You must thoroughly examine the structures that are offered in the country to choose the one that is best appropriate for you.
Experts at Odint Consulting can guide you in selecting the most appropriate type of BVI company and can further help you establish your firm in the nation. Contact Odint Consulting if you intend to register your business in the British virgin islands.
FAQ’s
Yes, foreigners can establish and run enterprises in the BVI. The BVI offers a welcoming business climate and welcomes foreign investors.
Segregated Portfolio Companies are types of BVI businesses that are capable of creating distinct portfolios inside of a single legal entity. Each portfolio functions independently, shielding assets and liabilities from the risks related to other portfolios.
A few of the benefits of forming a business in the BVI include:
- Favorable tax climate without a corporation, capital gains, or inheritance taxes
- Corporate governance that is flexible and that has few reporting obligations
- Extreme levels of anonymity and privacy
- Getting access to a financially regulated market
The prerequisites for establishing a limited partnership include registered offices, registered agents, and partnership contracts.
Yes, BVI corporations are subject to continuing compliance regulations. These involve the selection of a registered agent, the submission of yearly returns, and the upkeep of precise accounting documents. To ensure that the business maintains its good standing, it is crucial to fulfill these commitments.
