Key benefits of using BVI structures

By most standards, offshore holding structures using BVI corporations are the most common worldwide. While offshore vehicles are employed for a wide range of diverse purposes worldwide, there are several similar elements that contribute to the BVI product’s success. While BVI businesses are the most common legal entities, BVI trusts and partnerships are increasingly becoming more common.Numerous other jurisdictions share many of the BVI’s benefits (English language, absence of currency exchange controls, US dollar as a currency, stable democracy, common law legal system with final appeal to the Privy Council in London). Several other benefits are not:

Taxation

The BVI has no wealth tax, capital gains tax, income tax, corporate tax, or other comparable fiscal regulations. Using a BVI firm as an intermediary holding company might create tax neutral layers in the corporate holding structure, even though trading companies will often pay taxes in the ordinary manner in the nations where they conduct business.

Speed

Companies can be quickly incorporated by authorized registered agents via the BVI’s online electronic interface, often within two days, provided that the necessary KYC requirements are met.

Names

In addition to their English names, BVI corporations are allowed to be formed using foreign character names (like a Chinese name).

Cost

Comparing BVI firms to comparable high-end jurisdictions like Cayman and Bermuda, as well as most mid-shore jurisdictions like Hong Kong or Singapore. Including expenses, the typical cost to incorporate a standard BVI business is roughly US$1,750.

Confidentiality

The BVI does not need the public filing of a company’s share registration or register of directors. Law-abiding businesses can operate with the confidence of privacy even though measures are in place to prevent misuse of corporate secrecy in regard to money-laundering and international crime.

Business adaptability

The BVI’s company legislation is created to be as flexible as possible while yet adhering to common law legal systems. There are no restrictions on corporate benefit, and businesses are free to engage in any legal conduct or activity. The economic substance regulation mandates that entities engaging in relevant activity must have sufficient substance in the BVI even if they are not tax residents of another suitable jurisdiction outside of the BVI.

Capitalization criteria

The BVI does not enforce any general capital maintenance requirements or “thin capitalization” standards. There are no restrictions on a company’s capacity to transfer assets to its shareholders in the form of dividends as long as it maintains cash flow and balance sheet solvency. A BVI business has the legal authority to give money to a third party for the purpose of purchasing its own shares.

Joint ventures

To remove the common law obligations on directors to operate in the best interests of all shareholders in a joint venture and instead allow them to act for the advantage of the party selecting them, BVI corporations may incorporate specific clauses in their corporate constitutions. Due to this flexibility, a number of well-known international joint ventures have been set up using BVI holding companies.

IPO ready

BVI firms are frequently employed in the international financial markets as listing vehicles for prosperous businesses. Stock markets in London (LSE and AIM), New York (NASDAQ and the Big Board), Toronto, Hong Kong, and Singapore, among other places, list shares of BVI firms.

Debt Financing

In the event that a BVI company has to leverage assets in order to obtain finance, it can do so thanks to the rapid and straightforward secured creditor registration process in the BVI. The BVI also boasts the most advanced insolvency system in the offshore market, which is typically a major consideration for banks when requested to fund entrepreneurs even though it is not typically a great consideration for business owners.

“Light touch” regulation

BVI enterprises do not require regulatory license to operate their business outside of a few extremely specific industries (primarily: investment funds, banking, and insurance, but also certain other areas). BVI seeks to minimize pointless regulatory burdens by implementing “light but effective” regulations. Investment funds are the most typical sort of regulated firm, and there are specific carve-outs for them to lessen the regulatory burden on low risk investment funds.

Innovative trust structures

To eliminate common law features that were uncommercial, the BVI’s trust legislation has undergone significant revision. The popularity of trusts has been fueled by new and creative products including VISTA trusts and private trust firms, as well as rules that tighten restrictions on relevant non-charitable purpose trusts and prohibit remoteness of vesting.

Commercial court

Commercial ventures can, go wrong. The BVI Commercial Court is a specialized organization established to handle business and high-value commercial issues effectively. It has a stellar reputation for providing accurate decisions in a short amount of time. Without a specific conflict resolution center, it is crucial to prevent protracted delays and inconsistent outcomes that have an impact on other jurisdictions. The Privy Council in London, which is composed of judges from the UK Supreme Court, is the last line of defense.

FinTech and cryptocurrency

The BVI has developed into a desirable destination for initial coin offerings, crypto funds, and FinTech activities for all the reasons mentioned above. In order to encourage BVI enterprises and other endeavors to create and use innovative FinTech within a light touch regulatory environment, BVI has launched a regulatory sandbox.

Offshore structuring will always take the underlying transaction or structure into account. There is no one offshore structure that can satisfy everyone’s needs. However, the BVI’s market dominance shows that BVI structures can appear to be many different things to many different people.