|
By Sherri Ortiz, Executive Director,
British Virgin Islands International Finance Centre
The British Virgin Islands has always had a reputation for high standards of transparency and regulation. Whether it be in the fields of funds, trusts, company formations or other areas in which the BVI excels, the Territory strikes the right balance between meeting the needs of the international community, whilst maintaining regulatory and corporate governance standards that match international best practice.
The last 12 months have proved testing ones for the global financial community. Whilst some parts of the world are recovering, other countries aren’t performing as well. The BVI, however, boasts an economy that remains in good health. An International Monetary Fund report published in October 2010 indicated that the global financial crisis had not affected the health of BVI financial institutions. Revenue remains steady, with the BVI continuing to attract business because it is viewed internationally as a well-regulated, internationally cooperative and compliant jurisdiction with a strong legal framework and competent corporate services.
This performance is due in large part to a diversified financial services sector. BVI vehicles are well known worldwide, easy to use and supported by robust and fair regulations; an efficient and effective regulatory environment; a favourable tax system; stable government; and high-quality infrastructure. Indeed, it is the vision of the BVI’s International Finance Centre (IFC) that “the British Virgin Islands continues to be recognised as an innovative, efficient and respected international finance centre through the quality of its people, services and regulatory environment.” A strong partnership between the public and private sectors is a constant theme running through our policies. The results are there for all to see. More than 450,000 companies are registered in the BVI, and more than 3,000 of them are hedge funds.
International Standards
Complying with international best practice standards is vital for this success. The BVI continues to meet international standards around tax transparency. The BVI has now signed 20 Tax Information Exchange Agreements, most recently with India, and will continue to look to sign agreements with significant partners over the coming year.
As with other financial centres, the BVI has an independent regulator, the Financial Services Commission, which became the first institution to be admitted to membership of the International Organisation of Securities Commission (IOSCO) on the basis of that organisation’s Multilateral Memorandum of Understanding on Consultation and Cooperation and the Exchange of Information.
Territory also continues to receive favourable reports from the Caribbean Financial Action Task Force (CFATF). In 2010, the CFATF team examined the capacity, implementation and effectiveness of the BVI’s institutional framework, laws, regulations and systems. The concluding report states that the BVI has “maintained a robust public policy commitment to ensuring that the Territory plays its part in the global fight against money laundering and the financing of terrorism.” The CFATF further noted that successive BVI Governments “have promoted policies to ensure that the jurisdiction can play its part to effectively combat cross-border financial crimes and maintain a reputation for being a clean jurisdiction.”
In addition, the BVI is a member of the Peer Review Group (PRG), which was formed at the Organization for Economic Cooperation and Development (OECD) Global Forum on Taxation in Mexico in September 2009. The PRG is responsible for assessing the implementation of OECD standards in finance centres of member and non-member jurisdictions of the Global Forum based on availability of information, appropriate access to the information and the existence of exchange of information mechanisms. The PRG ensures that there is a monitoring and assessment process that is universally applied to all finance centres.
The Role of the IFC
The BVI IFC plays a pivotal role in the promotion and marketing of the BVI as a leading financial centre. Established in 2002 as part of the government’s growing commitment to the financial services industry, the aim of the IFC is to give a voice to the BVI’s financial sector. The IFC is committed to ensuring that the BVI retains the unique balance it has created in having a sound regulatory framework, an entrepreneurial business community and a government that is committed to developing innovative legislation.
The launch of the IFC marked the final stage in the government’s plans to separate the marketing/promotional and regulatory/supervisory functions. Regulation is now the sole responsibility of the BVI Financial Services Commission (FSC), which was also established in 2002.
As part of the BVI IFC’s marketing strategy, it seeks to promote the BVI as a jurisdiction to do business with but also focuses on the specific sectors that it has to offer.
Funds
The Territory plays host to many fund professionals and is the Caribbean’s second-largest hedge fund domicile, with clients from the United States, United Kingdom, Europe, the Middle East and Asia. Funds incorporated in the BVI now have further legal and regulatory support following the enactment of the Securities and Investment Business Act (SIBA), which became law in 2010. SIBA codifies some of the practices already undertaken by funds domiciled in the BVI and introduced laws to regulate investment business, public issues of securities and market abuse. The framework for the regulation of BVI funds is not materially altered by the enactment of SIBA, and most of the popular concepts remain. Many of the legislative changes made under SIBA and the Mutual Funds Regulations of 2010 merely codify existing BVI FSC policies that have developed over recent years in line with evolving international standards. Fund managers already find the legal and regulatory system in the BVI familiar and as easy to use as the Mutual Funds Act, which has been in place for well over 10 years.
Trusts
Trusts also value the flexibility the BVI gives them. The Virgin Islands Special Trust Act of 2003 (VISTA) has consolidated the BVI’s position as the location of choice for international trust settlements and operations and has generated a substantial amount of interest from legal and corporate professionals and business entrepreneurs alike. Trust and estate practitioners and other international experts have acknowledged VISTA as one of the most modern and coherent pieces of trust legislation globally. The implementation of the Financial Services (Exemptions) Regulations in August 2007 clarified the circumstances under which a BVI private trust company (or PTC) must be licenced, and further enhanced the BVI’s international reputation for trusts and estate planning products –– with VISTA purpose or charitable trusts being ideally suited to holding shares in PTCs. The PTC legislation together with the continued popularity of VISTA ensure that the BVI is able to provide a full suite of trust structures to suit international demand.
Company Flotations
The BVI’s legislative framework has made it a popular jurisdiction for floating companies. The BVI Business Companies Act of 2004 has received positive reviews from legal practitioners for its flexibility. Five different types of companies can be incorporated under the Act. In particular, investors have welcomed the introduction of segregated portfolio companies (SPCs), as these allow umbrella funds to be set up with limited liability between share classes, thus avoiding potential cross-class liability issues.
The Act also includes statutory merger and consolidation provisions, which make it possible for two entities (only one of which need be a BVI entity, provided certain conditions exist), to merge, with all the assets of both entities consolidated into the surviving entity. This has made the BVI more attractive for joint venture vehicles and for the restructuring of companies and funds.
BVI companies are often used in joint venture vehicles in Asia and Russia as a result of the protection remedies available to its shareholders and directors. Additionally, BVI companies can list on worldwide stock exchanges including the London Stock Exchange and its AIM subsidiary; the New York Stock Exchange; NASDAQ; the Toronto Stock Exchange; Brazil’s BOVESPA; and most recently, Winsway Coking Coal Holdings Limited became the first BVI company to be listed on the Hong Kong Stock Exchange.
Captive Insurance
Over the years, the British Virgin Islands has also developed into a major international insurance centre and is listed as the world’s fourth-largest captive domicile for enhanced insurance products and services. The Insurance Act of 1994 was further strengthened by the Insurance Regulatory Code of 2009, which ensures full compliance with the International Association of Insurance Supervisors’ Core Principles, further simplifying the BVI’s insurance regime and increasing transparency.
Professional Services
Other businesses have found they can thrive here. The world’s foremost accountancy firms all have a presence in the BVI, and there are clear signs of a growing demand for their services, particularly in the areas of mutual funds audit and insolvency practice. In addition, all the major offshore law firms are established in the BVI including Harneys, the first law firm to set up in the jurisdiction; Conyers Dill & Pearman; Maples and Calder; Walkers; Ogier; and the more recent additions, Appleby and Withers law firms. BVI lawyers are widely respected throughout the financial services sector, and several firms have opened offices in London and Hong Kong, all of which work closely with their BVI offices.
Shipping Register
The Virgin Islands Shipping Registry (VISR), the arm of Government with administrative responsibility for ensuring that vessels registered in and/or operating in the BVI do so in compliance with the strictest international safety standards, continues to thrive. There are currently just about 3,300 vessels registered with VISR and, therefore, flying the BVI flag all around the world.
The BVI is an acknowledged Category 1 Red Ensign register — which means that the jurisdiction is one of only 10 centres around the world where mega and super yachts of up to 3,000 gross tonnage and general cargo ships of unlimited tonnage can be registered. The BVI Shipping Registry offers the highest practical standards in technical expertise, safety management and quality assurance, compatible with the Red Ensign Group (REG), to assure first-class services. The islands’ facilities include registration of ships; mortgages; discharge of mortgages; change/transfer of ownership; and full corporate, legal, telecommunications and courier services. Ships flying the BVI Red Ensign flag are British ships and are entitled to British diplomatic and consular support and Royal Navy protection. The BVI also has access to the range of technical expertise of the U.K. Maritime and Coastguard Agency.
Globally Integrated and Responsible Financial Services
The past few years have posed challenges for all countries in the world. However, of all the lessons that have been learned, there is one overarching theme: Jurisdictions committed to ensuring that businesses have the maximum opportunity to thrive within the correct legislative framework will be the ones that will help lead the world into a new era. We at the BVI IFC are committed to keeping our jurisdiction at the forefront of the world’s financial centres. As a financial centre of major importance to the global financial system, the BVI has always set the highest standards of transparency, regulation, collaboration, enforcement and cooperation, as this has always been a key part of our strategy for retaining our competitive edge. We will maintain this policy because we believe it is the right way to succeed in a globalised economy.
We have been at the forefront of international financial services for decades and will continue to innovate and adapt to the constantly changing global financial environment to ensure the BVI maintains a gold standard for international finance centres. The BVI will continue to strike the right balance between meeting the financial and business needs of the international community and maintaining sound regulatory and corporate governance policies, thus playing its part in ensuring that the world’s recovery from the recent downturn continues to gather pace.
The BVI International Finance Centre
Government of the British Virgin Islands
Sherri Ortiz, Executive Director
Haycraft Building, 1 Pasea Estate
Road Town, Tortola
Tel: 468-4335
Fax: 468-1002; 494-1260
E-mail: sortiz@bviifc.gov.vg
Web: www.bviifc.gov.vg
Show me financial and other business services available in the British Virgin Islands.
Dreaming of buying a home in paradise? Learn all about buying and investing in BVI real estate.
| 
The British Virgin Islands has always had a reputation for high standards of transparency and regulation. Whether it be in the fields of funds, trusts, company formations or other areas in which the BVI excels, the Territory strikes the right balance between meeting the needs of the international community, whilst maintaining regulatory and corporate governance standards that match international best practice. 
This performance is due in large part to a diversified financial services sector. BVI vehicles are well known worldwide, easy to use and supported by robust and fair regulations; an efficient and effective regulatory environment; a favourable tax system; stable government; and high-quality infrastructure. Indeed, it is the vision of the BVI’s International Finance Centre (IFC) that “the British Virgin Islands continues to be recognised as an innovative, efficient and respected international finance centre through the quality of its people, services and regulatory environment.” A strong partnership between the public and private sectors is a constant theme running through our policies. The results are there for all to see. More than 450,000 companies are registered in the BVI, and more than 3,000 of them are hedge funds.
Territory also continues to receive favourable reports from the Caribbean Financial Action Task Force (CFATF). In 2010, the CFATF team examined the capacity, implementation and effectiveness of the BVI’s institutional framework, laws, regulations and systems. The concluding report states that the BVI has “maintained a robust public policy commitment to ensuring that the Territory plays its part in the global fight against money laundering and the financing of terrorism.” The CFATF further noted that successive BVI Governments “have promoted policies to ensure that the jurisdiction can play its part to effectively combat cross-border financial crimes and maintain a reputation for being a clean jurisdiction.”
The launch of the IFC marked the final stage in the government’s plans to separate the marketing/promotional and regulatory/supervisory functions. Regulation is now the sole responsibility of the BVI Financial Services Commission (FSC), which was also established in 2002. 
Trusts also value the flexibility the BVI gives them. The Virgin Islands Special Trust Act of 2003 (VISTA) has consolidated the BVI’s position as the location of choice for international trust settlements and operations and has generated a substantial amount of interest from legal and corporate professionals and business entrepreneurs alike. Trust and estate practitioners and other international experts have acknowledged VISTA as one of the most modern and coherent pieces of trust legislation globally. The implementation of the Financial Services (Exemptions) Regulations in August 2007 clarified the circumstances under which a BVI private trust company (or PTC) must be licenced, and further enhanced the BVI’s international reputation for trusts and estate planning products –– with VISTA purpose or charitable trusts being ideally suited to holding shares in PTCs. The PTC legislation together with the continued popularity of VISTA ensure that the BVI is able to provide a full suite of trust structures to suit international demand.
The Act also includes statutory merger and consolidation provisions, which make it possible for two entities (only one of which need be a BVI entity, provided certain conditions exist), to merge, with all the assets of both entities consolidated into the surviving entity. This has made the BVI more attractive for joint venture vehicles and for the restructuring of companies and funds. 
Shipping Register
The BVI International Finance Centre