Innovative legislation and public-private partnership ensure continued success in the BVI.

BVI International Finance Centre

In the mid 1980s, when the British Virgin Islands first introduced the legislation that has made it an attractive financial services centre, all involved were hopeful of success. However, even the most wide-eyed optimists would have been hard-pressed to envision the extraordinary growth and prominence the Territory has achieved in what is an extremely competitive market.

Today, the BVI is the leading offshore domicile for company registrations, with well over 800,000 companies registered here since 1984.

The latest boost to this evolution took place on 1 January 2006, when the BVI Business Companies Act 2004 (BVI BC Act) replaced the long-established International Business Companies Act (IBC Act), which lay at the heart of the BVI’s development as a leading offshore jurisdiction. This new legislation has created a flexible, forward-looking and, in many ways, radical framework within which highly sophisticated companies can operate effectively.

This talent for seizing and making the most of opportunities by providing the right supporting environment has not only proved successful in ensuring the BVI remains the dominant force in company registration, but has also brought about success in other sectors such as investment business, trusts and captive insurance.

Mutual / Hedge Funds

The BVI is an attractive and established jurisdiction in which to domicile offshore funds. With some 3,000 funds now operating in or from within the jurisdiction, the BVI is the second-largest domicile of hedge funds, with approximately 10 percent of the global market share.

The hedge fund industry has grown substantially since the introduction of the Mutual Funds Act 1996, which is the primary legislation governing the funds industry in the BVI. The legislation provides a clear and cost-efficient framework for the regulation of hedge funds, managers and administrators. The three categories of regulated funds (public, private and professional) are very attractive to hedge fund managers and continue to provide the core strength of the BVI’s reputation in the alternative investment arena.

Another major factor that makes the BVI such an attractive domicile for funds is that it is significantly less expensive to establish and maintain a fund in the BVI than in its competitor jurisdictions.

The new BVI BC Act has also had an impact on the investment funds sector by providing fund managers with more options and flexibility, including the ability to establish funds with an unlimited number of no par value authorised shares and as Segregated Portfolio Companies. The absence of share capital and capital maintenance rules in the BVI BC Act also creates new opportunities for simplifying hedge fund structures.

Trusts and Private Wealth Management

Private Trust Companies (PTCs) have become increasingly popular in Offshore Financial Centres (OFCs) in recent times, and the BVI enacted special provisions for PTCs in January 2007 that further enhance its world-renowned trusts and estate-planning products.

In addition, the coming into force of the Virgin Islands Special Trusts Act 2003 (VISTA) and the BVI’s Trustee Act 2003 (the Amendment Act), on 1 March 2004 were significant developments for the sector and jurisdiction alike.

Both VISTA and the Trustee Amendment Acts were based on proposals which were made to the BVI government by the BVI branch of the Society of Trust and Estate Practitioners (STEP), demonstrating the effectiveness of a close collaboration between government and the private sector that results in the development of the industry in ways that respond to the needs of the jurisdiction’s international client base.

To make it easier for trustees to deal with third parties, the BVI has also adopted many of the recommendations of the English Trust Law Committee, thus making the BVI the jurisdiction of choice when setting up trusts to use in commercial transactions.

STEP BVI is now working on further proposals for trust law reform, so watch this space!

Captive Insurance

The BVI’s captive insurance sector has continued to show substantial success and can now proudly boast 14 uninterrupted years of growth since the introduction of the BVI Insurance Act in 1994. The jurisdiction now has the fourth-highest number of captive insurance registrations in the world, with some 400 captives licensed in the jurisdiction by the end of last year.

The aforementioned Business Companies Act enables structures to be created that combine both the insurance and capital markets. Sophisticated structures such as catastrophe bonds and credit derivatives are increasingly being used to offer insurance-linked solutions to large and complex risks.

In addition, the Segregated Portfolio Companies legislation has undoubtedly attracted more captive business to the BVI. It provides an alternative for organisations with similar businesses and risks to form joint ventures while segregating their respective risks, assets and liabilities.

Public / Private Partnership

Essential and sound legislation and prudent regulation can only go so far. It is the on-island professionals who do the hard work and provide the necessary expertise on a day-to-day basis.

The BVI is the only Caribbean jurisdiction to boast the presence of six of the largest offshore law firms in the world. The world’s top accounting and auditing firms are also present in the BVI. Their professional services include not only the traditional accounting, audit and risk management practices; specialist areas such as forensic accounting, corporate restructuring and insolvency management services are also being offered from within the BVI. In addition, there are many leading international trust and corporate service providers who, through their efficient systems, procedures and people, have helped build the BVI into the world’s offshore corporate domicile capital.

All this growth and success has been supported by the British Virgin Islands International Finance Centre (BVI IFC), which has played a pivotal role in the promotion and marketing of the BVI as a leading financial centre.

The BVI IFC launched “Team BVI,” which comprises a dynamic unit of ambassadors whose principal objective is to create a competitive advantage by presenting the Territory as a modern and progressive jurisdiction to a global audience, thereby ensuring continued growth and success for decades to come.

Continuing to spread the positive and powerful message about the Territory’s competitive advantage is the central focus of the BVI IFC’s partnership with Team BVI. With the current and growing popularity of the BVI’s financial services products, Team BVI and the BVI IFC will surely have much to talk about over the coming months.

For more information, please contact The BVI International Finance Centre
Government of the British Virgin Islands
Haycraft Building, 1 Pasea Estate
Road Town, Tortola
Website: www.bviifc.gov.vg

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