The BVI Business Companies Act (the Act) came into force on
January 1 2005. Unlike the International Business Companies Act
(the IBC Act), this single statute allows for the incorporation
of international offshore companies as well as locally owned
companies doing business in the BVI. For a two-year transition
period, both the IBC Act and the new Act will be in force.
After the two years, the new Act will be the sole corporate
statue for the BVI and will regulate all BVI companies.
Seven different types of companies can be incorporated,
including guarantee and unlimited companies, segregated
portfolio companies and restricted purpose vehicles.
There is nothing to prevent a company from stating its
objects or purposes, but it is not required to do so in its
memorandum or articles. The only exception is a restricted
purposes company, which must state the purposes for which it is
Members, their rights and liabilities
The new Act specifies the rights that a shareholder has: the
right to one vote, the right to an equal share of any dividend,
and the right to an equal share in the distribution of surplus
assets. The memorandum can vary these rights.
The new Act does not contain provisions for members'
remedies along the lines of s 459 of the UK Companies Act 1985
for unfair prejudice (which is consistent with the IBC
A company must have at least one director and it must keep a
register of directors.
The new Act also allows a director of a subsidiary to act in
the best interests of its holding company even if it is not in
the best interests of the subsidiary, provided they are
expressly permitted to do so by the memorandum or articles, and
have the prior agreement of all shareholders if the company is
not a wholly owned subsidiary.
Shares, capital and distributions
The new Act abolishes the concept of authorized share
capital, or indeed of share capital. The concept of surplus
(the IBC equivalent of share premium) is not retained.
Distributions (including dividends) can only be made if the
directors are satisfied that the company will, immediately
after the distribution, pass a statutory solvency test. A
company may purchase, redeem or otherwise acquire its own
shares in accordance with two distinct regimes: under
provisions in the new Act or in accordance with its own
memorandum or articles.
Registering charges and priorities of
Under the new Act, a company must keep a register of charges
at its registered office or at the office of its registered
agent. However, the particulars of the charge can now be
registered in a new public Register of Registered Charges
maintained by the Registrar for each company. Either the
company or the chargee can apply to the Registrar for
registration, and there is no time limit for making an
application. Registration is not mandatory, and failure to
register does not affect the charge's validity or
enforceability, even against a liquidator or other creditors,
including secured creditors.
However, registration will affect priority for charges. The
statutory priority rules can be varied by agreement. Registered
floating charges rank after a subsequently registered fixed
charge unless the fixed charge breaches a negative pledge in
the floating charge.
Merger, consolidation, sale of assets, forced
redemptions, arrangements and dissenters
The provisions relating to these matters in the new Act are
similar to the equivalent provisions in the IBC Act, although
some of the provisions have been clarified.
The new Act allows a foreign company to continue as a
company incorporated under the new Act but only if the laws
under which it is registered authorize it to continue in
A company can only go into voluntary liquidation if it
either has no liabilities or it is able to pay its debts as
they fall due; if it is insolvent, it must go into insolvent
liquidation under the Insolvency Act 2003.
If the voluntary liquidator believes that the company is
insolvent, they must notify the Official Receiver and call a
meeting of creditors within 21 days. This is treated as a first
meeting of creditors under the Insolvency Act and the
liquidation continues as under the Insolvency Act.