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Celebrating 30 years of the BVI International Business Companies Act


Sylvia Moses, Executive Director, British Virgin Islands International Finance Centre
September 2, 2014



Passed on 15 August, 1984, the British Virgin Islands' International Business Companies (IBC) Act – and the subsequent take-up of the BVI IBCs law over the past 30 years – has had a profound, highly positive impact not just on the local BVI economy but also the global financial system.

The success of the IBC Act has resulted in a thriving financial services industry in the BVI.  More than one million companies have since been formed, incorporated or registered, with approximately half a million still active.

More than any other piece of legislation at the time, the success of the original act has enabled the BVI to become the first-tier financial services jurisdiction it is today.  It will be a fundamental tenet of the future that enhances the ongoing success of the BVI.

Looking back at its success, it becomes easy to forget how far-reaching the initial concept of the act was.  Without realising it, the IBC Act was far ahead of its time, streamlining the incorporation procedure and removing the requirement of corporate capacity – two ideas that did not surface in English company law until the Companies Act 1986 and the Companies Act 2006 respectively.

The BVI IBC Act was the collaborative work of public and private individuals – a group that later became known as the 'Gang of Five'. Lewis Hunte, the then Attorney General of the BVI, met with Neville Westwood, Michael Reigels and Richard Peters, all partners at Harneys to discuss the bare bones of what would become the IBC along with American lawyer Paul Butler from US law firm Shearman & Sterling who played an integral role as he initially suggested the creation of a new corporate product to respond to the cancellation of the double tax treaty.

Whilst the Act has been subsequently amended, most notably in 1990, it set the standard that other centres on-and offshore have tried to emulate since.  In 2004, the BVI Business Companies Act advanced the IBC to take the BVI's success to even greater heights.

Over the past two decades there has been a distinct hardening of attitudes from larger developed economies towards the BVI and other smaller financial centres.  The demands from all quarters for greater transparency of financial services programmes, policies and procedures have grown ever louder, and the spotlight from political and other stakeholders has intensified.

In recognition of the evolving global finance landscape, the BVI's legislation, taxation and international cooperation modalities have been reviewed, evaluated and inspected to ensure full compliance with international standards.  By doing so, the BVI has ensured its financial sector and the use of IBCs has not only survived but thrived.

The result is that the BVI has weathered this changing financial climate.  Today the BVI is viewed as a cooperative and well regulated international finance centre that applies international standards and plays its part in protecting the global financial system.

Challenging times also represent a great opportunity. Flexibility and innovation are fundamental attributes of the BVI IBC, which has helped to mould the BVI's business affairs which are characterised by pragmatism and progress in a mercurial global financial system.

Since 1984 and largely due to the IBC, the BVI has developed into a reputable and responsive financial centre at the core of global trade.  The BVI has evolved into a modern, forward-looking financial centre that has matured and garnered widespread international recognition.  The jurisdiction has successfully combined local and overseas expertise, offering a diverse range of innovative, high-quality.

 

Tags: law | financial services | services | legislation | standards | tax | offshore | trade | British Virgin Islands | Virgin Islands | compliance | business | individuals

 

 

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