Many users of British Virgin Islands (BVI) International Business Companies are not aware that by December 31, 2010 they must have turned in their bearer shares to an authorized custodian. An additional tax of One Thousand Dollars (US$1,000) and a custodian fee must be paid every year. Alternatively, shareholders can amend the company charter to prohibit bearer shares and replace any bearer shares for shares made out to a nominee.Resident Agent / Offices of British Virgin Islands (BVI) Companies are required to remind customers to comply with the BVI BC Act 2004 in relation to bearer shares and the possible consequences of not complying with the new regime which took effect from January 1, 2010.
The consequences for companies that did not comply with the new regime of bearer shares, as confirmed by the BVI regulator, include among others:
- the loss of all rights which a shareholder may have as such("disabled bearer shares") .
- The payment of the cumulative difference between the rate applicable to government companies without bearer shares and the new government rate for companies with bearer shares in custody.
- Fines by the BVI Financial Services Commission (BVI FSC) for breach of the law.
BVI Service providers and Resident Agents reserve themselves the right to provide services such as restoration, change of registered agent, amendments to the charter and articles of association of companies, or to sign documents for companies with disabled bearer shares.
As for companies which nominee director services are provided, information of the new shareholders must be provided, in order to prepare the necessary documentation and to comply with the requirements of the law. Nominee directors who do not receive said information on time, are likely to resign as directors of these companies.
For more information on BVI companies see :
BVI INternational Financial Center www.bviifc.gov.vg/
BVI Financial Services Commission http://www.bvifsc.vg/
Offshore Structures http://mypanamalawyer.blogspot.com/2010/10/are-offshore-structures-for-you.html
Offshore Structures http://mypanamalawyer.blogspot.com/2010/10/are-offshore-structures-for-you.html
7 May 2004
PRESS RELEASE
BVI PREPARES TO IMMOBILISE BEARER SHARES
ENCOURAGES APPLICATIONS FOR “CUSTODIAN” STATUS FROM JULY
The BVI is poised to take a major step in July towards immobilising bearer shares by starting the applications procedure for custodians of bearer shares.
New legislation will ultimately require all bearer shares in BVI International Business Companies (IBCs) to be held by a custodian and thus immobilised. Companies formed before 1 January 2005 will have until 31 December 2010 to comply.
Companies formed after 1 January 2005 must comply from their date of formation.
To enable custodians to be in place by 1 January 2005, the BVI Financial Services Commission will consider applications to act as custodians from 1 July 2004.
Those eligible to apply as an “authorised” custodian will be service providers licensed under any BVI financial services legislation, as well as bodies corporate incorporated or formed outside the BVI that are not resident in, and do not have a place of business in, the BVI.
Those eligible to apply as a “recognised” custodian will be investment exchanges or clearing organizations that operate securities clearance or settlement systems in a jurisdiction which is a member of the Financial Action Task Force.
All applicants to be “authorised” custodians will have to satisfy the Financial Services Commission that they meet certain “fit and proper” criteria and have the necessary systems in place for safe custody of their bearer shares.
For bodies corporate, the Commission will consider the prudential regulation and anti-money laundering regulations with which the bodies have to comply.
The Commission may attach conditions to its approval and vary or revoke these.
To assist potential applicants for custodian status, the Commission has issued a new Aide Memoire, entitled, Criteria for Approval of Authorised Custodians of Bearer Shares of BVI Incorporated Companies. Besides setting out the criteria the Commission will use when approving custodians, the Aide Memoire addresses, inter alia, the duty of custodians and the grounds on which the Commission may revoke approvals.
Commenting on the new bearer shares regime, Robert Mathavious, Managing Director and CEO of the Financial Services Commission, said, “These measures enable the BVI to comply with all international standards, including the 40 anti-money laundering recommendations of the Financial Action Task Force. They are the result of close cooperation between the BVI private sector, government and regulator. The Commission encourages all potential custodians to apply from 1 July.” NOTES TO EDITORS 1. The Aide Memoire is available on the Financial Services Commission’s website at www.bvifsc.vg 2. The International Business Companies (Amendment) Acts of 2003 and 2004 provide the legal framework for immobilising bearer shares. The Acts are due to come into force on 1 January 2005.
3. The Financial Services Commission (Amendment) Act of 2004 addresses the regulatory framework for immobilising bearer shares, in particular the rules governing custodians. It is due to come into force on 1 July 2004.
4. IBCs will be able to amend their Memoranda of Association to state that they are authorised to issue only registered shares and that these may not be exchanged for bearer shares. They will be required to file this statement with the BVI Registrar of Companies, along with a declaration that they have no bearer shares in issue.
5. The new rules are the result of extensive consultation with BVI service providers. They are based on the recommendations of a private sector panel that the Financial Services Commission convened to examine the issue.
6. Although the IBC (Amendment) Act of 1993 envisaged a deadline for immobilisation of bearer shares of 31 December 2004, the private sector panel recommended a seven-year transition period before the new legislation took effect. A further IBC (Amendment) Act of 2004 gave effect to this recommendation, setting a new deadline for immobilisation of 31 December 2010.
7. Most of the 500,000 IBCs registered in the BVI currently have the power to issue bearer shares. Whether they have in fact issued these and have bearer shares outstanding is not certain.
8. Bearer shares are not unique to BVI IBCs. They are widely used in Europe by non-listed companies and are also popular in Latin America, the Far East and some US states.
http://www.bvifsc.vg/Default.aspx?tabid=134
If you need a Resident Agent or Custodian for the bearer shares of your BVI company, contact us through our website, by email, Bitwine or Skype
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