Government Bearer Shares Announcement

INTRODUCTION

On 30 October 2003 the British Virgin Islands'

Government announced that the changes to the bearer share

regime highlighted in our client advisory of May 2003 will not

come into full effect for seven years.

EXISTING IBC'S

For the first four years, the situation will remain

unchanged for existing international business companies. After

that, for a further three years, those international business

companies that retain the power to issue bearer shares would

pay a small increase in their license fee.

Any international business company whether incorporated

before or after the effective date of the IBC (Amendment) Act

("Act") that amended its memorandum

of association to prohibit the issue of bearer shares would

file at the Registry of Companies in the British Virgin

Islands, together with an extract of the amendment, a

declaration to the effect that no bearer shares are in

issue.

AUTHORISED/RECOGNISED CUSTODIANS

When the Act comes into force, it will require all bearer

shares to be held in the custody of either an

"authorised" or "recognised" custodian with

the result that the transferability of bearer shares will be

immobilised.

A Bill to amend the separate Financial Services Act making

provision for "authorised" and "recognised"

custodians, will be introduced in the British Virgin Islands

legislature shortly. The Bill will make service providers

licensed under any British Virgin Islands financial services

legislation eligible for consideration as an authorised

custodian.

In addition, a body corporate incorporated or formed outside

the British Virgin Islands that is not a resident in, and does

not have a place of business in the British Virgin Islands will

also be eligible as an authorised custodian.

British Virgin Islands

Jack Boldarin, Partner

Cayman Islands

Wayne Panton, Partner

Londo...

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