The British Virgin Islands And Commercial Law

Beginning our short focus on Commercial Law, through the eyes of a Thought Leader, is Rosalind Nicholson on the topic of Commercial Law, and heard about her work in the British Virgin Islands, with a particular focus on shareholder disputes.

There are more than 450,000 active business companies in the BVI. What is it that attracts companies to establish business operations in the BVI?

There are a number of factors which combine to make the British Virgin Islands (BVI) the leading offshore incorporation domicile.

First, as a British Overseas Territory, the BVI offers a stable political environment, with a democratically elected House of Assembly. The official language is English and it is on the Organisation for Economic Cooperation and Development's (OECD) 'White List'.

Second, the Business Companies Act, which governs international business companies is tailor-made for the BVI and draws on legislative precedents from England and Wales, Canada, Delaware and elsewhere, selecting from the strengths of each with innovations unique to the BVI. The result is user-friendly, flexible and efficient statutory framework designed to facilitate the carrying on of corporate business world-wide.

Third, the BVI provides a neutral tax jurisdiction for business companies: there is no corporation tax, capital gains tax, wealth tax, income tax or any other tax applicable to a business company. A BVI business company is exempt from the payment of stamp duty on any instruments or deeds relating to the business of the business company, including the transfer of all property to or by it and transactions in respect of its securities. This means that businesses which choose to structure their operations through the BVI do not thereby include an additional layer of tax at that level. Instead, tax is payable on the business operations where they are carried on, profits at holding company level do not attract additional tax.

Fourth, the BVI is a common law jurisdiction whose laws are, broadly speaking, drawn from English law. It therefore draws on English law to a large extent for precedent, whilst continuing to develop a local jurisprudence of its own. The BVI has an internationally renowned modern, specialist commercial court, which deals exclusively with corporate and commercial matters. The Commercial Court is staffed by specialist Judges experienced in dealing with the sorts of matters which the Court sees, many of whom are senior QCs drawn from the London...