The British Virgin Islands is a group of more than forty islands situated in the Caribbean approximately sixty miles east of Puerto Rico. It follows United States eastern standard time and is connected by numerous daily flights to San Juan in Puerto Rico. San Juan is an international juncture with direct flights to the United States, South America and Europe.

The British Virgin Islands is a British protected territory and a member of the British Commonwealth of Nations. It became self-governing in 1967 and has a democratically elected Legislative Council of eleven members and an Executive Council comprising the Governor and four Ministers drawn from the Legislative Council.

The legal system is based on the English Common Law. The judiciary are appointed by the territorial government. The ultimate appellate court is the Privy Council in London.

THE OFFSHORE INDUSTRY

The British Virgin Islands, by virtue of its double tax treaties, was a financial centre long before the enactment of the International Business Companies Act in 1984. In 1984 the Territorial Government enacted legislation to enable the jurisdiction to meet the increasing demands of the international financial community. The cornerstone of the corporate legislation is the International Business Companies Act, 1984. This legislation has proved so popular with the international financial community that the British Virgin Islands is now one of the world's pre-eminent offshore financial centres.

In keeping with its role as one of the world's pre-eminent financial centres, the Territorial Government has also been conscious of the need to provide the international financial community with a broader legal framework within which to provide offshore financial services. A legislative review programme was undertaken which has seen the amendment in 1993 of the Trustee Ordinance, 1961 and the enactment of the Partnership Act, 1996 and the Mutual Funds Act, 1996.

INTERNATIONAL BUSINESS COMPANIES

The International Business Companies Act, 1984 ("IBC Act") provides for the incorporation and administration of the International Business Company ("IBC"). Some of the specific features of IBC's include the following:
(1) IBC's incorporated pursuant to the IBC Act enjoy a complete exemption from income tax. This includes an exemption from capital gains tax, and all forms of withholding tax. There is no exchange control.
(2) Company names must include one of the following words: Limited, Corporation, Incorporated, Societe Anonyme, Sociedad Anonima or abbreviations of the aforementioned.
(3) Memorandum and Articles of Association are provided. The standard form is designed for a straight forward corporate structure. This structure may be amended after incorporation. Alternatively, special form Memorandum and Articles of Association can be tailored to meet a client's requirements prior to incorporation. A minimum of one subscriber is required.
(4) There are no minimum capital requirements and shares may be denominated in any currency. Shares may be issued with or without a par value and may be issued in different classes with special rights attached. Bearer shares may be used.
(5) The minimum number of directors is one. The first appointment is by the subscriber. Corporate directors may be used.

It is a requirement that IBC's have a registered office and registered agent in the British Virgin Islands where a copy of the share register and imprint of the corporate seal is kept.

The IBC Act provides an environment of administrative ease and flexibility. Specifically:
(1) There is no requirement to file annual returns or financial statements.
(2) There is no requirement to hold annual meetings of directors or shareholders.
(3) Directors and shareholders resolutions may be passed by telephone meetings or by circulating written resolutions (including facsimile copies) for signing. Meetings need not be held in the British Virgin Islands.
(4) A company need not have British Virgin Island resident directors.
(5) The books and records of the company may be kept at such place as the directors determine.
(6) Bank accounts may be opened anywhere in the world.
(7) A company may finance or repurchase its own shares out of surplus. Repurchased shares may be cancelled.
(8) Reductions of capital can be effected by resolution of the directors or shareholders. There is no necessity for a court order.
(9) There are minimal disclosure requirements and the ownership of shares and the names of directors and officers are not available on the public record.

Kaizen Corporate Services Limited has shelf IBC's immediately available. Alternatively, an IBC can be incorporated to instruction within 24 hours (please allow 7 days for delivery)..

The above is only intended as a general outline of some of the significant features of the laws relating to IBC's. Should you require any further information, please contact Kaizen.

DUE DILIGENCE REQUIREMENTS

You may be aware that new due diligence procedures for the incorporation of companies are being implemented by law in most offshore jurisdictions. The British Virgin Islands financial community has introduced such procedures.

To comply with the new procedures we ask that when incorporating an International Business Company, you return to us the following:
1. The name, address and occupation of each beneficial owner of shares in the company.
2. A copy of the passport or other identity document of each beneficial owner of shares in company.
3. A reference letter from a bank or professional service organisation in respect of each beneficial owner of shares in the company.

This information will be held confidentially in the registered office in British Virgin Islands. Please do not hesitate to contact Kaizen Corporate Services Limited if you have any questions.