British Virgin Islands Offshore review for 2000

January 2001

The British Virgin Islands continues to attract offshore commerce and maintains it status as the leading offshore corporate domicile. As of October 2000 over 412,000 International Business Companies are registered in the Territory, 50,000 of which were incorporated in the previous year. Following the success of the Mutual Funds Amendment Act, the BVI is now considered a premier offshore jurisdiction for Mutual Funds with 1,930 Mutual Funds recognised or registered in the BVI. The BVI has also witnessed tremendous growth in the offshore insurance sector and now has 234 licensed Insurance Companies, comprised of 150 Captive Insurance Companies, 54 Credit Life Companies and 30 Domestic Insurance Companies. In addition the Territory has 14 licensed Banks and 73 licensed Trust and Management companies.

International Initiatives

The BVI, like most Offshore Financial Centres, has been subject to intense scrutiny and heightened pressure from national and international organisations such as the OECD, FATF, FSF and the G7 Nations. The BVI Government recognises that in order for the Territory’s Financial Services Sector to continue to prosper and provide the level of service and expertise that has come to be expected of it, the Territory has to be sensitive to international financial and regulatory concerns.

The BVI Government, in consultation with the BVI Financial Services Sector, have for some time been considering how it can provide greater transparency in financial matters where there is a legitimate reason to do so, while continuing to protect client confidentiality. To this end, Government has announced that it is prepared to co-operate with these organisations and will, amongst another things, amend legislation to:

• require particulars of directors to be recorded at the Companies Registry; and

• restrict the mobility attaching to bearer shares by requiring them to be deposited with licensed financial institutions.

It is anticipated that such amendments will result in the Territory being viewed as co-operative, thereby avoiding international sanctions and economic reprisals.

Civil Procedure Reforms

The BVI Court, is about to adopt civil procedure reforms which will change the landscape of litigation within the Territory.

The new Civil Procedure Rules are expected to be introduced on 31 December 2000. Much of their form and content will be familiar to UK lawyers, being broadly similar to many of the civil procedure reforms introduced in the UK by Lord Woolf in April 1999. The overriding objective of the Rules is to enable the Court to deal with cases justly by ensuring that the parties are on an equal footing, reducing costs, applying proportionality in relation to the amount of money involved, importance of the litigation, complexity and financial position of each party and ensuring that matters are dealt with expeditiously.

In an effort to ensure that the objectives are achieved, the Court will take an active role in case management. In consequence, the parties will be required to attend case management conferences, either in person or by telephone, at which directions will be given as to the future conduct of the case.

E-Commerce

The BVI E-Commerce Committee has completed a study of the UNICTRAL Model Law on E-Commerce together with legislation from other leading offshore and onshore financial centres and has made initial recommendations on appropriate e-commerce legislation for the Territory. It is expected that the Attorney General will shortly present draft legislation.

Marine Bill

A draft Marine Bill has been prepared encapsulating many of the features contained in the UK Merchant Shipping Act. The Bill is designed to attract larger vessels to the Territory - in particular large motor-yachts. When enacted, the Bill will enable the BVI Register of British Ships to upgrade from its current status as a Category 2 Register (which limits the tonnage of vessels permitted to register in the British Virgin Islands) to a Category 1 Register, allowing ships of any size to register in the Territory and fly the British Ensign.

For further information on developments within the BVI, please contact us.