Equity Trust (BVI) Limited is one of the largest licensed trust companies in the BVI, with a staff complement of circa 75, including experienced lawyers, accountants and industry qualified management.  Equity Trust traces its routes in the BVI back to 1992 and offers a comprehensive range of services to private, professional and corporate clients around the globe.

Equity Trust (BVI) Limited offers the following services from the BVI:

• Incorporation and maintenance of domestic and international BVI companies, including:
• Incorporation and maintenance of hybrid and special purpose companies
• Assistance with testamentary and estate planning arrangements
• Provision of a full range of trustee services
• Establishment and maintenance of BVI partnerships
• Establishment and administration of BVI mutual funds
• Formation and maintenance of captive insurance companies
• Accounting and re-invoicing services
• Structuring services
• BVI yacht registration
• Managed trust company services
• Custodial services
• Investment services

Geographic location

• The BVI is close to the US East Coast and Latin America, overlaps with Europe time zones, and has first-rate communications facilities.

Political and economic stability

• The BVI is a British Overseas Territory
• The Government comprises a British appointed Governor and 13 constitutionally elected members of a Legislative Council
• Democratic elections are held every 4 years. 
• The base currency of the BVI is the US Dollar.

Beneficial tax system and the free movement of funds

• The BVI reduced its domestic income tax rate to 0% in January 2005, and introduced a payroll tax system in its place. 
• Trusts and BVI companies are not taxed in the BVI unless they employ staff in the jurisdiction. 
• There are no capital gains taxes, exchange control regulations or restrictions on the movement of funds within the BVI. 
• There are no double tax treaties i.e. complete tax transparency.

Codification of banking, insurance, trust and company laws

• BVI Law is based on the British Legal system and English Common Law, with final appeal to the Privy Council in England.  The BVI has a clear and practical legal and regulatory framework.

Confidentiality practices

• The BVI does recognise that fiduciaries and service providers have a strict duty of confidentiality. 
• Disclosures will only be made upon instruction from the BVI Court, to whom clear evidence of just cause such as criminal activity must be presented.

Cost effectiveness

• The BVI gives careful consideration to the pricing of licence fees, cost and quality of labour, the ability to secure professional staff and work permits for foreign nationals.

Support services

• As would be expected of a successful business and finance centre, BVI is well served by trust and fiduciary companies, banks, international law firms, accountancy practices and all appropriate support industries.

Reputation

• The BVI appears on no black lists and is well viewed by the supranational organisations such as the IMF, the OECD and FATF.
• BVI is the only British Overseas Territory to which the UK has devolved full responsibility for its own financial sector – a testament to the confidence that the UK puts in the BVI. 
• The BVI has been invited to chair a tri-partite working group on financial services, consisting of representatives from the European Commission, EU Member States and Overseas Territories. 
• Excellent record for business propriety and due diligence in its practices.

Critical mass in and commitment to the jurisdiction allowing:

• Qualified specialist staff with level of technical support not offered by smaller companies
• Practical “solution driven” approach.
• Widest range of products and services
• Comprehensive insurance coverage
• The only Authorised Custodian of bearer shares in the jurisdiction (at the time of writing)
• Close working relationship with the financial services commission and government
• Representation on the Registered Agents Association
• Close working relationship with the rest of the Equity Trust group (represented in 26 jurisdictions)

The BVI had 2 companies’ ordinances running in tandem, relating to both companies doing business within the BVI and companies not doing business in the BVI:

Companies Act (Cap 285) – governed local companies

International business companies (IBC) Act 1984 – governed companies not doing business in the BVI.

The BVI Business Companies Act 2004 replaces the IBC and Cap Acts, thereby ending the ring-fencing much criticised by the OECD’s unfair taxation paper, UK white paper and IMF.  Also a natural “evolution” of the IBC Act, increasing the scope of BVI offerings.  From 1 January 2007, only BVI Business Companies will exist.

BVI Companies Act 2004

key features:

• Wide range of corporate vehicles including segregated cell, limited and unlimited by share, limited and unlimited by guarantee and restricted purpose companies
• Wide choice of company name
• Removal of concept of authorised capital
• No requirement to state the objects or purposes of a company in the M & A
• Defined corporate capacity replacing weak ultra vires doctrine
• Members’ rights clearly defined
• Directors’ duties defined
• Bearer shares only issued if M & A allows, but must be lodged with an authorised or recognised custodian (Equity Trust is the only Authorised Custodian licensed by the BVI financial services commission at the time of writing)
• Clearly defined rules covering distributions and dividends
• Defined registration of charge process
• Clarification of liquidation, strike off and restoration process
• Clarification of fees and fines for non-compliance
• Clear transitional provisions.

The Insolvency Act, 2003 introduced the availability of voluntary arrangements, the concept of shadow directors, licensing of insolvency practitioners, and disqualification of directors.  The key benefits to lenders include certainty by way of objectivity tests of solvency, rules enforcing set-off and netting, and a practical approach to cross border insolvency.  The law also provides a new basis for an administration order, namely to facilitate a cross border scheme of arrangement for a group of companies.  Banks and other large creditors want certainty that the terms of their security will be upheld, that set off and netting survive in insolvency, and that the legislative regime is reasonably creditor friendly.  Insolvency practitioners familiar with the new law expect creditors of BVI companies – even when there are no assets in the BVI – to commence a main proceeding under the new BVI law, with ancillary proceedings elsewhere as required.

The Virgin Islands Special Trusts Act of 2003 (VISTA) addresses the conflict between the prudence expected of trustees and the commercial pressure on them to hold assets that they could not reasonably be expected to actively manage.  The English “prudent man of business” rule imposes a duty on trustees to monitor and intervene - perhaps accept an unwanted but attractive offer to purchase assets or consider selling large shareholdings to diversify.  VISTA is a separate trust regime to a “normal” trust. VISTA relieves the trustee of these duties so that, for example, succession planning may be achieved with certainty that assets will be dealt with as the settlor intended.  VISTA allows property to be held on a trust to retain rather than a trust for sale; and leaves the management of underlying companies to the directors.  Only shares in a BVI company may be held on a VISTA trust - other assets should be owned by the IBC.

Practitioners are ever finding new uses for VISTA, including:

• When a settlor wishes to remain as director and in control of underlying private or investment holding companies
• Entrepreneurs who need to be able to make quick decisions without referring to the trustee
• Trusts of “high risk” assets, such as real estate, controlling shareholdings in private companies, speculative investments including venture and seed capital, derivative financial instruments including futures and SWAPs
• Divorce settlements where shares in private companies are to form part of the financial arrangements
• Blind trusts for politicians and other politically exposed persons
• To hold shares in off-balance sheet (orphan) transaction companies, commonly known as Special Purpose Vehicles (SPVs), used for securitisations and other capital market deals.

Amendments contained in the Trustee (Amendment) Act, 2003 facilitate dealings between trustees and third parties, enhance the rules dealing with conflicts of law and forced heirship, and improve existing sections of the Trustee Act, 1993 dealing with purpose and charitable trusts as well as increased flexibility to vary the terms of a trust.  In conjunction with the Insolvency Act and VISTA. These changes probably make the BVI the most advanced trust jurisdiction for commercial transactions as well as traditional private family trusts. 

* Some information used with the permission of campden publishing's OFC Report.