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BVI OFFSHORE COMPANY

Please contact us today to enquire about incorporating a BVI offshore company and to open an offshore bank acount.


NEW BVI BUSINESS COMPANIES ACT AND BEARER SHARES

In accordance with the new Company Act, bearer shares must be deposited with a custodian authorized or recognized by the BVI Financial Services Commission. Bearer shares not deposited with a custodian are immobilized and the rights attaching to them are disabled and any transfer of the certificate is void. The custodian becomes the member of the company but the beneficial ownership of the share remains with the intended bearer.

So, you might be wondering if it has to do anything with your particular BVI company...

BEARER SHARES TEST

In the first instance I ask you to make a simple test and determine if you company is allowed to issue bearer shares, or not.
Note. We discontinued provision of the M&AA allowing bearer shares from October 2003 except for when asked to do so by a special customer's request. So, if your company was incorporated after October 2003 most probably it can not issue bearer shares.

Please kindly open the MEMORANDUM OF ASSOCIATION of your company and find Article 10.

IF article 10 of MEMORANDUM OF ASSOCIATION reads as follows:
"The directors may issue shares as registered or as shares issued to bearer as they may determine by resolution of the directors." ...then your memorandum DOES allow issuance of bearer shares

IF article 10 of MEMORANDUM OF ASSOCIATION reads as follows: "Notwithstanding anything to the contrary in this Memorandum or the Articles of Association of the Company, or the Act, the directors may issue only registered shares, and bearer shares are not permitted." .then your memorandum PROHIBITS issuance of bearer shares

ACTION PLAN WHEN YOUR MEMORANDUM PROHIBITS ISSUANCE OF BEARER SHARES

1. I recommend to have your company voluntarily re-registered before December 1, 2006. As I mentioned in my previous email to you, the costs would be US$255 for the original set and US$405 for the apostilled set plus courier delivery costs depending on the destination.

Please let us know (1) if you need a voluntary re-registration and also advise (2) if you need an apostilled set. You may need an apostilled set to deal with banks, foreign authorities and other non-BVI third parties. We will need as an information are you going to pay for this services by a credit card or by a wire transfer or money order/bank cheque, etc.

ACTION PLAN WHEN YOUR COMPANY'S MEMORANDUM DOES ALLOW ISSUANCE OF BEARER SHARES

1. I recommend to have your company voluntarily re-registered before December 1, 2006. As I mentioned in my previous email to you, the costs would be US$255 for the original set and US$405 for the apostilled set plus courier delivery costs depending on the destination.

2. IF the Bearer Shares Test indicates that your company CAN issue bearer shares then you have two options:

OPTION I This option is applicable when you prefer to retain the right of your company to issue bearer shares

After January 1, 2007 you would have to keep all bearer share certificates with the properly licensed custodian in the BVI or a custodian recognized by the BVI government and located in another country. Please ask for details if interested. The shares not delivered to a custodian will be disabled. In our case you would have to pay the custodian fee from US$790 p.a. per share certificate plus one time initial set-up costs of US$375. Please note that our preliminary research shows that you may expect considerably higher fees from other custodians.

After January 1, 2007 the BVI Registrar annual fee will increase to US$600 from US$350 for the companies not prohibiting issuance of bearer shares. Note. This would be US$1,100 for the companies with the authorized capital exceeding US$50,000.

OPTION II
This option is applicable when you prefer to ABOLISH the right of your company to issue bearer shares to eliminate future costs for the custodian and increase in the BVI government fees.

The company was have to first file an amendment to abolish the bearer share provision at a fee of $275 for filing (once resolution date is within 30 days of filing). Then on the same date (if you wish) we would file the voluntary re-registration. There will be two separate filing and 2 separate charges.

MY OPINION

I think bearer shares do not worth so much trouble and expenses, and if I were you I would exercise Option II and order its processing to us at once with the voluntary re-registration. Don't forget as well that immobilizing of the bearer shares with a custodian effectively "kills" their mobility.

So, if you follow Option II then please kindly let us know (1) if you need a voluntary re-registration and also advise (2) if you need an apostilled set and (3) confirm that you need to file prohibiting of bearer shares issuance.

CONCLUSIONS

Finally, that's what is most important: the recent changes in the BVI company law have been a very smart move in response to the "ring fence policy" and other accusations of EU, FATF and OECD. The EU, FATF and OECD implied that BVI created a special type of a tax free company for non-resident owners - BVI International Business Company (BVI IBC), and this was (ab)used by some residents of the Western countries for tax evasion.

Now, from January 1, 2007 there will be only one general trade company act in force in the BVI, and just one type of general trade company. This will be the BVI Business Company allowed to do business in the BVI and tax free for all offshore profits. So, legally it's not an offshore company any more, while actually it preserves most of the attractive features of the BVI International Business Company.

My personal opinion is that the BVI company has become even a more powerful corporate instrument as before.

Just compare...

Type of Company BVI IBC BVI BC
Filing of directors' names with the BVI authorities NO NO
Filing of shareholders' names with the BVI authorities NO NO
Filing of accounts with the BVI authorities NO NO
Can do business in the BVI NO YES*
Corporate Tax ZERO ZERO**
Bearer shares YES YES***

*The BVI BC company must apply for a trading license to do business in the BVI

**Payroll taxes are to be paid if local BVIlanders are employed by the company

***Bearer shares still allowed but...please see above



MY MESSAGE

So, my message is: don't you worry, business will be as enjoyable as usual with your BVI company, but please consider seriously to bring the corporate documentation of your company in line with the new legislation.

...and, we at Unitrust Capital are always here to help:)

BVI IBC VOLUNTARY RE-REGISTRATION


As you might well know the new BVI Business Company Act has come into force, and all companies previously incorporated as International Business Companies have to be re-registered as BVI Business Companies with the Registrar to govern the company under the new Act.

Re-registration can be done voluntarily or automatically.

VOLUNTARY RE-REGISTRATION

The application and accompanying documents will be filed with the Registrar. The government deadline for the voluntary re-registration is December 31, 2006. Our own deadline is December 1 as we need some time to prepare and file the documents. Then, don't forget about Christmas:)!
FEES FOR VOLUNTARY RE-REGISTRATION: $255 plus courier delivery costs. This includes the provision of a Certificate of Re-Registration and two new filed stamped M&AA's TO GOVERN THE COMPANY UNDER THE NEW ACT.

Apostilles would be US$150 ea./per set

AUTOMATIC RE-REGISTRATION

If a BVI IBC has NOT made a voluntary application it shall be deemed to be re-registered under this Act on 1st January 2007. However, in this case the Registrar shall NOT be required to issue a certificate of re-registration to the company UNLESS it applies for a certificate and PAYS the appropriate FEE.

If the company "slept through" the deadline of December 31 2006 and was re-registered involuntarily then due to the increased costs the following FEES will apply:

A certificate of re-registration at a fee of $150 plus US$110 M&AA amendment fee plus $120 for two filed stamped M&AA with the total of US$385 plus courier delivery costs.

Apostilles would be US$150 ea./per set

OUR RECOMMENDATIONS

We strongly recommend proceeding with the VOLUNTARY RE-REGISTRATION before December 1, 2006 as this will allow your company to update the corporate documents in line with the new legislation with minimum costs.

November 01, 2006

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