If you're looking at opening an offshore business, choosing where to incorporate it is a huge and important decision. The wrong choice can mean high fees, strict regulations, and legal risks. You need a jurisdiction that works for your business—not against it.
The British Virgin Islands (BVI) is a popular option, offering tax benefits, privacy, and a simple setup. But it’s not the right fit for everyone.
Considering the good and bad sides of those offshore companies in the British overseas territory is important before deciding if you will have your own BVI business company. This guide breaks down everything you need to know about BVI company formation so you can make the right choice.
What is a BVI Company?
A BVI company is a business registered in the British Virgin Islands (BVI). It’s officially called a Business Company (BC) and is widely used internationally.
BVI companies are known for their simple setup, flexible structure, and strong privacy protections. They can be formed by individuals or other companies, with no requirement for local owners or directors.
The BVI offers a stable legal system based on English common law and uses the U.S. dollar as its currency. With over 600,000 registered companies, it is one of the world’s leading business hubs.
Types of BVI Company Formation
BVI offers different company structures, each designed for specific business needs.
- Company Limited by Shares (Most Common): This is the standard BVI company type. It issues shares to investors, with shareholder liability limited to the amount unpaid on their shares. Directors manage daily operations.
- Restricted Purpose Company: This type is created for specific business activities, usually in securitization and structured finance. It has a limited corporate scope and must be registered as a restricted purpose company at incorporation.
- Segregated Portfolio Company (SPC): An SPC allows a company to create separate asset portfolios. Each portfolio is legally protected, meaning one portfolio’s liabilities do not affect the others. This structure is commonly used in investment funds and insurance.
- Company Limited by Guarantee: This type does not issue shares. Instead, members provide a financial guarantee. It can be structured with or without the ability to issue shares and is often used by non-profits.
- Unlimited Company: An unlimited company can issue an unlimited number of shares and may or may not be authorized to issue shares. At least one member must take on unlimited liability for the company’s debts.
BVI Company Formation Advantages
The British Virgin Islands (BVI) is one of the most popular places to create an international business company (IBC). This is because it's well-known as being a tax haven.
Here’s a quick look at why businesses choose to incorporate in the British Virgin Islands:
| Benefit | Description |
|---|---|
| Tax Efficiency | No extra taxes beyond what owners already pay in their home country. |
| Simple Corporate Rules | No strict corporate governance requirements; businesses can operate freely. |
| No Share Capital Requirement | Companies don’t need to provide share capital, reducing setup costs. |
| Easy Relocation | Can migrate to or from other jurisdictions if allowed. |
| Mergers & Acquisitions | Can merge with BVI or foreign companies; the surviving entity can be elsewhere. |
| No Financial Restrictions | Can buy back shares if they meet solvency requirements. |
| Low Maintenance Costs | Affordable setup and renewal fees compared to other jurisdictions. |
| Global Stock Exchange Access | Can list shares on international stock exchanges. |
BVI Company Formation Disadvantages
While BVI remains a popular offshore destination, there are notable challenges:
1. Stricter Economic Substance Requirements
The BVI introduced the Economic Substance Act in 2019 to meet OECD standards. Companies involved in activities like banking, finance, shipping, holding companies, and IP must now maintain real operations in the BVI—such as staff, office space, and local spending—and submit annual reports. Non-compliance can result in fines or removal from the register.
Additionally, regulated industries like gambling, banking, and investment services must obtain licenses from the BVI Financial Services Commission.
2. Longer Setup and Approval Times
Setting up a basic BVI company still takes 1–3 days. However, businesses in regulated sectors face a 4–6 week licensing process and extensive document reviews.
Opening a bank account can take up to 3 months, and companies hiring locally must also apply for work permits, which require 7–10 weeks. These added steps make the BVI setup process slower and more complex than before.
3. Ongoing Reputation Risks
Despite reforms and OECD white-listing, the BVI's reputation suffers due to past scandals, including the misuse of COVID-19 funds and major drug busts.
Companies may face skepticism from banks, clients, and regulators, requiring extra transparency and compliance efforts to build credibility.
4. High Costs and Banking Challenges
Incorporation fees typically range from $1,500–$3,000, with annual renewals between $800–$1,500.
Opening bank accounts outside BVI is difficult due to reputational concerns, and many banks refuse BVI company applications outright.
Step-by-Step Process to Register a BVI Company
Setting up a BVI company is straightforward but requires meeting specific legal and documentation requirements. Here's a simple breakdown of the BVI offshore company formation process:
Step 1: Choose a Company Name
- Must include Ltd, Inc, Corp, S.A., or similar endings.
- Restricted names (e.g., "Bank" or "Trust") require approval.
- Up to three name options can be submitted for approval.
Step 2: Appoint a Registered Agent
- A licensed BVI registered agent is required for all companies.
- The agent handles incorporation, filings, and legal compliance.
- The registered office is usually the agent’s address.
Step 3: Prepare and Submit Documents
The following key documents must be submitted to the BVI Registrar:
- Charter (Memorandum & Articles of Association) – Defines company structure.
- Certificate of Incorporation – Official registration document.
- Register of Directors & Members – Lists company leadership and shareholders.
- Minutes of Meetings – Records of director and shareholder decisions.
- Register of Mortgages (if applicable) – Details of any secured loans.
Step 4: Obtain a Business License
- Required based on the business type and industry.
- The process varies depending on the company’s activities.
Step 5: Open a Bank Account
- A corporate bank account is needed for BVI company incorporation.
- Can be opened in offshore banks or neobanks that accept BVI companies.
Key Characteristics of a BVI Company Formation
| Benefit | Description |
|---|---|
| Tax Efficiency | No extra taxes beyond what owners already pay in their home country. |
| Simple Corporate Rules | No strict corporate governance requirements; businesses can operate freely. |
| No Share Capital Requirement | Companies don’t need to provide share capital, reducing setup costs. |
| Easy Relocation | Can migrate to or from other jurisdictions if allowed. |
| Mergers & Acquisitions | Can merge with BVI or foreign companies; the surviving entity can be elsewhere. |
| No Financial Restrictions | Can buy back shares if they meet solvency requirements. |
| Low Maintenance Costs | Affordable setup and renewal fees compared to other jurisdictions. |
| Global Stock Exchange Access | Can list shares on international stock exchanges. |
Once registered, the company must comply with annual filings and economic substance requirements to remain in good standing.
Set Up Your British Virgin Islands Company in Hong Kong
BVI company formation is not the same as it once was, but navigating your business in certain ways can still make it a better choice than many continental registration alternatives.
Pairing your BVI business up with a global multi-currency business account could definitely soften the blow of the recent BVI policy changes if you're already registered there as well.
Register your company with Air Corporate today and get access to a multi-currency business account located in Hong Kong.
