Country report: Public and private sector partnership in the BVI

By Humphry Leue, chief operations officer, British Virgin Islands International Finance Centre

Most industry analysts in the offshore arena will concede that the rise to prominence of the British Virgin Islands (BVI) has been impressive. A decade ago few would have considered the British Virgin Islands as a full service financial services offshore jurisdiction. The territory has long been the undisputed leader in corporate registrations and is also number two in the world for hedge fund registrations, number four in captive insurance registrations and has world-renowned trusts and estate planning offer.

The BVI built its reputation as a leading international finance centre around the registration and domiciliation of International Business Companies (IBCs). Following the introduction of the new BVI Business Companies Act in 2005 - replacing the renowned IBC Act and the domestic Companies Act – 2006 proved to be another fantastic year with some 51,000 new business companies registered in the BVI during the first three-quarters of the year alone. This is on track to surpass the 57,000 IBCs incorporated in the jurisdiction in 2005. This bumper year of company registrations has seen the total number of BVI companies grow to over 750,000 since the IBC Act was first introduced in 1984, more than any other jurisdiction by far.

On the investment business front, a recent survey by Advent Software ranked the BVI as second among all hedge fund domiciles with nine per cent of the global market, overtaking Bermuda with seven per cent. Some 2,500 funds now operate in or from within the jurisdiction, drawing on the support of more than 500 managers and administrators licensed in the territory to provide fund support services to both mutual and hedge funds.

The BVI has also attracted some of the biggest names in the sector, further endorsing the maturity and attraction of the domicile on the world stage. Last year, Fortis Prime Fund Solutions, one of the world’s foremost hedge fund administrators made a firm commitment to the BVI through the acquisition of Hedge Funds Services (HFS), one of the principal administrators operating in the territory with approximately €2bn in assets under administration. In October, Jersey-based law firm Ogier, one of the largest and most renowned offshore law firms in the world, announced its entry into the BVI through a merger with WSmiths, a BVI firm whose practice area focuses on investment funds and related securities business, particularly in Asia and Latin America.

However, a financial-services industry can only thrive given the right supporting environment – and the ‘Big Four’ business companies in the BVI, investment funds, captive insurers and trusts continue to prosper. A large part of this is due to the oft-praised regulatory and legislative framework within which they operate, encompassing internationally accepted and business-enabling regulatory standards and laws. As the Financial Services Commission (the regulatory authority) puts it, the BVI is known for its prudent regulatory regime, enforced with a light touch.

No success would be possible, however, without the wealth and support of experienced, knowledgeable professionals resident in the BVI. The BVI is the only Caribbean jurisdiction to boast the presence of all six of the largest offshore law firms in the region – and the legal profession in the territory continues to expand and strengthen with a steady influx of lawyers, barristers and solicitors. The world’s top accounting and auditing practices are also present in the BVI and have been for quite some time. Their professional service offerings include not only the traditional accounting, audit and risk-management practices, but also increasingly specialist areas such as forensic accounting, corporate restructuring and insolvency management services offered from within the BVI. And then there are the many leading international trust and corporate service providers who, through their efficient systems, procedures and people, have helped build the BVI into the world’s corporate domicile capital.

All this growth and success has been supported by the British Virgin Islands International Finance Centre (BVI IFC), which has played a pivotal role in the promotion and marketing of the BVI as a leading financial centre. The BVI IFC has implemented a worldwide programme of road shows to inform, educate, and discuss the opportunities for growth in financial services with the international professional and business communities. Through this global programme, the success story of the BVI has been taken to many of the leading centres for international business, including London, New York, Hong Kong, Singapore, Miami, Geneva, Zurich and Shanghai, keeping the image and branding of the territory foremost in the minds of its stakeholders.

Established in 2002 as part of the government’s commitment to support the financial-services industry, the aim of the IFC is to give voice to all segments of the finance sector while also making sure the territory retains the unique balance of a sound regulatory framework, an entrepreneurial business community and innovative legislation.

With these aims in mind, the BVI IFC last year launched ‘Team BVI’, which comprises a dynamic unit of ambassadors, whose principal objective is to create a competitive advantage by presenting the territory as a modern and progressive jurisdiction to a global audience and thereby ensuring continued growth and success for decades to come.

This ground-breaking initiative involves senior executives and key officials drawn from government, the regulator’s office and the private sector, who work together to voice the competitive financial products and services and represent the BVI at select international conferences, media interviews and networking events, among others.

Importantly, Team BVI is not a closed shop – far from it. While there are 15 founding members, we are actively seeking the assistance and expertise of the entire financial-services sector in a collective push to showcase the jurisdiction’s leading offshore finance offer.

The vehicle for this message is the organising and hosting of road shows, promotion and publicity through media partners and sponsoring relevant international conferences and events.

With the current and growing popularity of the BVI’s financial-services products, Team BVI and the BVI IFC will surely have much to talk about over the coming months.