On 4 June 2018, the British Virgin Islands (BVI) Micro Business Companies Act 2017 (the Act) came into effect. The Act is primarily designed for small, non-financial sector businesses including start-ups and small to medium enterprises, rather than for international corporations.
Key features of the Micro Business Companies (MBC) Act
- The gross asset value or annual turnover of a MBC cannot exceed US$2 million. A MBC that exceeds these limits is required to transform into a BVI Business Company. A MBC may also elect to transform into a BVI Business Company.
- The operations of the MBC are carried out by an individual who is referred to in the Act as the principal. The principal must not be disqualified from acting in that capacity.
- The Act includes an express statutory right for the principal to negotiate, conclude, agree and enter into contracts in the name and on behalf of the Company.
- A MBC can only issue a maximum of six (6) shares, one of which must be issued to the principal and is referred to as the principal share. The remaining five (5) shares (participant shares) can, but are not required to be, issued to shareholders referred to as participants. Participant shares and the rights attached thereto are non-transferrable, save and except by operation of law in the event of a participant’s death or mental incapacitation. Participant shares can only be issued to natural persons.
- The MBC cannot have more than ten (10) employees.
- Principal and participant shareholder information are publicly accessible on the Register of MBCs.
- The MBC is required as part of its incorporation to prepare a charter in English (in an approved form) which will set out, amongst other thigs, its specific business purpose. The charter will be binding on the principal and participants (if any).
- The MBC is required to have a registered agent and registered office in the BVI. Only certain approved entities will be able to provide these services.
- MBCs are required to file annual returns as well as interim returns in the event of any changes to its charter or statutory characteristics as an MBC, or certain changes to its business.
- The MBC is a simple and transparent structure which can be formed and used through a smart phone
To view the Act, please click here.
What Vistra can provide
Vistra has in-house expertise that can support clients with practical knowledge and legal services on how to optimise the opportunities brought by the new legislation.
Please note, however, that while the Act is now in force, it is not yet possible to establish an MBC, as the required platform and guidelines have not yet been issued by the BVI Government.
Should you have any questions or need advice, please contact your account manager or your usual Vistra contact.