OFFSHORE Series | Understanding Offshore Company Registers through Practical Examples (Part 1) - An Example of BVI Companies
Editor's note:
As the pace of economic globalization advances, more and more domestic capital is seeking to develop in the international market. Apart from a few enterprises that will invest directly, most enterprises will choose to set up offshore entities as Special Purpose Vehicles (SPVs) in overseas locations to carry out global investments.
Among the offshore registration locations, the British Virgin Islands (BVI) and the Cayman Islands are currently the popular choices. The most commonly used SPVs are BVI companies and Cayman companies.
This series of articles consists of two parts, each of which will use the Register of Members (ROM) of BVI companies and Cayman companies as examples to analyze the purpose, definitions, and considerations of offshore company registration documents by interpreting the relevant legal provisions and citing practical cases.
The BVI Companies Act’s regulations on ROM
The Register of Members (ROM) is the basis for determining the formal qualification of shareholders and is crucial for any company, including BVI companies. As a result, as an important document of BVI companies, the ROM will be required to be provided to relevant regulatory authorities for various cross-border investment registrations. For investors who are shareholders or intend to become shareholders, where should they start to understand the ROM of BVI companies?
Now, let's take a look at how the BVI BUSINESS COMPANIES ACT ("BVI Companies Act") regulates the ROM.
Firstly, the BVI Companies Act explains the function of the ROM. Section 42 of the Act clearly states that the Register of Members as evidence of legal title, which means that the ROM is a proof document of legal ownership.
Secondly, the BVI Companies Act specifies the details of the ROM. According to the relevant provisions of the Act, although different registered agents may issue ROMs in different styles, the detailed contents must comply with the provisions of the Act.
Example and analysis of BVI company ROM
To facilitate understanding, an actual case sample is provided to show the format of a BVI company ROM in detail. The ROM consists of four parts:
1. The first part contains basic information about the shareholder.
In accordance with the legal provisions, this part includes the shareholder's name, address, date of becoming a member, and the date on which the shareholder's identity ceased.
Address: The address provided should be consistent with the address proof provided by the shareholder.
Date entered as a member: If the shareholder is a founding shareholder, the date should be the date of the company's establishment.
Date ceased to be a member: Fill in truthfully.
2. The second part contains details of the shares held.
This part includes the class of shares held, the par value, and the total number of shares currently held.
Class of shares: The common category is Ordinary shares, and different names for other classes may be used depending on the issuing company. For example, Class A shares, etc.
Par value: Determined by the company itself.
Total shares currently held: It is important to note that the common total number of shares issued by BVI companies is 50,000 shares, and over-issuance will result in other special modifications and an overall increase in costs.
3. The third part contains details of the acquisition of the shares.
This part includes the date of acquisition of the shares, the number of shares acquired, the certificate number of the shares, the detailed acquisition method, and notes.
Certificate number: This number corresponds to the share certificate with the same number. The share certificate is also one of the documents that a BVI company will have after establishment.
Acquisition Description: Directly translated as "acquisition description," it can be commonly understood as the source of the shares. For example, in this ROM, the source of the shares held by the shareholder is "Allotment of 1 Ordinary share(s) to [NAME]," which means that 1 ordinary share was issued to the shareholder.
4. The fourth part contains details of the transfer/disposal of shares.
This part includes the date of transfer, the number of shares transferred/disposed, the certificate number of the shares, the new certificate number (if any), the description of the disposal/transfer, and notes. This part only applies to shareholders who have transferred or disposed of their shares. If it is the original shareholder of a newly established company, this part will be blank. Once there is a transaction or change in the shares, it will be displayed in this section.
Summary
For ease of understanding, the above sample of the Register of Members is for a newly established BVI company with only one founding shareholder. If a BVI company has multiple shareholders or if there are transfers or other changes in shares, the content and number of pages of the Register of Members will vary accordingly.
It should be noted that according to the relevant BVI company legislation, the Register of Members is stored at the registered agent's office and is generally difficult for the public to obtain without BVI company authorization or government agency approval. This is also an important reason why BVI companies are widely used by cross-border investors as SPVs.
After reading the above explanation and sample of the Register of Members, can you now understand the BVI company ROM and apply it to your investment decisions? If you want to further understand BVI companies and their related compliance requirements, please feel free to contact our professionals.
Also, stay tuned for our upcoming article series, "Understanding Offshore Company Registers through Practical Examples (Part 2) - An Example of Cayman Companies."