CHANGES TO BVI LEGISLATION AND GOVERNMENT FEES 2023

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October 2021

What are the Pandora Papers?

The Pandora Papers are the 12 million leaked documents obtained and published by the International Consortium of Investigative Journalists (ICIJ).  The ICIJ received the data over several years and released the data in early October 2021.

What do the Papers reveal?

The Pandora Papers disclose the affairs of politicians, celebrities, and business leaders.  The papers disclose how individuals used offshore corporations to reduce their tax liabilities, hold foreign assets and in some cases disclosed improperly undisclosed assets held in offshore companies.

How did the ICIJ obtain the information?

The ICIJ did not reveal how it obtained the information.  However, it did name the following 14 service providers from which they obtained the documents:

All About Offshore Limited (Seychelles)                 Demetrios A. Demetriades LLC (Cyprus)

Alemán, Cordero, Galindo & Lee (Panama)          Fidelity Corporate Services Limited (BVI)

Alpha Consulting Limited             (Seychelles)       Glenn D. Godfrey and Company LLP (Belize)

Asiaciti Trust Asia Limited (Hong Kong)                  Il Shin (Hong Kong)

CCS Trust Limited (Belize)                                            Overseas Management Company Inc (Panama)

CIL Trust International (Belize)                                  SFM Corporate Services (CH and UAE)

Commence Overseas Limited (BVI)                          Trident Trust Company Limited (BVI)

For greater detail please visit:

https://www.icij.org/investigations/pandora-papers/about-pandora-papers-leak-dataset/

Was information obtained from Coverdale Trust Services Limited?

We reviewed the information publicly available and our systems and, to the best of our information and belief, we determined:

1. No information revealed by ICIJ was obtained from Coverdale Trust Services Limited; and
2. None of Coverdale Trust Services Limited record keeping or reporting systems were breached.

Who do I contact for further information?

Ronald Schmalcel, General Manager

Coverdale Trust Services Limited

4^th Floor, Water’s Edge Building, Meridian Plaza

PO Box 4519

Road Town, Tortola

British Virgin Islands  VG1110

rschmalcel@coverdalebvi.com

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Are you considering redomiciling your company to the BVI? This article by O’Neal Webster highlights the benefits of redomiciling your company to the BVI, and the process to undertake.

If you should this article interesting, our Coverdale Blog page has more interesting article waiting for you.

The post REDOMICILING TO THE BVI: A WISE CHOICE FOR MANY COMPANIES IN THE COVID-19 ERA appeared first on Coverdale Trust Services.

WHAT HAPPENS WHEN THE SHAREHOLDER OF A BVI BUSINESS COMPANY DIES?

An increasingly popular approach is a Shareholder Administered Succession Planning Trust. Under BVI law the shares of a BVI Business Company are BVI “situs” assets. This means that they are treated as property physically located in the BVI. When a shareholder dies, the shares of the BVI Business Company form part of the deceased’s BVI estate. The process of distributing the shares to the deceased’s heirs varies depending on whether or not the deceased had a Will.

If the shareholder died with a Will:

The deceased’s shares cannot be distributed until the deceased’s BVI Will or foreign Will are probated by the BVI courts. Probate is the process by which the court will appoint an executor to execute the terms of the deceased’s Will.

As with the probate process in other countries, the contents of the deceased’s Will become public as does the identity of the heirs under the Will. The process can take several months. During this time bank accounts and investment accounts may be frozen.

As of January 2020, the estimated cost of probating a Will in the BVI in respect of the shares of a BVI Business Company is approximately $10,000.

If the shareholder died without a Will:

Should the deceased die intestate (meaning without a Will) or the foreign Will makes no mention of the BVI Business Company shares, then the process can be more complicated and costly than if the deceased died with a Will. The BVI court will appoint an administrator to deal with the BVI property of the deceased in accordance with applicable law. The risk is that the deceased’s shares will be distributed under the intestate laws of the deceased’s domicile rather than in accordance with the deceased’s wishes.

CAN THE DIRECTORS SIMPLY TRANSFER THE SHARES TO THE HEIRS WITHOUT GOING THROUGH PROBATE?

No! The directors cannot interfere with the assets of the deceased. Should a transfer of shares occur without a probated Will or the appointment of an administrator, legal action and substantial fines may result. The directors may also be personally liable for any loss that may have resulted from the transfer of shares.

PLANNING OPTIONS

Shareholder Administered Succession Planning Trust

A Shareholder Administered Succession Planning Trust is an option that is becoming increasingly popular – this is for the shareholder to appoint himself or herself along with one or more other persons to hold shares as trustees for the benefit of the original shareholder and those that he or she wishes to inherit the shares. The individuals are referred to as beneficiaries as they receive the benefit of the trust. The original shareholder will name someone (who could be a beneficiary) to be the trustee together with the original shareholder. After the death of the original shareholder the surviving trustee can distribute the shares to the beneficiaries by simply furnishing proof of the death of the original shareholder, a certified copy of the trust and the due diligence documentation applicable to each beneficiary as required of any new shareholder of a BVI Business Company. Since the shares have been settled in a trust, they do not form part of the estate of the original shareholder. Consequently, there is no need to probate the original shareholder’s Will in order to distribute them to the beneficiaries. It is important that there is always one joint trustee who survives the death of the original shareholder. If there is no surviving trustee, it will be necessary to obtain probate of the estate of the last surviving trustee in order to transfer the shares to the intended beneficiaries.

The advantages of this approach are:

• No need for probate (provided that there is at least one surviving trustee after the death of the original shareholder)
• The shares can be transferred quickly ensuring that the company continues to run without the possibility of frozen bank accounts or investment accounts
• The trust deed is confidential and will not be made public
• The original shareholder can specify who will receive his or her shares and the number of shares that he or she will receive
• The trust is revocable and the shares can be transferred out of the trust and back into the original shareholder’s name whenever the shareholder chooses

By way of example, a shareholder wishes that his children receive the shares on his death. He could name his spouse or one of his children as a joint trustee. On the death of the original shareholder, the surviving trustee could have the shares registered in the names of the beneficiaries as described above and provide the registered agent with the required documents.

The cost of implementing such a trust through Coverdale is a one-time fee of $500, plus an $85 courier fee to courier the new share certificates to you.

Spending $500 now can save $10,000 later.

Owning Shares as a Joint Tenant

Another option would be for the shareholder to register the shares in his name as a joint tenant with the right of survivorship with the person that he wishes to receive the shares after his death. Upon death, the deceased shareholder’s interest in the shares expires and the surviving joint tenant becomes the sole owner of the shares.

There are a number of disadvantages to this option. First, the joint shareholder would be entitled to participate in voting for the shares, receive dividends and participate in the benefits of other shareholder rights. Second, the joint shareholder could unilaterally end the arrangement and cause the joint shareholder’s portion of shares to be held by the joint shareholder outright. Lastly, the joint shareholder’s interest in the shares would be subject to the claims of his or her creditors.

For example, Mr John Chu is the sole shareholder of a BVI Business Company. He wishes his BVI Business Company to pass to his daughter Vivian upon his death. If he registers his shares as being owned by “John Chu and Vivian Chu as joint tenants with right of survivorship” his interest in shares will expire upon his death. After Mr Chu dies, Vivian would be entitled to have the shares registered in her sole name without having to probate her father’s Will in the BVI. However, prior to her father’s death, Vivian would be entitled to receive half of any dividends paid by the company and to participate in all shareholder votes. Also, if she becomes bankrupt or sued (for example by a spouse under divorce proceedings) her interest in the shares could be seized by her creditors, even while her father is still living. Vivian could also unilaterally sever her joint interest and become the holder of half the shares outright.

Making a BVI Will

A BVI Will that deals only with BVI-situated assets such as BVI Business Company shares is sometimes used as a planning tool where privacy is the main concern. After the shareholder’s death, the application for probate would only disclose the terms of the BVI Will and the identity of the heirs to the BVI property rather than the terms of the deceased’s general Will and the identity of the heirs to the entire estate. The BVI Will can only be effective in the BVI if it is also valid under the law of the deceased’s domicile. If it is not valid under that law then it will not be valid in the BVI. However, the cost and delays involved remain the same as when shares pass under a general Will.

If you would like to have more information or would like to establish a Shareholder Administered Succession Trust, please contact us at admin@coverdalebvi.com.

The post SHAREHOLDER ADMINISTERED SUCCESSION PLANNING TRUST – HOW SPENDING $500 NOW CAN SAVE $10,000 LATER appeared first on Coverdale Trust Services.