Offshore Corporate Administration Inc.

British Virgin Islands

The British Virgin Islands are located just 60 miles east of Puerto Rico and adjacent to the US Virgin Islands. Road Town on the main island of Tortola is the capital. The British Virgin Islands is a chain of 50 islands comprising 59 square miles. Approximately 15 of these islands are inhabited, of which the largest is Tortola with 21 square miles and a population of 19,000.

The British Virgin Islands is a self-governing, politically stable British Crown Colony with a self-legislative assembly and has become an important centre for offshore business activities. The islands boast two thriving economies, tourism and offshore investment. Major world banks and state of the art communications make the B.V.I. an ideal offshore financial centre. The U.S. Dollar is the legal tender in the B.V.I. and its official language is English.

Introducing The Business Companies Act (“BC Act”)

The new Business Companies Act (the “BC Act”), will enter into effect on 1st January 2005.

General Features

NOTES

The IBC Act will continue to be in effect until 1st January 2007, when it will be repealed. Then, all IBC's not yet re-registered as BVI BC's by 31st December 2006 shall be deemed to be re-registered under the BVI BC Act on 1st January 2007.

The Segregated Portfolio Company ("SPC") was used in the BVI under the Insurance Act, 1994. The BVI BC Act allows mutual funds and other types of companies to be incorporated as SPC's and enhances BVI's ability to compete for offshore business with other jurisdictions offering this type of service. The SPC is subject to FSC's approval.

Restricted Purpose Company ("RPC"). Despite its name, the RPC has full capacity to do any act and carry on any business whatsoever.

The Group's standard proforma M&AA's are for BVI BC`s limited by shares.

NOTES

The following annual fees apply, during the period from 1st January 2008 to 31st December 2010, in respect of an IBC re-registered under the BVI BC Act: US$600.00 if the share capital does not exceeds $50,000.00 and all its bearer shares are held by a Custodian located in BVI.

US$800.00 if the share capital does not exceeds $50,000 and all or some of its bearer shares are held by a Custodian located outside BVI.

US$1,100.00 if the share capital exceeds $50,000.

The International Business Companies Act and the new BVI Business Companies Act 2004 will be amalgamated. We have summarized the following changes that govern the Business Company. The aim of The New BVI Business Companies Act 2004 is to provide a choice and flexibility to companies incorporated under the Act

Seven different types of companies may be incorporated under the new Act

• companies limited by shares
• companies limited by guarantee not authorized to issue shares
• companies limited by guarantee authorized to issue shares
• unlimited companies authorized to issue shares
• unlimited companies not authorized to issue shares
• restricted purposes companies
• segregated portfolio companies

Given the large volume of companies incorporated under the International Business Companies Act, the BVI Government has introduced a flexible transitional period over a period of two years during which time both the IBC Act and the new Act will remain in force. The following timetable will apply during this transition period.

1st January to 31st December 2006

New incorporations will only be possible under the new Business Companies Act 2004. Existing IBCs will be permitted to continue under the IBC Act but they will be able to re-register under the new Act.

1st January 2007

All remaining IBCs incorporated under the IBC Act will be automatically re-registered under the new Business Companies Act, 2004.

Further information on the final transition of all remaining IBCs to the new Business Companies Act on 1st January 2007 will be submitted once the Commission has made a final decision.

Company names

Unlimited companies must end with either “Unlimited” or “unltd”. Restricted purposes companies must have the phrase “SPV) Limited” or “(SPV) Ltd” in the name and SPCs must have either “Segregated Portfolio Company”, in its abbreviation “SPC”, in the name.

Limited companies (including companies limited by guarantee) may continue to have endings permitted under the International Business Companies Act., example, Limited, Corporation, Societe Anonyme and their representative abbreviations such as Ltd. Corp. S.A.

The new Act makes provision for the Company to be used as a name also, such as “BVI Company Number 987654 Limited,” and if the name takes that form, the company can also have an additional name in foreign characters.

Memorandum and Articles of Association

Companies authorized to issue shares must state the maximum number of shares that can be issued; companies limited by guarantee must specify the amount which a guarantee member must contribute to the assets on liquidation; restricted purposes companies must state that they are such companies; and SPCs must state that they are segregated portfolio companies.

Whilst there is nothing to prevent a company from stating its objects or purposes, it is not required to do so. The only exception to this rule is a restricted purposes company must state the purposes for which it is incorporated.

There is no concept of authorized share capital for such companies, and companies authorised to issue shares must state only the maximum number of shares they are authorized to issue. There is no requirement to state the objects or purposes in the memorandum of association.

Register of Directors

Companies must now have at least one director and a Register of Directors must be kept. The Registered Agent must appoint the first director(s) within 30 days of incorporation. Subsequent directors can be appointed by resolution of members or directors if permitted by the Memorandum or Articles of Association. A person cannot act as a director unless he has consented in writing to be a director. Conversely, a director may resign by giving written notice of his resignation; a director may be removed by a resolution of members that may only be passed either at a meeting of members whose purpose includes the removal of directors, or by a written resolution passed by at least 75% of the members entitled to vote. A director may also be removed by the directors where expressly permitted by the memorandum or articles.

Shares

A company cannot issue bearer shares unless expressly authorized by its memorandum to do so and, similarly, registered shares cannot be converted to or exchange for bearer shares unless specifically permitted in the memorandum. The memorandum must state whether the company is or is not authorized to issue such shares. Bearer shares must be deposited with a custodian authorized or recognized by the FSC otherwise the shares are immobilized and the rights normally attached to them are disabled.

Registration of Charges and other Encumbrances

A Company must keep a Register of charges at its registered office/Agent. Registration of a Charge or other encumbrance at the Registry is not mandatory.

Registered Agents, records and seals

A company must at all times have a Registered Agent in the BVI. The Company must keep at the Registered Agent the Register of Members the Register of Directors, copies of all notices and other documents filed at the Registry by the company at the Registered Agent in the previous ten (10) years. However, if the Registered Agent only keeps copies of the registers, the Company must notify the registered agent in writing within fifteen (15) days of any changes to those registers and provide the Registered Agent with a record of the physical address where the originals are kept. Minutes of meetings and resolutions may be kept with the registered agent or at some other place in which event the registered agent must be given a written record of the physical address where they are kept.

The new Act does not require a company to have a seal.

Bearer Shares - Confirmation of Grace Period – Appointment of Custodian

All Existing Companies which shall continue issuing bearer shares will have up to 31st December 2010(*) to appoint an authorized or recognized custodian approved by the Financial Services Commission (“FSC”).

(*) This is the concept governing Registered Agents as contained in the FSC Aide Memoire #3, which does not have force of law; and in the IBC (Amendment) Act, 2004, which will be repealed on 1st January 2007. Although this concept is not directly addressed in the new BC Act, it is expected to be included in future regulations.

Payments of Annual License Fee

For the purposes of annual fee renewal, BVI companies are divided into two groups. It is important to remember to allow some processing time by the Registered Agents when close to the deadline:

First Group:

Companies incorporated or acquired from January to June.

a) If renewal payment is received after 30th April, a 10% surcharge on the licence fees is imposed.

b) If renewal payment is received after 30th June, a 50% surcharge on the licence fees is imposed.

c) If renewal payment is received after 15th October, the company may be struck-off and reinstatement will include the cost of US$300 restoration fees (which increases to US$600 after six months of the company having been struck off).

Second Group:

companies incorporated or acquired from July to December.

a) If renewal payment is received after 30th October, a 10% surcharge on the licence fees is imposed.

b) If renewal payment is received after 30th December, a 50% surcharge on the licence fees is imposed.

c) If renewal payment is received after 15th April, the company may be struck-off and reinstatement will include the cost of US$300 restoration fees (which increases to US$600 after six months of the company having been struck off).

Annual License Fee

Existing Companies will pay the annual license fee as follows:

• 2005 to 2007:

  Capital not exceeding US$50,000 - US$350

  Capital exceeding US$50,000 - US$1,100

• 2008 to 2010:

  Capital not exceeding US$50,000

  - US$600 (Custodian in BVI)

  - US$800 (Custodian outside BVI)

  Capital exceeding US$50,000

  - US$1,100 (Custodian in BVI)

  - US$1,100 (Custodian outside BVI)

• Starting 2011:

  Capital not exceeding US$50,000

  - US$800 (Custodian in BVI)

  - US$1,100 (Custodian outside BVI)

  Capital exceeding US$50,000

  - US$1,100 (Custodian in BVI)

  - US$1,350 (Custodian outside BVI)

Register of Directors

IBC’s incorporated as at 31st December 2004 will have until 31st December 2005 (12 months starting from 1st January 2005) to send a copy of their Register of Directors to their Registered Office.

Effectiveness of the IBC Act

It was only possible to incorporate new companies under the IBC Act until 31st December 2005, but the IBC Act will continue to be in effect until 1st January 2007, when it will be repealed and all IBC’s will be converted into Business Companies under the new proposed BC Act.

Automatic re-registration under Business Companies Act

It is important to point out that, according to the BC Act, re-registration of IBC’s as Business Companies will be automatically processed by the Registrar as from 1st January 2007. No amendments to the M&AA by the shareholders or filings by the directors or registered agents will be necessary.

Possible solutions or alternatives for the continuation of bearer shares system:

* Purchase IBCs from our stock of Existing Companies

* Change bearer shares to nominative shares

* Unit Foundations (for Professional Managers)

* Companies from another jurisdiction as Shareholder

* Panama Private Foundations as Shareholder

* Trusts for Shares

* Continuation to other jurisdictions such as Panama, Samoa or Seychelles

BVI Amendment Legislation to Immobilise Bearer Shares

Existing Companies:

The Transition Date has been extended from 31st December, 2004 to 31st December, 2010 to facilitate completion of the following requirements by existing IBCs:

• Appoint an "authorised" or "recognised" custodian approved by the Financial Services Commission if the Existing Company intends to continue issuing Bearer shares.

• Amend its Memorandum and Articles of Association to delete any references to Bearer shares, unless the Existing Company adopts the new statute to immobilise Bearer shares through a custodian.

• Maintain an updated register of Directors at the office of the BVI Registered Agent.

Custodians:

1. Those eligible to apply for "authorised" custodian status will be service providers that are licensed under any of the BVI financial services legislation, as well as bodies corporate incorporated or formed outside the BVI that are not resident in, and do not have a place of business in, the BVI.

2. Those eligible to apply for "recognised" custodian status will be investment exchanges or clearing organisations that operate securities clearance or settlement systems in a jurisdiction that is a member of the Financial Action Task Force (FATF).

3. All applicants to be "authorised" custodians have to satisfy the Financial Services Commission (FSC) that they meet certain "fit and proper" criteria, and have the necessary systems in place for safe custody of Bearer shares.

Regulation of Names:

The word "Limited" may be used in a Company's name. However, use of the following words is restricted: "Assurance", "Bank", "Building Society", "Chamber of Commerce", "Chartered", "Cooperative", "Imperial", "Insurance", "Municipal", "Royal", "Trust", or any word conveying a similar meaning. Titles such as "Corporation", "Limited", "Incorporated", "Societe Anonyme", or "Sociedad Anonima", "Gesellschaft mit beschrankter Haftung" or its abbreviations "Corp.","Ltd.", "Inc.", " S.A." "GmbH" may be used.

Shelf Companies:

These companies are "clean", that is to say they have never traded nor engaged in any transaction whatsoever. We deliver a letter to this effect (letter of non-activity) to our clients.

Objects:

Our standard objects provide comprehensive powers. If required, a specific objects clause may be drafted to suit clients' needs.

Share Capital:

The standard share capital is US$50,000, divided into 50,000 shares of US$1.00 each of which may be issued as Bearer shares (see regulations) or as Registered shares at the discretion of the Directors. Permutations (such as 100,000 shares of 50 cents or 50 shares of US$1,000 are permitted, below the ceiling of US$50,000). A share capital up to the equivalent of US$50,000 attracts the minimum license fee - US$300.00.

Shares:

Bearer (see regulations), Nominative, par or no par value shares, as desired.

Shareholders:

There are no limitations as to their number or nationality.

Shareholder Meetings:

Shareholders' meetings may be held in any part of the world. The quorum is specified in the Articles of Association.

Directors Meetings:

May be convened in any part of the world.

Registered Agent/Registered Office:

The law requires that every IBC have a Registered Office and a Registered Agent, qualified to act as such, in the British Virgin Islands. In our standard Memorandum of Association, our British Virgin Island Office is nominated as the Registered Office and they act as the Registered Agent of the IBC in the British Virgin Islands.

Company Seal:

The Company Seal is mandatory. An imprint thereof must be sent to the Registered Office.

Taxation:

Income of IBCs is exempt from income tax in the British Virgin Islands. This includes all dividends, interest, rents, royalties, compensations, capital gains realized with respect to any shares, debt obligations or other securities, and any other amounts paid to the Company. In addition to this, no estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable with respect to shares debt obligations or other securities of a cos.

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Information derived from this site should not be construed as legal advice nor considered anything more than an offer to provide free technical information to suitably qualified parties. Such technical information was accurate at the time of publication and whilst every endeavour is made to maintain such accuracy, it is recommended that independent verification be made.

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