BVI Companies Limited by Guarantee The BVI Companies Act (Cap. 285) provides for the establishment of domestic companies limited by guarantee. Such companies have no authorised share capital and no shareholders. A domestic company can apply to the BVI Companies Registry for status as a ‘non-resident company’ and thereby secure exempt status from BVI corporation tax on income not sourced in or remitted to the BVI. It is required under the BVI Companies Act that the memorandum and articles of association of a company limited by guarantee shall contain a declaration that each member undertakes to contribute (quote) "to the assets of the company, in the event of the same being wound up during the time that he is a member, or within one year afterwards, for payment of the debts and liabilities of the company contracted before the time at which he ceases to be a member, and of the costs, charges and expenses of winding up the company, and for the adjustment of the rights of the contributories amongst themselves, such amount as may be required, not exceeding a specified amount". The name of the proposed company must end in "Limited". The articles of association can be drafted so that membership rights are pari passu, or in whatever fixed proportions as are set out therein. A company limited by guarantee can undertake commercial activities without the need for any subscribed equity capital. The following special features are available to a company limited by guarantee: Control of the company is achieved without a holding of shares. Exclusion of the membership from registration on a share register or annual return of shareholders. Ownership in the form of membership can be made non-transferable in the articles of association. Ability to utilise the company as a succession vehicle; with correct drafting, asset devolution on the death of a member can be achieved without requirement for probate. Ability to have distribution from the company categorised as capital gain rather than as income. Proper tax advice must be taken to achieve this. A company limited by guarantee can achieve (through specialised drafting of the memorandum and articles of association) several purposes, including serving as an offshore holding company, asset protection, charity, investment, private company in lieu of a private trust, real estate, succession company in lieu of a will or grant of administration, or private annuity company. Elan has included in this presentation a complete Incorporation Procedure outlined for your convenience. Note that there are slight differences between incorporating a CAP285 company limited by guarantee and a normal CAP285 domestic company, and therefore the procedure will vary slightly. We recommend that you contact us before proceeding with online incorporation of a company limited by guarantee.

---

© Elan Corporate Services Ltd., MCMXCVI-MMIV. All rights reserved.
Corporate Address: Palm Chambers / P.O. Box 119 / Road Town, Tortola, B.V.I.
Telephone: +1 (284) 494.4590 / Telecopier: +1 (284) 494.2838 / E-mail: elan@elanbvi.com
Please report any problems to: postmaster@elanbvi.com