Government Bearer Shares Announcement

INTRODUCTION

On 30 October 2003 the British Virgin Islands' Government announced that the changes to the bearer share regime highlighted in our client advisory of May 2003 will not come into full effect for seven years.

EXISTING IBC'S

For the first four years, the situation will remain unchanged for existing international business companies. After that, for a further three years, those international business companies that retain the power to issue bearer shares would pay a small increase in their license fee.

Any international business company whether incorporated before or after the effective date of the IBC (Amendment) Act ("Act") that amended its memorandum of association to prohibit the issue of bearer shares would file at the Registry of Companies in the British Virgin Islands, together with an extract of the amendment, a declaration to the effect that no bearer shares are in issue.

AUTHORISED/RECOGNISED CUSTODIANS

When the Act comes into force, it will require all bearer shares to be held in the custody of either an "authorised" or "recognised" custodian with the result that the transferability of bearer shares will be immobilised.

A Bill to amend the separate Financial Services Act making provision for "authorised" and "recognised" custodians, will be introduced in the British Virgin Islands legislature shortly. The Bill will make service providers licensed under any British Virgin Islands financial services legislation eligible for consideration as an authorised custodian.

In addition, a body corporate incorporated or formed outside the British Virgin Islands that is not a resident in, and does not have a place of business in the British Virgin Islands will also be eligible as an authorised custodian.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.