From the Archive – June 2012

The BVI IBC was the sensational success of the 1980s. In no time, a little-known group of pretty islands, which one or two people had discovered useful for treaty-shopping into the United States, was exporting companies by the dozen to the ends of the earth – the expression “A Bee-vee-eye” becoming in China, one is told, part of the language. The Act of 1984 was not the first “designer statute” for the user-friendly company. That honour should perhaps go to the Cayman Islands, which provided for the formation of the Exempted Company in the 1960s. (See now the Companies Law Part VII). But the IBC was an altogether more radical step towards the “incorporated pocketbook” – an enactment short and uncomplicated, allowing redomiciliation and bearer shares, and requiring little by way of registration or protection of creditors or minority shareholders. It was widely imitated in other jurisdictions. Surprisingly, however, as Richard Peters pointed out at our meeting in Barbados, the IBC Act allowed only one type of company – the company limited by shares. Nowadays, the BVI Companies Act provides for other kinds of companies, including the mysterious company with unlimited liability with no power to issue shares, and indeed many jurisdictions offer a portfolio of company types – IBCs on the BVI Model, LLC’s on the US model, limited partnerships on the English model, protected cell companies, and so on. (See, for example, Miles Benham’s account, in Amsterdam, of the range offered by the Isle of Man.)

Slumbering in the schedules to many of the companies laws which derive from the English Companies Act are provisions relating to companies limited by guarantee. In Gibraltar, for example, they are in Tables C and D in Schedule I. Although companies limited by guarantee are not exactly unknown – the ITPA itself is a company limited by guarantee incorporated in the Cayman Islands, they are not by any means on every tax planner’s agenda. Perhaps they should be: Peter Cannell has discovered their tax planning possibilities, and he is going to talk about these in Lisbon in October.