Kenneth Baker's Presentation on Risk-Based Approach in Financial Services

In autumn 2007, Deputy Managing Director Mr. Kenneth Baker's speaking was discussed twice. It was described that on October 16, the BVI Financial Services Commission published 2 presentations of Kenneth Baker that regarded the amendments to the BVI corporate legislation and on the Private Trust Companies Regulations.

Recently, another interesting presentation of Deputy Managing Director Mr. Kenneth Baker was published on BVI FSC site. The presentation is entitled Emerging International framework for Financial Services - Risk-Based Approach.

In his presentation, Mr. Baker disclosed the main purposes of risk-based approach and its benefits and challenges as well as described the Risk-Based Approach itself.

What seemed the most interesting to me was the descriptive part where Deputy Managing Director has structured and described in simple words the Customer Due Diligence procedures.

What does the BVI Financial Services Commission expect from Licensee?
1) Licensee must develop procedures to identify and verify identity of each customer and beneficial owner, as well as obtain appropriate information to understand customers business and transactions.
2) Licensee should apply differentiated approach based on predetermined risk levels. There are 3 recommended levels of Due Diligence requirements:
a) Increased Due Diligence for determined Higher Risk customers (correspondent banking, politically exposed persons, specific geographic location);
b) Reduced Due Diligence for Lower Risk cases (publicly listed companies and regulated financial institutions, individual where main source of funds comes from salary, transactions involving de minimis amounts);
c) Standard Due Diligence to Rest of customers.

Mr. Kenneth Baker emphasized that suspicious transaction reporting is critical for the BVI to combat money laundering, terrorist financing and other financial crimes and that reporting a suspicious transaction or activity to the BVI FIA is mandatory, but he also pointed out that, to make the system, there should be thresholds below which an activity will not be reviewed.

It should be also noted that a substantial part of the presentation was dedicated Training and Awareness as well as Internal Controls Framework.

BVI FSC publishes FATF recommendations

On Deceber 14, 2007, two important documents were published by the BVI Financial Services Commission. These documents are nothing new in the world of anti-money laundering, however, publishing them signifies the commitment of the British Virgin Islands to this world-scale problem.

The documents are the Financial Action Task Force on Money Laundering (FATF) recommendations that are often treated as number-one anti-money laundering guidelines by many respectable sources and bodies.

The 1st document is the FATF 40 Recommendations, it was worked out by the FATF as a complete set of anti-money laundering measures in 2003. The recommendations cover the financial system and its regulation, the criminal justice system and law enforcement, as well as international co-operation as regards money laundering.

The 2nd document is published by the BVI FSC is the FATF Special 9 Recommendations, which includes additional special recommendations on terrorist financing added by the Commission in 2004.

It is worth noting that the FATF recommendations were published just days after the Seminar on Anti-Money Laundering/Countering the Financing of Terrorism was postponed by the BVI FSC.

Digicel gets mobile license in BVI

On December 17, Digicel announced that it has been granted a license to operate in the British Virgin Islands. Soon, the fastest growing mobile operator in the Caribbean and new entrant to Central America will be able to operate a GSM network in the BVI.

The liberalization process that preceded the license was initiated by the BVI Government in the beginning of 2005. With the licence, Digicell becomes the 3rd entrant into the BVI mobile market, so, it should create good competition and move mobile telecommunications development further – and bring enormous benefits including competitive pricing, better choice and technology innovation to mobile customers in the British Virgin Islands.

The BVI is to become the company's 24th market. It should be reminded that entering a number of Caribbean markets was not an easy task for Digicel. Previouslly, Digicel had filed legal action against the BVI Telecommunications Regulatory Commission, and won it, and then it filed an application against the rival operator Cable & Wireless that, as Digicel claimed, used illegal practices to delay the entry of Digicel into a number of Caribbean markets.

Digicel is planning to spend USD 15 million as its initial investment. This is needed to build a network that would offer close to 100% population coverage. The company will directly have 20 employees in BVI as well as create hundreds of indirect jobs.

Digicel’s goal announced by Colm Delves, Digicel Group CEO, is becoming the number one operator in the BVI.

BVI - the top outward direct investment destination and the 2nd largest inward direct investment source in Hong Kong economy for 2006

Yesterday, the Census and Statistics Department of the Hong Kong Special Administrative Region (HKSAR) government provided the following information regarding investments in the jurisdiction:

According to official figures released on December 13, 2007, at the end of 2006, the stock of Hong Kong's inward direct investment (DI) rose significantly by 42.3% from a year earlier to $740.9 billion at market value.

The Census and Statistics Department indicated that the substantial increase can to a great extent be explained by the large gain in market values of some listed prominent Hong Kong resident companies upon the surge in their share prices as well as an increase of direct investment inflow to these Hong Kong affiliates.

In accordance with the analysis of immediate source of investment, the 2nd largest investor territory at end-2006 was the British Virgin Islands, which took up 33.8% of the total stock of inward DI. So, one of the most popular offshore jurisdictions was 2nd only to China, which stood at 35.1% and reflected the importance of its investment in Hong Kong.

The BVI was followed by the Netherlands, Bermuda and the US accounting for 6.8%, 6.1% and 4.8% of the total stock of inward direct investment at end-2006 respectively.

Stock and Flow of Inward Direct Investment (DI) of Hong Kong at Market Value by Major Investor Country/Territory, 2005 - 2006

HK$ billion

Major investor country/territory	Stock of Inward DI	at end of year	DI Inflow	during the year
	2005	2006	2005	2006
Mainland of China	1,271.9	2,024.3	72.9	108.7
British Virgin Islands	1,270.7	1,950.6	47.0	78.8
Netherlands	327.1	390.9	17.0	28.1
Bermuda	271.5	350.1	36.0	23.8
USA	205.8	277.9	-29.7	51.3
Japan	131.7	151.4	14.1	18.0
United Kingdom	88.5	105.6	13.7	15.4
Cayman Islands	66.7	101.3	12.0	18.4
Singapore	84.3	85.2	11.0	8.1
Taiwan	30.0	33.7	3.5	8.7
Others	308.0	300.9	64.0	-9.4
Total	4,056.3	5,771.9	261.5	350.0

As regards outward direct investments, the Census and Statistics Department of the HKSAR said that, at the end of 2006, the stock of the country's outward DI increased by 44.1% from a year earlier to $675.8 billion at market value.

According to the analysis of immediate destination of investment, the British Virgin Islands remained the most popular tax haven economy for indirect channeling of DI funds as at end-2006 it accounted for 46.9% of the total stock of outward DI of Hong Kong.

Stock and Flow of Outward Direct Investment (DI) of Hong Kong at Market Value by Major Recipient Country or Territory, 2005-2006

HK$ billion

Major investor country/territory	Stock of outward DI	at end of year	DI outflow	during the year
	2005	2006	2005	2006
British Virgin Islands	1,609.3	2,467.6	18.1	78.0
Mainland of China	1,477.4	2,117.2	130.3	166.6
Bermuda	126.1	137.8	12.5	-5.0
United Kingdom	59.6	62.1	4.9	-0.2
Japan	29.7	60.8	-9.2	34.7
Cayman Islands	25.1	41.1	14.8	7.9
India	6.7	37.1	0.8	28.9
Thailand	23.0	34.7	2.6	6.4
Singapore	40.0	33.1	6.0	2.1
USA	26.3	29.1	0.9	3.1
Others	230.7	243.8	29.8	26.8
Total	3,653.9	5,264.5	211.5	349.4

BVI FSC Postpones the Seminar on Anti-Money Laundering

The BVI Financial Services Commission has announced that its Seminar for the non-regulated sector of the Territory's economy on the BVI obligations and responsibilities in the areas of money laundering and terrorist financing has been postponed. The one day Seminar which was initially planned to be held today (Tuesday, 11 December 2007), now is re-scheduled to the beginning of 2008.

The Seminar on Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) is to bring together money transmitters, dealers in precious metals and stones (including those engaged in the sale of jewellery), real estate agents, dealers in other high valued goods such as yachts, cars and heavy duty vehicles.

Delegation of BVI Officials at OCTA Meetings in Brussels

The BVI delegation, headed by Minister of Communications and Works of the British Virgin Islands Honourable Julian Fraser, took part in the annual OCTA (Overseas Countries and Territories Association) Ministerial Conference and the OCTA-EU forum, whicih took place in Brussels, Belgium from November 26-28. The delegation was comprised of Financial Secretary Neil Smith, Deputy Permanent Secretary in the Premier's Office Petrona Smith, Deputy Director of the International Affairs Secretariat Elise Donovan, director of the BVI London Office Dawn Smith, political and accounts officer of the London Office Sandra Besson, private secretary Gloria Mactavious, and consultant Ben Coleman.

Having in mind that EU is reviewing its relationship with the Overseas Countries and Territories and has proposed a “privileged partnership” based on “Europeanicity”, Minister emphasised that the BVI needed to explore the meaning of these terms and potential effect on BVI-UK relationship.

The BVI delegation actively participated in the discussions focused on financial services, economic and trade co-operation, environment problems and other issues. Speaking after the Forum, Minister Fraser said: “The BVI must ensure that our relationship with Europe continues to deliver benefits for our people. We are going to have to do some serious thinking about the results we want and the best way of getting them.”

During the meetings, Fraser stressed BVI's commitment to work with the Overseas Countries and Territories Association and the EU. He had bilateral discussions with the heads of delegations from other overseas territories from the Caribbean region and around the world.

Being the chair of OCTA's Partnership Working Party in Financial Services, in May 2007 BVI hosted the financial conference of the Overseas Countries and Territories Association. In Brussels, the British Virgin Islands presented a review of the year's activities in the sphere of financial services.

11 Month FDI Statistics in Vietnam: $15 Billion Attracted, BVI the Second in the List of Top Investors

According to the 11 months statistics on Foreign Investments in Vietnamese economy, in this period the country attracted $15 billion in FDI. Pahn Huu Thang, the director of the Foreign Investment Department at the Ministry of Planning and Investment, attributed this to the country's political stability and the fact that investors gained more confidence in the economically booming Southeast Asian country. He also said that Vietnam's admission into the World Trade Organization contributed to the rise in foreign investment.

The list of foreign investors in the 11 months through November is topped by South Korea, with the investment capital of $3.7 billion. The British Virgin Islands are, again, in the second place with $3.5 billion, - compared to US$1.73 billion FDI, reported in the 10 month statistics. The BVI are followed by Singapore with $1.5 billion.

By words of Thang, they expected foreign investments to top $16 billion till the end of this year, - the amount that would top last year's previous annual record of $12.2 billion by more that 30%.

Since 1988, the government of Vietnam has licensed more than 8,000 foreign investment projects worth about $80 billion.

BVI Premier Hon. Ralph T. O'Neal Speaking on Offshore and Financial Matters in his Yesterday's Presentation

In his speech on November 27, 2007, the Premier Hon. Ralph T. O'Neal addressed the territory with a report on the main achievements for the first 90 days of work in the office, and on the First Meeting with the UK Government.

In the part of the presentation that concerned the Financial Services Industry, the Premier talked about meeting of the Cabinet and the Financial Services Commission, to discuss their annual report for 2006 and their work plans for 2008.

In the course of discussions, it was decided that the Commission would meet informally with the House of Assembly, in order to discuss with its members the matters related to the financial services industry. Also, it was proposed that a seminar would be held sometime next year for members of the House of Assembly and Permanent Secretaries and senior officials, in order “to get more people in the Territory to understand and appreciate what the financial services industry means to the Territory.”

The Premier very positively evaluated the familiarization visit of a Chinese delegation from the Ministry of Commerce (MOFCOM) of the People's Republic of China that took place on November 8-10. During several meetings with key officials, the Chinese delegation discussed several issues concerning company registration and establishment, exposure of the information of registered companies, Administration of Foreign Exchange and taxes, and co-operation with international and finanacial regulatory institutions.

Today, the Premier leaves the Territory, to attend the ninth annual Meeting of the Heads of Government of the United Kingdom Caribbean Dependent Territories. Among the questions to be discussed at the Conference there are: UK's action plans for combating international corruption, constitutional modernization, OECD harmful tax initiatives, European Union Savings Tax directive, etc. Among other matters discussed there will be the National Audit Office report on the management of risk in the overseas territories.

Premier Hon. Ralph T. O'Neal also has been invited by the House of Commons Foreign Relations Committee to give evidence regarding the Territory, and he expects to have a one to one talk with the Under Secretary of State, Mrs. Meg Munn.

The Premier is planning to hold discussions on the complete purchase and development of the Virgin Gorda airport, - the project that was started in 2002 . He will also visit the famous BVI House, to hold there some of his meetings with the private sector.

BVI Premier hosts 10 member delegation from the China Ministry of Commerce

Premier of the British Virgin Islands, Honourable Ralph T. O'Neal, hosted a 10 member delegation from the Ministry of Commerce (MOFCOM) of the People's Republic of China headed by its Vice Minister Madam Ma Xiuhong. It was the familiarisation visit of Chinese delegation to the territory, and its members held meetings with Governor David Pearey, the Premier, Mr Robert Mathavious, Managing Director of the Financial Services Commission, the Director of the International Affairs Secretariat Mrs. Lorna Smith and members of the private sector.

The visit included a day trip of the delegation to Virgin Gorda and a lunch hosted by the Premier O'Neal. In his speech, the Premier said that it is important to build on the relationship between the two countries since the British Virgin Islands play an important role in the economy of China.

Before visiting the Territory, the delegation of China also made visits to the Cayman Islands and United States Virgin Islands.

BVI FSC Publishes Series of Documents on Anti-Money Laundering issues

Recently the British Virgin Islands Financial Services Commission has published a series of new/updated/amended documents related to anti-money laundering issues:

• The Liberia (Restrictive Measures) (Overseas Territories) (Amendment No 2) Order 2007
• The Lebanon (United Nations Sanctions) (Overseas Territories) (Amendment) Order 2007
• The Iran (United Nations Measures) (Overseas Territories)(Amendment)Order 2007
• Notice of Revision of Consolidated List of Individuals on whom a Travel Ban and assets freeze have been imposed
• Notice of Revision of list of Individuals and Entities associated with Usama Bin Laden, Taliban and Al-Qaida
• Notice of the list of Revision of Consolidated List of Persons connected with the Taliban and Usama Bin Laden
• The North Korea (United Nations Measures) (Overseas Territories) (Amendment) Order 2007

These documents describe United Nations sanctions, certain restrictive measures (such as procurement of military goods and technology, supply of specific proliferation-sensitive goods, asset freezing), imposed by the European Union members to uncooperative countries as well as contain lists of individuals and entities subject to a travel ban and assets freeze.

BVI Financial Services (Administrative Penalties) Regulations Amended by Adding Late Penalty Schedule

On November 16, 2007, the British Virgin Islands Financial Services Commission published the amendments to the Financial Services (Administrative Penalties) Regulations.

These amendments are published to update the previous version of the BVI Financial Services (Administrative Penalties) Regulations, which was gazetted on 14th December, 2006 and came into effect on 15th January, 2007. The amendments were gazetted on 27th September, 2007 and came into effect on 31st July, 2007.

Administrative Penalties Schedule is redesigned as Schedule 1 and Late Penalty Schedule (Schedule 2), and completely new subsection 5A (describing late penalty Schedule 2) is introduced by the amendments 2007:

5A. (1) The Commission may impose an administrative penalty on a licensee in accordance with Schedule 2 where the licensee fails to pay
(a) any fee or charge payable under the Act or any regulatory legislation; or
(b) any penalty payable under these Regulations on or before the date upon which the fee, charge or penalty is due for payment.
(2) Where the Commission decides to impose a late payment penalty on a licensee under subregulation (1), it shall send a penalty notice to the licensee stating
(a) the fee,charge or penalty in respect of which the penalty is imposed; and
(b) the amount of the proposed penalty calculated in accordance with Schedule 2.
(3) Subject to regulation 8(6), a licensee that receives a penalty notice shall pay the penalty stated in the notice to the Commission within fourteen days of receipt of the notice.”

Late Penalty Schedule 2 is introduced in the following redaction:

Description of Fee/Penalty	Penalty payable
1. Penalties for late payment of fee or charge payable under any regulatory legislation
For the late payment of a fee or charge payable under any regulatory legislation
(a) Where the fee or charge is paid 1-30 days after due date	20% of fee or charge payable, subject to a minimum of $80.00
(b) For each additional period of 30 days, or any part thereof, during which fee or charge remains unpaid	10% of fee or charge payable, subject to a minimum of $20.00
	The maximum penalty payable under paragraphs (a) and (b) shall be 100% of the fee or charge payable
2. Penalty for late payment of administrative penalty, other than late payment penalty)
For the late payment of an administrative penalty imposed under Schedule 1
(a) Penalty paid 1-30 days after due date	10% of penalty payable
(b) For each additional period of 30 days, or any part thereof, during which penalty remains unpaid	10% of penalty payable
	The maximum penalty payable under paragraphs (a) and (b) shall be 100% of the administrative penalty payable”

Other sections as well as Schedule 1 of the BVI Financial Services (Administrative Penalties) Regulations are amended accordingly.

BVI Insurance Association looking for ways to rescue BVI domestic insurance business

The BVI Insurance Association that was recently formed to work in the domestic insurance sector, is to deal with many issues affecting the industry and to address many challenges, some of them even threatening functioning of the sector.

The President of the BVI Insurance Association and the Managing Director of NAGICO Insurance Company Shan Mohamed has told about the main problems of onshore insurance industry. He said that members of the Association would need to come together and agree to work with certain parameters, to ensure that the industry remains strong, and customers' interests are respected and protected. The President of the Association expressed concern over too large number of accidents in the BVI, and said the association will lobby to Government to address this issue.

An important point made by Mohamed is that the association was formed to protect the domestic insurance industry in the BVI, because financial institutions, for example banks, are seeking to enter the property insurance market, and their number may be critical to other companies, particularly medium and small insurance agents. By his words, this becomes common practice in developed countries, and the current situation should be evaluated by the BVI FSC and other Government bodies responsible for the approval of new licenses.

After saying a few words about the problems of onshore insurance business in BVI, we should note that BVI offshore insurance business is sound and perfect. Offshore insurance business in BVI is another good example how offshore jurisdiction can improve the quality of offshore financial services. Industry professionals should remember how in early 90s there were couple thousand captive insurance companies registered on the BVI. Most of them were shell captives, some were related to grey business, and even money laundering. By introducing stringent requirements to minimum capital, due diligence and other measures, the number of licences was reduced to several hundreds, but BVI dramatically improved the quality of BVI-licensed captive insurers.

Parent companies for most BVI-licensed captives are located in the U.S. However, the offshore territory is of global importance, being the basic jurisdiction for captives from such countries as Switzerland, Guernsey, Taiwan, South America and the Middle East.

Amount of FDI in China Rises, BVI the Second in the List of Top Investors

China's Ministry of Commerce has published the ten months statistics of Foreign Direct Investments in Chinese economy. From January to October, the number of newly established foreign-invested enterprises reached 30,826 – 6.78% less if compared to the same period of the last year, and the amount of utilized FDI was US$53.995 billion – up 11.15% compared to the same period of 2006.

According to the information released a month ago, FDI level in China continued to rise. In October the number of newly established foreign-invested enterprises was 2,620 – down 14.01%. However the utilized FDI totaled US$6.776 billion – that is up 13.18%.

In the current top list of countries having the largest FDI in China, the British Virgin Islands are ranking the second, with US$12.914 billion of FDI. They are preceded by Hong Kong (US$18.655 billion), which is traditionally the major FDI source for China. Other countries on the list are South Korea with US$2.945 billion, Japan (US$2.81 billion), Singapore (US$2.245 billion), the United States (US$1.987 billion), the Cayman Islands (US$1.788 billion), Samoa (US$1.457 billion), Taiwan (US$1.294 billion), and Mauritius (US$907 million).

The amount of FDI made by the top 10 countries and territories including British Virgin Islands accounts for nearly 87.05% of the total FDI utilized in China in this period.

BVI IFC Hosts Roadshow in London

This month, the BVI International Finance Centre hosted a roadshow in the city of London to demonstrate its commitment to what is widely recognised as the world's financial capital. The BVI IFC has informed about its plans to visit London, Dubai and Qatar and some regions of Asia, in February 2007, when CEO of BVI IFC Mr.Humphry Leue reported about selecting the roadshow destinations and other marketing initiatives in 2007.

Hosting roadshows in different parts of the world is one of the ways how the BVI territory is popularized by the BVI IFC, and the Financial Services Commission. The event in London that lasted for three days, followed the London Presentation organized by the BVI International Finance Centre in October; this time, it included a series of business development meetings with senior figures at London's leading private banks and law firms. Also, the BVI side organized evening receptions during which more than a hundred delegates were briefly informed on the new developments and opportunities in the BVI's Trust and Corporate business sectors.

Delegates were addressed by the Deputy Premier of the BVI, The Hon. Dancia Penn OBE, the Executive Director of the BVI International Finance Centre Lorna Smith, and the Deputy Managing Director of Regulation at the Financial Services Commission, Kenneth Baker. Some of the BVI's leading financial services practitioners also made their presentations. On the whole, the roadshow delegates were provided with an update on the regulatory environment, legislation, and current trends in trust and corporate business.

Sherri Ortiz, Chief Operating Operator of the BVI IFC, has concluded, - "We were pleased that the Roadshow attracted such interest and delegate feedback suggests that the bond between the BVI and the London financial community will continue to strengthen in the months and years ahead."

The Number of BVI Business Companies Exceeded the 800,000 level in the Second Quarter 2007

By the data provided last week in the BVI FSC 2nd Quarter Statistical Bulletin for 2007, the total number of BVI Business Companies achieved 802,850 by June 30 of this year. According to the BVI companies registration statistics that shows the dynamics of companies' growth in 2006, the number of new registrations is constantly increasing, and the data for the second quarter 2007 confirm the continuing growth.

Just simple illustration by 5-year statistics of BVI business companies registered in the first quarter and in half a year (not cumulative):

Year	Company incoporations in Quarter 1
2003	14,459
2004	16,307
2005	15,837
2006	17,892
2007	21,111

Year	BVI Company incoporations in half a year
2003	24,061
2004	29,425
2005	30,503
2006	33,409
2007	38,914

The statistical bulletin also includes the statistics of banking & fiduciary industries: in the first half of the year 2007 there are one Class I Trust, one Class III Trust and three Restricted Class II Trusts registered.

The investment business sector statistics indicated that 24 new Mutual Fund Managers have been registered in the BVI, 154 new Professional Funds, 48 new Private Funds and 2 new Public Funds. The cumulative number of BVI registered Funds as at 30 June 2007 is 1548 Professional, 791 Private and 211 Public Funds. By the structure of BVI registered Funds, during the first half of the year 2007 the proportion of Professional Funds (by the number of Funds) increased from 59% to 61%, but the portion of Private Funds and Public Funds has reduced from 32% to 31%, and from 9% to 8% respectively.

BVI FSC Issues 2nd Public Statement on Boston Life and Annuity Company Limited

Yesterday the British Virgin Islands Financial Services Commission has issued the 2nd Public Statement concerning Boston Life and Annuity Company Limited, pursuant to Section 37A of the Financial Services Commission Act 2001. The document was published on the official site of BVI FSC on October 31.

The previous public announcement concerning Boston Life and Annuity Company Limited, and signed by managing director/CEO of the Commission Robert Mathavious, was published on July 13 of this year. Both public statements were issued to protect the public interest of those who are related to Boston Life and Annuity Company Limited, including customers, creditors, or investors of the company.

In the public announcement published on July 13, 2007, the Commission issued a directive to the company, that prohibited Boston Life to enter into new contracts for insurance business for 90 days, until the notice provided by the BVI FSC. In the last public statement, BVI FSC informed that:

- The cease and desist Directive published on July 13 to Boston Life and Annuity Limited is extended, until such further date as the Commission may specify.

- The Directive was extended in order to facilitate the Commission's ongoing investigations into the Company, and for the preparation of the investigative report by Kroll Inc., the Examiner conducting the investigations on behalf of the Commission.

Among the other documents issued by the BVI FSC during this year to protect general publics from scams, misunderstandings or offences, there was also Advisory Warning No. 1, concerning Dexter Insurance Company, Ltd.

Vietnam FDI Statistics Reported for 10 Months: BVI the second with US$1.73 billion

The Foreign Investment Department under the Ministry of Planning and Investment of Vietnam reported FDI figures for the ten months of 2007. From the time of the previous 9-month report, British Virgin Islands raised their positions, now they rank the second in the published top list of 50 foreign investors' countries, with the amount of invested registered capital of US$1.73 billion. The Republic of Korea, again, is the first place with registered capital of US$2.44 billion, and Singapore with US$1.37 billion is the third.

According to the Report of Foreign Investment Agency, there are 1,144 new projects on the whole, which brought in US$9.75 billion of foreign investments into Vietnam economy. The overall amount of foreign direct investment during the first ten months 2007 made US$11.26 – a 36% increase if compared to the same period of the previous year.

Vietnam now ranks the 6th among the top ten most attractive FDI destinations. These data were provided according to a survey by the United Nations Conference on Trade and Development.

Mr Baker's Speaking on the BVI Private Trust Companies Regulations

“Kenneth Baker of BVI FSC Speaks on Amendments to BVI Business Companies Act“ continued.

Speaking about the Private Trust Companies Regulations, the Deputy Managing Director of the Commission Mr Kenneth Baker said the following:

1) The Financial Services Commission recognizes it is appropriate for some companies that act as trustee or provide other trust related services, to be exempted from the licensing requirement under the British Virgin Islands Banks and Trust Companies Act, 1990.

2) The BVI has permitted the use of private trust companies since the Banks and Trust Companies (Application Procedures) Directions, 1991, but, after 15 years, these could not serve as the requirements and needed the update.

3) Some years ago, the BVI branch of STEP submitted a proposal for updating the 1991 exemptions, but it was decided by BVI FSC that the proposals did not fully address its regulatory concerns. However, last year the Commission reviewed its intention of establishing a new regime for private trust companies.

Further on, Mr Baker outlined the legal framework for the private trust companies, including Financial Services (Exemption) Regulations 2007, BVI Business Companies (Company Names) Regulations 2007, and BVI Business Companies (Amendment of Schedules) Order 2007.

Other presentation points are the definition of a Private Trust Company (PTC), what types of trust business can be conducted by a Private Trust Company, definition of trust, unremunerated and related business; obligations on PTC, role and duties of registered agent, records held by him, and the reasonable steps that must be taken by a PTC.

Mr Kenneth Baker concluded that the initial reports from the BVI private sector indicated that the private trust company exemption regime is proving to be very popular, and that this is a direct result of the hard work that has gone into marketing this product.

Kenneth Baker of BVI FSC Speaks on Amendments to BVI Business Companies Act

On October 16, the BVI Financial Services Commission published two presentations of Kenneth Baker, - the organization's Deputy Managing Director, working in the Regulation area. The remarks by Mr Baker dated October 2-4 contained some new information on the amendments to the BVI corporate legislation, and on the Private Trust Companies Regulations.

In his BVI Business Companies Amendment Act Speech, Mr Baker spoke about the amendments implemented by the BVI Government and the Financial Services Commission. He informed about the new section of the BVI Business Companies Act under which the Company Law Review Advisory committee will be established, with representation from the Government and the private sector. The main functions of the committee will be keeping BVI Business Companies Act under review, making recommendations to the Commissions on the possible changes, and on the development and reform of company law in the British Virgin Islands.

The BVI Business Companies Act, at the beginning of 2007, completely replaced the BVI IBC Act established as the principal corporate law in December 2004. Now the BVI BC Act is considered to stay in the forefront of BVI companies legislation, but to remain in this status it should be amended as necessary. In his presentation, Kenneth Baker named the last amendments to the Act as:

• BVI Business Companies (Amendment) Act, 2006;
• BVI Business Companies (Amendment of Schedules) Order, 2006; and
• BVI Business Companies (Amendment of Schedules) Order, 2007.

In his presentation, Mr Baker gave brief summary of the effects of some of these amendments, and changes concerning Business Companies. In conclusion, he said that the Commission's last statistical bulletin maintains its popularity with 2007, which is expected to be a record year for incorporation.

The last amendments to the Business Companies Act announced by BVI FSC simplified the procedure of transfer from bearer share companies to non-bearer share companies. The current changes are made based on the feedback from the private sector, from international clients and professional intermediaries.

PricewaterhouseCoopers Opens its Office in BVI

This month, PricewaterhouseCoopers (PwC) has opened its office in the British Virgin Islands. The work of the BVI office will be concentrated on investigations, forensic accounting, insolvency, restructuring, solvent wind up of companies, schemes of arrangement and business continuity.

Senior Partner of PwC Cayman Nick Freeland explained that the firm's global client base will benefit from the firm's long presence in the market. He noted that the BVI market is evolving, with an increasing demand for experts that can effectively manage critical and complex business issues and crises. The partnership will initially focus on advisory services in BVI, and the PwC East Caribbean Partnership will continue to provide other Advisory services to Government, and select domestic clients from Barbados.

PwC's team at the BVI office will be lead by Nick Carter, BVI resident and licensed insolvency practitioner, who has much experience in both the accounting and legal aspects of corporate securities, turnarounds, restructuring and insolvency, being qualified as a lawyer and accountant, and has been involved in many assignments across the globe and in multiple industries.

Chinese FDI Reaches US$47.2, BVI Among the Most Active Investors in the first 9 Months

The Ministry of Commerce of China has released new figures for Chinese FDI during the first nine months of 2007. By the new information, Foreign Direct Investment level in China continued to rise, having reached US$47.2 billion, and increased by 10.87% if compared to the same period last year. During the first three quarters of 2007, about 28,206 foreign-funded companies were founded- just 6.05% less than the amount founded during 2006. However, in September Chinese FDI declined by 2.36% to US$5.27; in that period, 3,358 foreign-funded companies were established, decreasing by 11.49%.

The last FDI report published in September confirmed the leading positions of the British Virgin Islands among foreign direct investors in the economy of China. This month, British Virgin Islands, again, were among those countries that were most active in investments in China, - Hong Kong, Republic of Korea, Japan, Singapore, U.S., Cayman Islands, Samoa, Taiwan and Mauritius. During the first three quarters, the investment from these countries including BVI accounted 86.73% of the total FDI level in China.

BVI Moves Towards Achieving Category 1 Registration Status

The British Virgin Islands will probably change its vessel registration status from Category 2 to Category 1 within the Red Ensign Group. At the current moment, British Virgin Islands have the status of tax neutral Category 2 Red Ensign port of British Registry operating under the authority of the Merchant Shipping Act, 2001. At the Red Ensign Group (REG) Conference that was held in Guernsey in summer it was announced that the Secretary of State for Transport has agreed to upgrade the British Virgin Islands Shipping Register (VISR) to Category 1 status limited to general cargo ships.

In 2006, the BVI government launched the VI (Virgin Islands) Shipping Registry, which was created out of a merger of the Shipping Registry Division of the BVI Financial Services Commission, with the Marine Services Unit of the Ministry of Communication and Works. Forming of the Registry, which falls administratively under the authority of the Chief Minister's office, means that one of the final conditions required for BVI to operate as Category 1 Shipping Registry is fulfilled.

A change of registration status would lift the current tonnage restrictions on vessels that may be registered under the BVI flag, and provide the new possibilities to the jurisdiction in the merchant shipping arena benefiting.

The BVI government is planning to find the resources needed to create the infrastructure required for the change in status during the period of 2003-2007. Probably, the new status will be formally received before the end of 2007, and then BVI will join the ranks of Bermuda, the Cayman Islands, Gibraltar, the Isle of Man and the United Kingdom.

Premier Hon. Ralph T. O'Neal Summarizes Financial Situation in the Territory

Since the time when the Virgin Islands Party (VIP) defeated National Democratic Party (NDP) in general elections 2007, VIP continues to publish information about all the things which could be done better by NDP, which was the ruling party from 2003 till 2007, and which VIP is going to improve now. So far, VIP has touched upon spheres not connected directly to offshore financial industry (health, tourism, building industry), but some of future corrections may be related to the BVI financial services industry.

However, the ruling party is unlikely to criticize the BVI financial services industry, which was not less successful in the past 4 years as in the previous years, also the main regulator – BVI Financial Services Commission – was established in the previous period when VIP was the ruling party – in 2001. Anyhow, in this transitional period after the elections we will follow the process of the change of the ruling party, and how it can influence upon the Financial Services Industry. Now back to the Premier's address.

In his speech of September 19,2007, Premier Hon. Ralph T. O'Neal has addressed BVI community with information on some 'mysteries' that should be unraveled yet.

The main subject matter of Premier's talk was the situation around the project of the Virgin Islands Party Government - the Peebles Hospital. Premier explained that the work with this project came to a full stop after June 16, 2003. On May 2, 2006, the Minister of Finance, Health and Social Development was asked to inform the Honourable House of the names, scope of works and amounts of each contract that was stopped or not allowed to be performed by the Government of BVI.

Further on, the Premier in his speech got more in detail that the firm BCQS was contracted by the preceding Government in 2001, to provide project management services on the new Peebles Hospital Project. The project was placed on hold in order to conduct further financial studies; it was signed at a cost of $3.6 million to be spent over a three year period. At the time when the project was stopped, total amount of more than $1,4 million was already paid – about 50% of the amount of the contract, while only 20% of the actual work was completed. In addition to the sums expended, the closing cost was in the amount of more than $118,000, and the annual cost for services including management for all projects under the Ministry of Health and Welfare was $155,000.

The Virgin Islands Party Government negotiated with an architectural firm of Page Southerland and Page to design and produce the working drawings for the new Peebles Hospital. Hon.Ralph O'Neal noted in his speech that his National Democratic Party paid the same Architectural firm about $3,000,000 to re-design the hospital, while the Virgin Islands Party Government had designed for a total of $75,000,000.

The Premier is going to lay a copy of five development agreements of such a kind on the Table of the House of Assembly. He was informed that before signing these agreements, each prospective investor or developer was required to sign a contract to engage the services of a particular individual, for a fee of $7,500,00 a month.

Hon. Ralph O'Neal added some words about the financial situation concerning the BVI Tourist Board, and looked into the whole financial situation of the territory., saying about the possible deficit of 13,000,000 in 2007. The Premier informed on his intention to have a detailed report of the territory's finances.

BVI the 3rd in 9 Months' Statistics for Vietnam FDI

The Foreign Investment Agency of Vietnam published FDI results for the first nine months of 2007. The amount is estimated at $9.6 billion, - that is 38% increase compared to the same period last year.

The official at the ministry's Foreign Investment Agency informed that, this year, Vietnam is expected to attract 12 billion USD in new foreign direct investment. The main FDI source during the first nine months was The Republic of Korea, with 311 newly approved projects worth more than 2.1 billion USD, the amount that makes 25.4% of the total. As in the FDI report published a month ago, British Virgin Islands is in the third place, with 39 projects valued at $1.23 billion. The second place in the ranking belongs to Singapore, with its 67 projects for 1.38 billion USD. The forth and the fifth positions, immediately after BVI, are taken by Taiwan with US$629.7 million, and India with US$623.1 million.

Hon. Ralph O'Neal Speaks About Financial Situation in the BVI Tourist Board

Hon. Ralph O’Neal, the new premier of the British Virgin Islands, which also holds responsibility for tourism, has temporarily banned traveling overseas by employees of the BVI Tourist Board. The purpose of this measure is to prevent further depletion of the statutory body's financial situation.

Addressing the territory's community, Premier O'Neal suggested that the BVI TB needs tighter fiscal management. He said: “There is no doubt, my dear people, that the financial situation with the Tourist Board is grim and in order to prevent the situation becoming worse I had to put a ban on traveling of the employees until I could get a clear picture of the whole situation, I am aware that some things are already paid for especially in the American and European markets and once proper representation is made I am prepared to allow that.”

Further he explained that the BVI Tourist Board, which was very important function of advertising and promoting these islands as a tourist paradise, in the year 2006 was instructed to spend $1,696,891 from their operating budget in capital works, such as the Queen Elizabeth Park, Gun Creek Project phase one, Architectural and management fees. Up to June 2007, the Tourist Board spent the amount of $730,222. These amounts were to be refunded by the Central Government.

It should be said that in the last years, a lot of work was done for popularization of the British Virgin Islands not only as business centre but also as the centre of tourism. It is not a secret that BVI economy depends to a large extent on touristic and financial services sectors, and expenses on marketing may be quite large.

Governor David Pearey Appointed the BVI First Full-Time Magistrate

The Governor Mr. David Pearey has appointed the BVI first full-time Magistrate with effect from September 1, 2007. The person chosen to this post was Mrs. Charmaine Rosan-Bunbury who worked in the Attorney General Chambers as Crown Counsel from 2001 until this appointment.

Mrs. Rosan-Bunbury is a BVIslander, holding a legal certificate from the University of Northumbria, Newcastle United Kingdom, a Bachelors of Law with Honours from the University of Wolverhampton, UK, and a Bachelors degree in Business Administration from the University of the Virgin Islands.

The new Magistrate will deputise for the Senior Magistrate and preside over civil proceedings; she will also preside over sittings of night court, serve as Coroner and conduct inquests into unnatural deaths within the Territory of the British Virgin Islands.

Senior Magistrate Mrs. Valerie Stephens has said that she is pleased to work with Mrs. Rosan-Bunbury, and is glad that being the first full time local Magistrate Mrs. Bunbury would provide balance in court proceedings.

London Presentation Organized by the BVI International Finance Centre in October

The BVI International Finance Centre will send the delegation to London in October. It's task will be to undertake a series of presentations informing executives involved in the trusts and corporate business sector on the development of BVI trusts and corporate business industries, their regulatory environment and current offshore finance trends and opportunities. Members of the delegation will be Christopher McKenzie (Walkers BVI), Kenneth Morgan (Rawlinson & Hunter, BVI), Peter Larder (AMS Group), and Helene Lewis (Simonette Lewis).

On October 2, evening presentation will be hosted for London-based executives in the trusts; on October 3, there will be presentation for corporate business industries. Speakers from both Public and Private sectors will provide information on the growth of the BVI trusts and corporate business industries, their regulatory environment and current trends and opportunities in offshore finance. BVI IFC will also arrange a series of meetings with London's leading private banks and corporate law firms.

Established in 2002 as a result of the Government's commitment to support the financial services industry, the BVI IFC has played an exceptionally important role in the promotion and marketing of the BVI as a leading financial centre. The main task of the IFC is to make sure that the BVI retains the balance in having a sound regulatory framework, an entrepreneurial business community and BVI government. IFC is not involved in financial regulation, which is the sole responsibility of the BVI Financial Services Commission, also established in 2002.

In June 2007, the BVI IFC revealed new records that showed that in 2006 65,284 Business Companies were registered in BVI, - a 12% increase as compared with 2005, and a new record for annual BVI company registrations set by the offshore centre. In total, at December 31, 2006 there were nearly 775,000 of both types of BVI companies – International Business Companies and BVI Business Companies.

Also, in 2006 the BVI became the 3rd largest offshore centre for captive insurance business, with 57 new captive insurers registered, and total amount of captives being over 400. There were more than 282 new investment businesses in 2006, and the total amount for that sector was about 2,600 active mutual and hedge funds in the beginning of 2007. This year, further growth is expected.

1st House of Assembly inaugural sitting held in BVI

September 14, 2007 can be considered to be the beginning of a new era in BVI politics as the 1st sitting of the new House of Assembly convened in Road Town.

The 3-hour session attended by Gov. David Pearey, public servants, family members, students, party supporters and visitors hosted the 13 representatives elected during the August 20 General Elections. Also, a delegation from the U.S. Virgin Islands attended the ceremony.

David Edgecombe represented Gov. John deJongh Jr., Simon Caines represented Lt. Gov. Gregory Francis and Stephen Frett represented Senate President Usie Richards. Sen. Carmen Wesselhoft of St. John also attended.

The main three tasks of the day were selecting a speaker, who does not belong to the ranks of elected House members, electing a deputy speaker and administrating the oath of allegiance to the new members.

The speaker was elected unanimously. It was former teacher and government Personnel Department employee Roy Harrigan of Virgin Gorda. Former speaker and businessman Keith Flax was elected the new deputy speaker.

The government side of the House are the following persons:

• District 1 Rep. Andrew Fahie, Minister of Education and Culture;
• District 2 Rep. Alvin Christopher;
• District 3 Rep. Julian Fraser, Minister of Communications and Works;
• District 4 Rep. Vincent Scatliffe; District 5 Rep. Elvis Harrigan;
• District 6 Rep. Omar Hodge, Minister of Natural Resources and Labor;
• District 8 Rep. Dancia Penn, Deputy Premier and Minister of Health and Social Development;
• District 9 Rep. and Premier Ralph O'Neal, Minister of Finance;
• Territorial At Large representative Keith Flax;
• Territorial At Large Vernon Malone;
• Territorial At Large representative Irene Penn-O'Neal.

The opposition side are:

• District 7 Rep. Kedrick Pickering;
• Former Chief Minister Orlando Smith.

House Speaker Harrigan accepted the position with humility and took the responsibility. He gave each member 5 minutes to speak.

Premier O'Neal noted that there were only 2 seats on the opposition, however, he mentioned that he would not tolerate them being bypassed.

Opposition Leader Smith stated that it was a great honor for his National Democratic Party government to have served the British Virgin Islands for the last 4 years. He also noted that despite the fact that the opposition is small in number, it will have a voice.

When congratulating the new government, he reminded the new constitution that elected representatives have greater responsibilities, especially as regards external affairs and police and crime.

New Figures for Chinese FDI: BVI Ranks Second with US$9.91 billion

The new statistics on foreign investments in Chinese economy during the first eight months of 2007 shows following figures: value of investments rose 12.79% from a year earlier to US$41.95 billion; 24,848 enterprises were set up in China by overseas investors, that is down 5.26% compared to the previous year.

The released information confirms the position of the British Virgin Islands among regions and countries that lead by the amount of foreign investments. As in the report published by the Ministry of Commerce of China in the mid of June, BVI remains in the second place after Hong Kong.

The amount of foreign investments for eight months of 2007 made US$14.1 billion from Hong Kong, US$9.91 billion from the British Virgin Islands, and much less – US$2.46 billion – from the third investor, the Republic of Korea. Other regions and countries being part of the top ten investors are Japan, Singapore, the United States, the Cayman Islands, the Samoan Islands, Taiwan Province, and Mauritius.

During the first eight months of 2007, investment value of the above-named top 10 countries made 86.55% of the total nationwide. The number of new US-invested enterprises was down 15.12%,while investment value increased by 0.77%, compared to the same period of 2006.

Cable & Wireless Provides Broadband Upgrade in the Region

The leading full-service telecommunications provider in the Caribbean Cable & Wireless Ltd., which was recently involved in the legal dispute with Digicel in the British Virgin Islands, announced in the beginning of September the providing of major speed and value upgrades to its broadband customers in the Caribbean region. Chris Hetherington, Chief Executive Officer of Cable & Wireless Americas & Caribbean, informed that this launch is the result of a US$140 million investment in Cable & Wireless' Next Generation Network for the Americas & Caribbean region. The purpose of this three-year investment were physical and operational infrastructure improvements.

Cable & Wireless offers various plans for each specific group of customers, so people can choose the plan based on their needs. In addition to this launch of upgraded broadband services, this August launch signifies a shift to the name Cable & Wireless Broadband for all Broadband services across the region. According to Mr. George Lewis, VP Networks, the shift from XNet in some countries in the region to Cable & Wireless Broadband will take place over the next few months. In the British Virgin Islands, Cable & Wireless has always carried the Cable & Wireless Broadband branding.

Mr. Vance Lewis, Chief Executive of Cable & Wireless, has commented, “Now the starting level, minimum standard for Cable & Wireless Broadband customers in the BVI and across the Caribbean, is speed of up to 1 MEG – for the same low prices they paid before.”

Opposition Leader Makes a Statement

There is some short period that passed after the general elections in the British Virgin Islands, and the National Democratic Party that was ruling party for the last 4 years became an opposition. Now we can say that the NDP and its leader Orlando Smith have granted some kind of rest to the party that won victory in the elections. However, already from this week the NDP has started to perform the functions of opposition. On September 5, 2007, the leader of NDP Orlando Smith has published announcement addressed to BVI community, where he stated that some of the promises made to the people of the territory were not fulfilled.

Among these promises there are the proposal of the Minister of Education concerning free books and free lunches in BVI schools. Mr. Smith noticed that during that time Minister of Education reviewed the proposal given earlier, by implementing more stringent guide lines for accessing the school book program.

Also, Orlando Smith denied the fact he was party to a discussion and agreement with the Metodist Church. Speaking about economy, he said he never informed about BVI experiencing excellent growth of its economy, with a 11% record last year; he also denied some other statements made by some international publications and organizations.

Here is the full version of the statement by leader of the opposition, Orlando Smith.

The First Days of the new BVI Government: Dancia Penn Appointed as Deputy Premier, the First Meeting of the National Security Council

After the Virgin Islands Party gained the victory over the National Democratic Party ruled by Dr. Orlando Smith, the five member cabinet of the new ruling party (VIP) was sworn on Thursday. Under the new Constitution of the British Virgin Islands, the head of the party Ralph T. O'Neal was sworn as Premier, - a post that was previously titled chief minister and belonged to Orlando Smith. The legislative council now is called the House of Assembly.

The new BVI Premier Ralph O'Neal has listed the top priorities of his administration as tackling crime and making higher the standard of living for BVI residents.

The first formal day of work of the new BVI government was Friday, August 24. On Tuesday, August 28, the Governor David Pearey, acting on the advice of Premier Honourable Ralph O'Neal, appointed Honourable Dancia Penn, OBE, QC, on the post of the Deputy Premier of the British Virgin Islands. Dancia Penn had already been sworn as the Minister of Health and Social Development in the new government.

Another institution introduced by the BVI Constitution 2007 is the National Security Council, which held its first meeting at the Governor’s Office on Monday, August 2007. The meeting was chaired by his Excellency the Governor David Pearey, and attended by the Premier Ralph O'Neal, Honourable Dancia Penn, and some ex-officio members.

The National Security Council has to provide advise to the Governor on the issues concerning internal security, and to make greater sharing of responsibility for security matters between the elected Government and the Governor, constitutionally responsible for internal security matters.

General Elections Won by Opposition, Ralph O'Neal to be the new Premier of BVI

Last week I gave some kind of preview of the BVI general elections, as the most important event in the British Virgin Islands, which will inevitably bring changes into the economic course, first of all in tourism and in the offshore sector. Now, when the results are already known and the new government is taken to oath, we can summarize that these results really changed the political situation in the BVI.

Tough competition between the National Democratic Party with its flagships Orlando Smith, Ronnie Skelton, Elmore Stoutt and Mark Vanterpool, and the 40-years-old Virgin Islands Party with Ralph O'Neal, Keith Flax and Vernon Malone, resulted in the victory of the opposition. VIP has won seven seats in the 15-member House of Assembly (former Legislative Council), and returned to power after a 4-year interval.

Probably, the voters in the British Virgin Islands showed some kind of rejection of the ruling NDP's platform, as there was only one successful candidate from the NDP which was the government's minister before the poll.

By the voting results, the VIP received top three spots. It should be said that the forth spot belongs to former Chief Minister Orlando Smith, who is also the NDP president. Orlando Smith conceded defeat of his party, saying that his government's approach was to develop BVI economy through the sectors of tourism and financial services. The head of the Virgin Islands Party, Carvin Malone, also named growth of economy as one of the main focuses of the VIP during the campaign. Both leaders agreed that key factor in the results of these elections was public perception of the development projects initiated during the ruling period of NDP.

On Wednesday, August 22, the Governor David Pearey officially assigned ex-leader of the opposition Hon. Ralph O'Neal as the first Premier of the British Virgin Islands. On Thursday, new government of the British Virgin Islands was sworn in at a ceremony held at the Chambers of the House of Assembly. Hon. Ralph O’Neal was sworn as Premier and Minister of Finance & Tourism, Hon. Andrew Fahie – as Minister of Education & Culture, Hon. Julian Frazer became the minister of Communication and Works. The other government ministers sworn during the ceremony were Hon. Omar Wallace Hodge – Minister of Natural Resources & Labor, and Hon. Ruth Dancia Penn which will lead the Ministry of Health and Social Development.

The Financial Services Exemptions Regulations 2007

Recently I wrote about BVI Business Companies (Company Names) Regulations 2007 defining the permitted ending of BVI private trust company. On the same day, the Executive Council, acting on the advice of the Financial Services Commission represented by Natalie Fahie Smith, adopted also the Financial Services Exemptions Regulations 2007.

These regulations is additional schedule to Exemptions Applicable to the Banks and Trust Companies Act, 1990.

This legislative act explains in details following issues: Application of Financial Services Commission Act, 2001 and Banks and Trust Companies Act to private trust companies, Duties of registered agent of private trust company and Obligations on private trust company, and also defines the meaning of “unremunerated trust business”, “related trust”, “group of related trusts” and “connected person”.

These regulations come into effect on August 1, 2007, except Qualifying BVI Company that has been “re-registered under paragraph 6(1)(b) of Part III of Schedule 2 of the Business Companies Act and, in respect of which, an election to disapply Part VI of Schedule 2 of the Business Companies Act has been registered”. Concerning the last ones, these regulations come into effect on January 1, 2008.

The full text of the document can be read on http://www.bvifsc.vg/Publications/LatestDocuments/tabid/214/Default.aspx.

BVI General Elections to be Held on August 20

Although BVI Offshore World usually does not inform about political news, I cannot ignore in my blog the event of the highest political importance - general elections, which are to be held in some days. After all, the results of the elections will have great impact on the economic development of the British Virgin Islands.

The general elections will be held on August 20, with the participation of the two major political parties of the territory. These parties, to which most candidates are affiliated, are the ruling National Democratic Party of Chief Minister Orlando Smith, which was formed prior to the 1999 elections, and the main opposition Virgin Islands Party of former Chief Minister Ralph O'Neal. There are also some several independent candidates participating in the elections. The parties will outline their four year work plans in the manifestos that will be released this week.

General elections in the BVI territory are held every four years. BVI Legislative Council includes 15 members: 13 are elected to four years, nine in single-seat constituencies and four at large. The other two members are the attorney general and a speaker. The Council members will be elected among thirty-five candidates that were nominated to run in the 2007 General Elections. In 2003, there were thirty-three candidates nominated.

There are 11,115 people eligible to vote on one of the nine polling stations operational during the 2007 General Elections. Each person may cast five votes – one in the district he is registered in, and one each for four-at-large candidates.

BVI Business Companies Company Names Regulations 2007

BVI Business Companies (Company Names) Regulations 2007 defining the permitted ending of BVI private trust company was signed by Clerk of the Executive Council, Natalie Fahie Smith, on August 2, and gazetted on August 3 2007. The original document can be read on http://www.bvifsc.vg/Publications/LatestDocuments/tabid/214/Default.aspx.

BVI Business Companies (Company Names) Regulations 2007, which is a small document consisting of two pages, simply orders that the name of private trust companies established under BVI Business Companies Act, 2004 should include designation “PTC” before company name ending. BVI company name endings are stated in section 17(1)(a), (b) or (c) of the BVI Business Companies Act 2004 and these are “Limited”, “Corporation”, “Incorporated”, “Societe Anonyme”, “Sociedad Anonima” or abbreviations “Ltd”, “Corp”, “Inc” or “S.A.”

So if my private trust name in the BVI is “My BVI Trust Ltd”, I should name it “My BVI Trust PTC Ltd”. So easy.

BVI Ranks Third with $1.43 billion FDI in Vietnam

The Foreign Investment Agency of Vietnam informed that in the first seven months of the year the country has attracted over US$7.47 billion in foreign direct investment (FDI) – the 50% increase compared to the same period of the last year.

There are 39 countries and territories making direct investments in the economy of Vietnam. The British Virgin Islands rank the third by the amount of FDI, having 13.4% of the total with over $1.43 billion invested. During long period, BVI is among the top investment sources in the economy of HCM City. This year's results confirm strong positions of BVI among FDI sources in Vietnam's economy.

The first two places in the rank of investors belong to the country's neigbours. South Korea with over $1.43 billion makes up 22.5% of the total amount, Singapore has another 20.6%, with $1.32 billion of foreign direct investments.

Legal Dispute between Telecom Operators: Digicel against C&W

After Digicel filed legal action against the BVI Telecommunications Regulatory Commission, and won it, the company has filed an application against Cable & Wireless. The company declares that the rival operator used illegal practices to delay the entry of Digicel into a number of Caribbean markets, and seeks for multi-million-pound compensation for lost revenue, profits and market share.

The lawsuit was filed last week in a British high court, the countries involved are St Lucia, Saint Vincent and the Grenadines, Grenada, Barbados, the Cayman Islands, Trinidad and Tobago, the Turks and Caicos Islands. According to Digicel, when it began expanding its operations in the markets of these countries from 2002 to 2006, C&W resisted interconnection between different mobile and fixed land providers.

Memorandum of Understanding Signed Between BVI FSC and Jersey FSC

BVI Financial Services Commission and Jersey Financial Services Commission have entered into the Memorandum of Understanding. The information on this document (MoU) is posted on the official page of BVI FSC.

The JFSC is a statutory body established under the Financial Services Commission (Jersey) Law in 1998 ,and its purposes and functions are very much alike to those of BVI FSC. General function of the JFSC is supervision of financial services providers and financial products provided in or from within Jersey. This includes the authorisation and supervision of collective investment schemes, and fund functionaries, licensing and supervision of banks, insurance companies, investment business and trust company business, general insurance mediation business. JFSC also incorporates the Registry of Companies.

The main purpose of signing the Memorandum by the BVI FSC and Jersey FSC is providing a formal basis for co-operation, including for the exchange of information and investigative assistance. According to the document, each Authority will provide assistance to the other one, subject to its laws and overall policy; the assistance may include providing information in the possession of the requested Authority, confirmation and exchange of information, discussing issues of mutual interest, obtaining specified information and documents, inspections or examinations of financial services providers, and other issues.

Both the BVI FSC and JFSC believe that mutual co-operation will enable them to perform their functions more effectively. Each request for assistance on the above-mentioned matters will be assessed by the requested Authority to determine whether this MoU allows for providing such assistance. The criteria which will be taken into account by the requested Authority when making the decision are stated in paragraph 9 of the Memorandum. Also, for any of the reasons mentioned in this paragraph, the assistance may be denied in whole or in part.

The Memorandum of Understanding was signed by Robert Mathavious, as managing director and CEO of BVI Financial Services Commission, and John Harris, as the General Director of JFSC.

Public Statement issued by the BVI FSC

On July 13, the British Virgin Islands Financial Services Commission issued Public Statement signed by managing director/CEO Robert Mathavious. This Public Statement concerns Boston Life and Annuity Company Limited and has been issued in order to protect the public interest and the interests of those who are somehow related to Boston Life and Annuity Company Limited.

The BVI FSC informs the public that in April 2006 it received complaints from policyholders of the above-mentioned company. According to the complaints, the company had improperly terminated insurance policies under one of its programs to deprive policyholders of a refund. The Financial Services Commission started its investigations at once, and on June 2, 2006 it issued the Notices requiring documents and information from Boston Life and Annuity Company Limited and related parties.

According to the public statement, “in July 2006, the Commission retained the services of Krill Inc./ Kroll Associates Inc. to provide investigative assistance in the first instance providing an expert Forensic Accountant to review substantial records that the Commission had obtained in the course of investigations”.

In January 2007, Kroll was appointed by the Commission as an examiner to conduct further investigations into Boston Life.

Krill Inc./ Kroll Associates Inc. has assisted the Commission in the investigation, and the BVI FSC expects the investigation to be completely carried out in 3 months.

As far as the concerns have been recently raised, on July 13, 2007, the Commission issued a directive to the company. Currently, Boston Life and Annuity Company Limited is prohibited to enter into new contracts for insurance business for 90 days, until the notice by the BVI FSC.

BVI Business Companies Act amended

It is not such a long time since BVI the Business Companies Act was introduced and replaced BVI IBC Act completely at the beginning of this year.

Now the British Virgin Islands Financial Services Commission (BVI FSC) has announced several amendments being readied to the new Business Companies Act. Among other things, this will facilitate simplified provisions to transfer bearer share companies to non-bearer share companies.

Initially, provisions to transfer bearer share companies to non-bearer share ones were established for IBCs in 2003 to carry forward to Schedule 2 of the BVI Business Companies Act.

In accordance with the existing transitional provisions, companies are required to fully immobilise their shares by December 31, 2010. However, according to the BVI FSC, financial industry concerns that compliance with the transitional arrangements would place a heavy burden on the industry is taken into consideration. The BVI FSC observed that this could cause substantial inconvenience to the directors and owners of former IBCs when they pass resolutions amending their memorandum of association. Accordingly, the Commission has tried to find an appropriate solution in order to will carry out the immobilisation of all bearer shares before 2010 imposing the minimum administration on BVI companies.

According to an Order by the Executive Council, this should be achieved by deeming that the memorandum of a former IBC will be amended on the transition date in order to prohibit issuing bearer shares, unless the IBC elects that the deeming provision should not apply.

So, the transition of most bearer share companies to non-bearer share ones will be a straightforward process.

During 2008-2009, former IBCs which are bearer share companies will pay the same fee as non-bearer share companies.

The Commission has expressed its pleasure regarding its efforts to meet the international standards and, at the same time, remain an appealing and cost-effective domicile for international companies.

After enactment of the BVI Business Companies Act there already have been several amendments, also related to the schedule of the implementation of one or another new regulation. For example, in the beginning of 2006 several amendments including prolonging the deadline to comply with the bearer shares regime from 31st of December 2004 to 31st of December 2010 were introduced.

Before the BVI Business Companies Act, 2004 was enacted, BVI companies were administered under 2 statutes: the resident companies were administered under Cap. 285, while offshore IBCs – under the IBC Act 1984, Cap. 291. In order to eliminate accusations of ringfencing, the BVI Business Companies Act was enacted in the British Virgin Islands in 2004.

To inform the BVI company owners and stakeholders on the new company regime and its implications, the BVI FSC will be hold a series of public workshops.

The regulator has also announced that fees for companies registered under the Companies Act will be reduced to the level of companies registered under new legislation. Last year, the fees for companies registered under the Companies Act (Cap.185) was increased to a minimum of $350.00 in order to put Local BVI Companies on equal position with companies registered under the new BVI Business Companies Act. However, the legislators decided that BVI Resident Companies not re-registered under the BVI Business Companies Act when their annual fee was due will not be obliged to pay an increased fee in 2007. So, the Registrar of Companies should refund all overpaid fees.

This year, the annual fee payable by a BVI Resident Companies will, as previously, depend on the value of its assets. If the value of assets is less than $10,000, the annual fee will be reduced from $350 to $25.

The Companies Registry will identify all overpaid fees and notify all BVI companies eligible for a refund, which is to take abut a few weeks.

The new table of capital and annual licence fee payable by BVI resident companies is as follows:

Capital / Licence Fee
do not exceed $10,000 - $25.00
exceed $10,000 but do not exceed $50,000 / $50.00
exceed $50,000 but do not exceed $100,000 / $100.00
exceed $100,000 but do not exceed $200,000 / $200.00
exceed $200,000 but do not exceed $300,000 / $300.00

Source information on latest legislation changes and guidance note is available on BVI FSC site.