BVI’s corporate structures are ideal for Chinese investment, due to the strong and long-term relationship between the BVI and China.
This was highlighted during a May 20 panel discussion, ‘Corporate Structuring in a Post-COVID World’, for the 10th Annual China Offshore Summit-Spring Edition Virtual Summit.
The panel, moderated by China Offshore Director Matthew Sumner, comprised Jeff Kirk, Managing Partner, Appleby (BVI); Gareth Thomas, Managing Director, Ocorian Trust (BVI); Ellie Crespi, Managing Partner, Collas Crill (BVI); and Adenike Sicard, Managing Partner, Sinclairs (BVI).
BVI Companies as a Vehicle for Chinese Investment
Ellie Crespi said that BVI companies can be an option for potential investors in China’s Belt and Road Initiative (BRI) who are looking for efficiency and experience.
The managing partner asserted that the long-term relationship between the BVI and China will lend to investor confidence, considering the BVI’s experience in facilitating investment, the BVI’s presence in the region with the establishment of BVI House Asia, the Arbitration Centre and how the BVI demonstrates it “listens to China” by the addition of Chinese characters in corporate names.
Ms. Crespi also noted other advantages to be considered by potential investors including the BVI as a neutral and stable microstate, the inexpensive and timely incorporation of BVI companies, the “very flexible and evolving” corporate laws, and the BVI being a “lightly but effectively” regulated jurisdiction, with an “incredibly strong” rule of law, applied by “experienced and respected” commercial court judges.
She added, “Investors really appreciate the efficiency with which they can use BVI entities to structure their investments.”
BVI Funds Products
Adenike Sicard said approved funds are becoming more popular amongst Chinese investors, explaining, “They are more long-term and well suitable for family purposes.”
To that end, Jeffrey Kirk stated that the BVI’s funds products can be used in different classes of assets, and noted an increase of funds being used for digital assets.
Ms. Sicard said that BVI funds are increasingly more attractive due to the BVI’s respected international reputation, coupled with the efficiency of the regulator, the BVI Financial Services Commission.
Economic Substance and BVI’s Competitiveness
Regarding the economic substance regime, both Ellie Crespi and Gareth Thomas asserted that BVI companies are largely unaffected by the regulations.
Ms. Crespi said, “[Economic substance] hasn't impacted how competitive the BVI remains as an offshore jurisdiction.”
Mr. Thomas said that after the massive classification exercise in 2020, it was found that less than three percent are going to require “real substance in the BVI”.
To that end, Ms. Crespi noted, “Many companies will find that when they undertake the classification exercise that they are a pure equity holding entity, meaning their economic substance requirements are at the lower end of the scale, requiring them simply to maintain a BVI registered agent, which is required by law anyway to make their annual filing.”
Panel moderator Matthew Sumner said, “The BVI has an advantage of the added layer of transparency, and the amount of implementation done thus far should give investors confidence that they are going into a jurisdiction that is keeping up with international regulations.”
The BVI’s resiliency and digital transformation since the passing of the 2017 hurricanes concluded the panel discussion, with Ms. Crespi referencing how quickly the corporate registry restarted operations, along with a ‘pop up’ commercial court hearing.
To that end, Ms. Sicard said that the work done post the 2017 hurricanes in the digital space helped prepare the BVI financial services industry for COVID-19, adding, “We had so much things in place, that during the pandemic, it was seamless for us to continue functioning and providing those services internationally because of the flexibility of the e-services that evolved from Irma.”
The BVI is an established sponsor and participant of the China Offshore Summit, which was first launched in 2010. The event is one of the largest offshore finance and wealth management events in Asia. This year the summit was held virtually and attracted hundreds of business executives and high net worth individuals from China and abroad.
View Video Here: https://youtu.be/zKy-oguT5g4