Amendment 2003-2004 to the British Virgin Islands (BVI) Companies Law.
by: Maria Cristina Lima

As of 1 January 2005, the amendment to the Law of International Mercantile Corporations of 2003 and 2004 will become effective. This Law introduces the following changes:

1. It modifies the use of bearer shares as follows:

1.1. Immobilization of bearer shares:

1.1.1. This means that bearer shares must be deposited with “qualified custodians” or “authorized custodians” within or outside the British Virgin Islands, approved by the Financial Services Commission of the BVI.

1.1.2. The deadline to deposit the bearer shares depends on the date of constitution of the corporation, as follows:
· For the corporations organized as of 31 December 2004, the deadline is 31 December 2010. All the bearer shares that are not handled as of 31 December 2010 will be invalidated and subject to mandatory redemption or judicial liquidation.
· The corporations organized from 1 January 2005 will only issue bearer shares if they comply with the requirement of immediate immobilization.

1.1.3. Persons licensed to act as custodians of bearer shares are: banks and trust companies established in the BVI; investment or securities clearing houses; and regulated financial institutions. Our correspondents will secure their license as Authorized Custodians. We will keep you posted on this matter shortly.

2. Increase in registration and annual fees.

2.1. As of 1 January 2010, those corporations registered before 1 January 2005 issuing bearer shares as well as those whose constitutive documents do not prohibit bearer shares will pay higher registration and annual fees. The new respective fees have not been established yet.

2.2. The announced increase will also be applied to the corporations organized after 1 January 2005 that issue bearer shares or those whose constitutive documents do not prohibit the issuance of said shares.

The announced increase can be avoided by means of an amendment to the constitutive documents where bearer shares are prohibited and companies issue nominative shares only. Such steps must be taken not later than 31 December 2010. We will be available to prepare respective documents as soon as instructed.

Options under approved amendments:

1. The holder of bearer shares of BVI international mercantile corporations has the following options which must be implemented prior to 31 December 2010:

1. Immobilize bearer shares depositing them with a “qualified custodian” or “authorized custodian” as already explained. The deadline to deposit (immobilize) bearer shares before an “authorized custodian” is 31 December 2010.

2. Convert the bearer shares into nominative shares. The deadline for this conversion is 31 December 2004. Nominative shares may be issued in the name of a natural person or juridical (corporations, foundations of private interest, or trusts). The names and addresses of the shareholders must be reflected in the Share Register of the company, a copy of which will be kept in the registered office of the company in BVI.

3. Re domicile (continue its existence) the BVI corporation to a jurisdiction such as the Panamanian, which permits the use of bearer shares. This would avoid the immobilization and payment of new taxes. For information on Panamanian corporations go to our web site www.limayasociados.com.

4. Use Panamanian Foundations of Private Interest to convert the bear shares into nominative shares in the name of a Foundation of Private Interest. You can read about Panamanian Private Foundations on our web site: www.limayasociados.com.

Would appreciate to know which of the four options is of your choice by emailing your answer to our e-mail limaco@limayasociados.com, or via fax to 507 269 4663. We will provide all necessary assistance to comply with your preference.

2. Register of Directors: In relation with the directors of the corporations, the new legislation demands an updated Register of Directors, which must be kept in the registered office of the corporation in BVI. The deadline to fulfill this requirement is 31 December 2005. It is not necessary to furnish historic information of prior directors.

We assume that there is no change of directors in those corporations where they were chosen by the beneficiary of the corporation. In case you are aware of a different situation, please let us know not later than 30 November of this year. If we do not receive information to the contrary, we will render the names of the directors from our files to our correspondents.

We remain available to clarify any pertinent questions.

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