Welcome to the DAO Legal Guide focusing on the British Virgin Islands LLC, an integral segment of the Pontinova Global Top 100 DAO Legal Report.
Delve into this comprehensive guide to gain insights into the legal set up requirements and the regulatory compliance framework surrounding British Virigin Islands LLCs. Explore the other jurisdictions to understand why they excel at fostering DAO initiatives and navigating the intricacies of decentralized governance structures.
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Legal Requirements
Legal
BVI LLCs are incorporated under the Business Companies Act.
Constitution
Memorandum of Association, Articles of Association, one or more Members who can be either individuals or companies and do not need to be residents of the BVI.
Regulatory Board
British Virgin Islands Financial Services Commission (BVIFSC)
Administration, Management
Registered Office, Registered Agent, Bank Account within or outside the BVI, Board of Directors which consists of one or more persons who can be either individuals or companies and do not need to be residents of the BVI. The BVI LLC must maintain a register of directors. This register is not avail-able for inspection by the public, unless the company elects otherwise.
Reporting, Accounting, Auditing
Mutual Legal Assistance (Tax Matters) Act requires BVI LLCs to keep its accounts, records, and underlying documentation for at least five years from the date of completion of the transaction at the office of its registered agent or at the place the directors determine. The Reporting and accounting must therefore be sufficient and accurate. However, auditing is not mandatory.
Please note that no minimum capital is required to set up a BVI LLC. However, a BVI LLC is required to pay government fees after it is incorporated and thereafter on either May 31 or November 30 of each year depending on whether it was incorporated in the first or last six months of the year. The calculation of the incorporation fees should include legal consulting fees. The incorporation duration is about 4 weeks.
Taxation
No corporation tax, capital gains tax, wealth tax, or any other tax is applicable to BVI LLCs.
Regulatory Compliance Framework
On February 1st, 2023, the Virtual Assets Service Providers Act came into effect. The VASP Act creates the legal framework for the registration and supervision of VASPs operating in and from within the BVI. Through the provisions of the VASP Act, the BVIFSC is established as the competent authority for the supervision of persons engaging in any virtual assets service. However, virtual assets and virtual assets services including utility tokens are generally not covered by the regulatory framework.
Securities and Investment Business Act [A /VA I]
Applicable, because asset tokens qualify as “investment”. That means that an issuer of asset tokens is required to hold a BVIFSC investment business license. However, an offering prospectus will not be required since none of Part II of SIBA is presently in force.
Virtual Assets Service Providers Act [P,A / VA S]
Applicable, if (a) virtual assets service, (b) virtual assets custody, or (c) virtual assets exchange is provided. An entity wishing to provide virtual as-sets services in or from within the BVI is required to be registered by the BVIFSC to obtain a license. The registration fees payable to the BVIFSC depend on the virtual assets service provided by the entity and are summarized as follows: (a) USD 5’000 for virtual assets service, (b) USD 10’000 for virtual assets custody service, and (c) USD 10’000 for virtual assets exchange. The registration duration is about 6 to 9 months. Any entity carrying on virtual asset services without being registered and licensed under the VASP Act is liable on conviction to a fine of up to USD 100’000 and/or 5 years imprisonment.
Financing and Money Services Act [P / VA S]
Applicable, if the virtual assets service is classified as “money services business”. However, the Financial Services (Regulatory Sandbox) Regulations allow innovative fintech products to obtain a sandbox license for a limited time, without the need to comply with the more onerous licensing requirements set out in the FMSA.
Proceeds of Criminal Conduct Regulations [P, A / VA S]
Applicable, if the transactions involving virtual assets are valued at USD 1’000 or more.
Securities and Investment Business Act [A / VA S]
Applicable, if the virtual asset product is classified as “investment” and the “investment activity” is captured and not excluded by SIBA. Thus, the VASP must hold an FSC investment business license.
Beneficial Ownership Secure Search System Act [A / VA S]
Applicable, if not exempt, e.g., if the entity is recognized, registered, or otherwise approved as a mutual fund under the SIBA.
Foreign Account Tax Compliance Act and Common Reporting Standard Regulations [P, A / VA S]
Applicable to all VASPs operating within BVI.
Check the other DAO Jurisdictions:
• Switzerland - Foundation
• Switzerland - Association
• Liechtenstein - Foundation
• Lithuania - Private Limited Liability Company
• Marshall Islands - DAO (Non-Profit) Limited Liability Company
• Cayman Islands - Foundation
• Abu Dhabi ADGM - Distributed Ledger Technology Foundation
