Atrium Incorporators

In response to ongoing enquiries about the new bearer share regime in place in the BVI, we would like to offer some clarifications to answer any remaining questions you may have about the new requirements.

LICENSE FEES FOR BEARER SHARE COMPANIES
1. First and foremost, please be aware that companies formed before 1 January 2005 whose memorandum and articles of association allow the issuance of bearer shares (with an authorised capital of $50,000 or less) will pay the standard Registry license fee of $350 through 2007 .

Put another way, the license fee for bearer share companies formed prior to this year are the same as for companies which can only issue registered shares, provided only that the authorised capital is $50,000 or less. This means that bearer share companies existing before 1 January 2005 will pay the regular Registry license fee of $350 through 2007. It is expected that there will be an increase in the license fee from 2008 through 2010 and from 2011 the license fee will be $1,100.

2. As a result, at this point we recommending against mass filings to prohibit bearer shares for existing companies. Our recommendation with regard to amending Memorandum and Articles of Association to prohibit bearer shares for existing companies is not to rush to amend. If necessary, an appropriate time to make such amendments prohibiting bearer shares is mid 2007.

However, an existing Bearer Share company may require an amendment to its Memorandum and Articles of Association between now and 2008 for some other reason, such as a name change. If an amendment is required and the intention is to eliminate Bearer Shares for that company by 2008, then it would be a good opportunity to also amend to prohibit bearer shares (since no additional charge will be incurred for filing the prohibition resolution at the same time).

Attached for your reference a sample resolution and the required declaration that no bearer shares are currently in issue.

CURRENT FEES FOR FORMATION AND ANNUAL LICENSE FEES

A BVI Business Company must pay the following annual license fees to the BVI Government:

FOR COMPANIES WITH REGISTERED SHARES ONLY:

USD 350 for Company with up to 50,000 shares, with or without par value.

USD 350 for Company limited by a guarantee or an unlimited company without shares.

USD 1100 for Company with more than 50,000 shares, with or without par value.

USD 5000 for a Restricted Purposes Company.

FOR COMPANIES WITH, OR AUTHORIZED TO ISSUE BEARER SHARES:

USD 800 for Company with up to 50,000 shares, if all bearer shares are kept with a BVI Custodian.

USD 1100 for Company with more than 50,000 shares, if all bearer shares are kept with a BVI Custodian.

USD 1100 for Company with up to 50,000 shares, if some of the bearer shares are not kept with a BVI Custodian.

USD 1350 for Company with more than 50,000 shares, if some of the bearer shares are not kept with a BVI Custodian.

(Apart from these Government fees, Registered Agent and Address fees will normally be payable, as well as another professional fees for Company Management and Administration. These are set forth in full detail in our Schedule of Fees.)

CUSTODIANSHIP OF BEARER SHARES
1. Bearer shares issued from 1 January 2005 are required to be deposited with an authorised custodian and neither the registered agent nor the company may deliver bearer share certificates issued after January 1, 2005 to any person other than a custodian authorised or recognised by the BVI Financial Services Commission, or the registered agent of the company.

We have applied to the BVI FSC to become an authorised custodian and anticipate that authorisation will be forthcoming. However, at present the FSC has not approved any authorised custodians. In the meantime, this means that any bearer shares issued from 1 January 2005 onwards must be held by the registered agent of the company.

2. Companies which have issued bearer shares before 1 January 2005 have until 31 December 2010 to deposit the bearer share certificates with a custodian or convert the bearer shares to registered shares.

NEW BEARER SHARE COMPANIES
Clients who might wish to form a new Bearer Share company should also consider as an attractive possible option the use of an 'aged' shelf company permitting Bearer Shares formed prior to 2005. The use of such a company can be less expensive as well as simpler, at least until 2011. For further information on this option, interested clients should contact our office for a full explanation of the various considerations involved

We trust that the foregoing has been informative and please do not hesitate in contacting us with any questions.

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