Commercial Services

We focus on commercial services this month, with an interview from Calum McKenzie, Director at Folio Corporate Services Limited. Calum Mckenzie has worked in the offshore financial services industry for over 16 years. He has extensive experience and knowledge of fiduciary services, including providing director and trustee services to entities varying greatly in terms of structural complexity, asset value and activity, more lately with a focus on providing services to hedge & mutual funds. Mr. McKenzie is currently a non-executive Director of a BVI Class I General Trust Company, a director of a BVI Company Management company and is presently approved as a director in a number of offshore jurisdictions, including the BVI, Cayman Islands, Barbados, Nevis and Anguilla.

How would you describe the current business environment in your region?
By way of background, the BVI has a highly regarded legal system based on English common law and is home to the Commercial Court of the Eastern Caribbean Supreme Court which provides unparalleled legal access to practitioners. The legal framework is modern yet proven and trusted with prudent modern regulations. There is a stable political climate, with orderly changes of Governing parties upon election. There is a dedicated network of high quality sophisticated corporate and financial service providers based in the BVI. It is home to the full array of global offshore law firms and also all of the ‘Big 4’ accounting & audit firms, along with a very good range of niche and boutique service providers. It is OECD ‘white listed’ and is a member of IOSCO (International Organisation of Securities Commissions).
Service providers in the BVI are very competent and good at what we do. The jurisdiction itself has built its own reputation for the past 25 years and has proven it will do what is necessary to enable business to thrive within the BVI. People can rely on the BVI. For that reason BVI has long been recognised as the ‘go-to’ domicile for the incorporation of offshore companies. There is no question that this can be attributed in large part to the basic tenet of the jurisdiction being tax neutral, highly cost efficient and offering a good degree of privacy within which to conduct business affairs.

In terms of the current environment, business remains bullish. Whilst the statistics released for the year ended 2013 for BVI show a decline in year on year numbers, with almost 54,000 companies incorporated in 2013, it is clear that confidence in the BVI and its core product remains strong (BVI is the number one domicile in the world by number of registered companies). There continues to be a small decline in the number of mutual funds registered in BVI, but the year on year decline is slowing significantly (BVI is the number two domicile in the world by number of registered mutual funds). The decline one could argue reflects the economy in general and the unwillingness of investors to invest and banks to free up flows of capital. However, the increased demand for (or registration of) BVI Approved Investment Managers proffers reasons for confidence that the BVI Investment Business sector will remain strong.

Which sectors have seen the most activity and has this changed compared to the previous year? Where do the greatest opportunities for investors lie?
We are of the belief that the products, services and opportunities available in the BVI provides a strong platform for the BVI to progress. With increasing scrutiny on the substance over form and the qualitative or value driven investor/practitioner demanding or needing more from their service providers, there is an opportunity for service providers in the BVI to accommodate this business and type of client. Such a path of progression is inevitable on the back of the recent financial scandals and the latest economic crisis, both of which have led to a world of increasing compliance and a need for transparency.
One area of business that we anticipate will grow significantly in the BVI is the provision of BVI based independent directors who can implement and administer an appropriate good corporate governance structure. We have already invested a significant amount of time and resources in this area developing appropriate frameworks, processes and systems which will facilitate the provision of a range of value added ‘middle office’ services. We feel we are well placed to capitalize on this segment of the industry and see it as an increasing and exciting opportunity to increase business flow into the BVI.

What do you think the key challenges are for your region’s economy and how do you think these challenges can be met?
With the increasing pressure being placed on so called ‘tax havens’ and specifically British Overseas Territories, the next round of the FATF mutual evaluations for BVI taking place later in 2014 will be critical. BVI is well placed to perform well in the evaluations but the key will be to demonstrate that BVI exceeds the standards being set down and in all material respects outperforms its peers. Key will be implementation by service providers of the recently amended FATF recommendations, which will possibly require some BVI service providers to tweak their existing business model.
In conclusion it can be said that the BVI is placing itself well in a competitive and continuously evolving industry. It has demonstrated over an extended period of time its ability to meet the changing demands of stakeholders and yet simultaneously enhance its products and reputation. The BVI is an ideal place to do business and will continue to be the leading choice for the discerning needs of the global financial community.

The article can be found in the Lawyer Monthly e-mag (July Issue):