Monday, January 01, 2007The Panamanian Connection

Rosa Conway-RestrepoHow BVI Business Companies are used via Panama to reach the Latin Market.

In a world with an increasing number of jurisdictions competing for your business, why choose the BVI? One of the primary reasons to choose the BVI is the large number of qualified and experienced practitioners in situ. Latin American clients will be pleased to learn that this expertise includes practitioners who are in charge of wholly owned and controlled Panamanian trust companies. While these companies are prepared to serve clients from any part of the world, they are especially attractive to Latin American clients.

For over three quarters of a century Panamanian law firms such as Arias, Fabrega & Fabrega have advised private clients around the world in the formation and management of private investment and holding companies. They have also assisted clients in establishing appropriate fiduciary structures for the orderly transfer and disposition of their assets upon their death.

The Panamanian practitioners who have established trust companies in the BVI have for the last 18 years found the jurisdiction to be an ideal place for servicing their Latin American clients in the desired manner - with promptness, professionalism and at reasonable rates. With their experience in the industry, their shared language and understanding of the culture, Panamanian service providers have brought an additional dimension to the service community that would otherwise not be available. This has benefited the jurisdiction as a whole.

The most important job of any professional practitioner is to understand the needs of the clients. Practitioners often spend a great deal of time listening to what the client is thinking of or what he wishes to achieve. Those valuable first hours on the phone, in the client’s mother tongue and with a clear understanding of their culture, often gives a BVI practitioner information that may become essential in understanding what the client is trying to achieve and how best to serve them. Moreover, it is extremely important that the service provider gets to know the client on a personal basis as part of their due diligence. And, equally important, ensure that the clients understand the benefits, costs and limitations of the proposed structure.

With a long-standing professional relationship with other lawyers and practitioners throughout Latin America, the Panamanian presence in the BVI plays an important role in assisting their clientele. A good professional should always look for the best investment vehicles for their clients. Fortunately, the BVI as a developing jurisdiction has involved its practitioners in the development of new products and the shaping of legislation to ensure they fulfil the needs and requirements of all clients. As a result, clients feel comfortable using all BVI products when they need to make a decision regarding their business affairs and their future.

Presently, the BVI offers for investments and estate planning purposes five different types of Companies, trusts based on Common Law principles and a new VISTA trust, which may be considered by some a hybrid between the Common Law Trust and the Civil Law Foundation.

Companies limited by shares are the most commonly used corporate vehicle in the BVI. They provide Latin American clients with all the benefits of a new enhanced company law regime, which has been well tested and improved to meet current legal requirements. Being able to use any name also pleases these clients, including names in Spanish, and by being able to incorporate companies with bilingual memorandum and articles of association. Although, the English version of the documents would prevail in cases of discrepancies, the use of both languages in the preparation of corporate documents facilitates the use of BVI corporate structures in the clients’ businesses and financial projects taking place in their countries of origin. Furthermore, mergers and continuations of BVI companies with foreign companies, when documents are prepared and registered in both English and Spanish, make all transactions much easier to understand and therefore the clients are pleased and continue to use the BVI.

Indeed, the use of bilingual corporate documents is a major advantage for BVI companies involved in transactions or projects with companies or foundations already registered in Latin America.

In addition to all the well-known features of the old and very successful International Business Companies Act of 1984, the new BVI Business Companies Act introduces the most welcome feature of a reserve director. This provision is instrumental for those common cases wherein a company has only one individual member and such individual acts as the sole director. This provision avoids many of the difficulties that may arise when such sole member/sole director dies.

Although, not yet of popular use in Latin America, BVI Trusts and VISTA Trusts are vehicles which BVI practitioners may recommend to their clients. BVI Trusts are based on Common Law and have been well-tested as vehicles for estate planning. A client, once understanding the basic elements of a trust, may enjoy all it benefits. The VISTA Trust, on the other hand, would be of assistance to those clients who know their businesses and companies and wish to keep control of both while enjoying the benefits of a trust. VISTA allows the settlor to reserve some powers during his lifetime while ensuring orderly distribution of assets to beneficiaries. It also permits to incorporate existing foreign companies under a common umbrella, the BVI Company, whose shares would be held under the VISTA trust.

BVI legislation in conjunction with a pool of bilingual and experienced practitioners, who are able to assist in preparing and registering structures for investment and management of wealth, make the BVI jurisdiction the best choice for any client interested in properly organizing his business and establishing a fiduciary structure.

Oyster Publications Inc, PO box 3369, Road Town Tortola, British Virgin Islands, VG1110