US VIRGIN ISLANDS Law and Practice Contributed by: Marjorie (Jorie) Roberts, Duncan J.J. Kessler and Jessica McKenney, Marjorie Rawls Roberts PC
can place their worldwide assets in a USVI exempt company to obtain the many benefits such an entity provides without subjecting those assets to any estate tax liability. Moreover, most exempt companies are exempt from licensing unless certain circumstances are met, except that exempt insurers and exempt international bank - ing facilities must be licensed. Exempt companies can request to enter into a contract signed by the Lieuten - ant Governor providing for the tax exemption benefits for 20 years, provided the exempt company remains in compliance with all USVI laws, regulations and rules and current with any USVI taxes and fee payments. Standard corporations, LLCs and exempt companies must have a minimum amount of USD1,000 in capi - tal to commence business. See, eg, 13 V.I.C. § 2; 13 V.I.C. § 1203. 3.2 Incorporation Process The Office of the Lieutenant Governor, Division of Cor - porations & Trademarks, serves as the registry for all corporate filings in the USVI. To incorporate, compa - nies must generally provide the name of the corpora - tion; verify whether their intended name is currently in use or not; describe the nature of the business; pro - vide a physical and mailing address and a registered agent address; name the partners, members or direc - tors along with their titles and physical and mailing addresses; list the amount of capital of the company and the Par Value of the company; list the amount of shareholders; provide copies of government IDs; and indicate whether the application is to be expedited or not expedited. Effective in 2018, the Division of Corporations & Trademarks implemented an electronic filing sys - tem for entity formations and registrations. With the exception of exempt LLCs, which require paper filings, all entity formations, registrations and annual report - ing requirements must be submitted to the Division using the Division’s online system, Catalyst. Applica - tions are submitted through the Catalyst online por - tal. It generally takes one to three days to determine name availability. Checking name availability with the United States Patent and Trademark Office (USPTO) and the local Division of Corporations & Trademarks
takes only about 20 minutes. Expediting filings take one to three days for registration and formation. Regu - lar registration and formation takes about seven to 20 days. It takes six to eight weeks for business licence approval. 3.3 Ongoing Reporting and Disclosure Obligations Each USVI (and foreign) corporation, including LLCs, must file an “Annual Report on Domestic or Foreign Corporations” and a “Report of Corporation Franchise Tax Due” with the Office of the Lieutenant Governor, Division of Corporations & Trademarks. The Annual Report is due by 30 June of each year. The annual franchise tax due is based on the type of entity creat - ed under USVI law. For example, LLCs pay a minimum of USD300 annually, based on their capital. Moreover, the different domestic and foreign entities in the USVI, eg, corporations, LLCs, limited partner - ships, etc, have various requirements for filing chang - es with the USVI. 3.4 Management Structures Corporations can either be one-tiered or two-tiered. Generally this comes down to the purpose, size and scope of the company and whether it is a foreign entity registering to do business in the USVI or a new company. The most common framework is a one-tier structure with founders, executives and management board members also running the day-to-day opera - tions. Within the most common entity, an LLC, there is generally at least one member, and an LLC may be either member-managed or manager-managed. 3.5 Directors’, Officers’ and Shareholders’ Liability Directors and officers have protection from personal liability so long as they are acting in good faith. The USVI does have a “wilful misconduct” exception codi - fied in 13 V.I.C. § 809 in which directors and officers may be responsible for losses that were occasioned by their wilful misconduct. Further, corporate limited liability does not extend to situations of fraud or fail- ure to maintain a corporation’s separate legal identity (eg, commingling of corporate funds with the per - sonal funds of shareholders), or consistent failure to follow corporate formalities (eg, failure to hold annual
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