International Business Companies Act - Growth

Growth

Initially, market response to the legislation was slow, but by 1988 a steady core of incorporation work was evident. However, in 1990 the U.S. invaded Panama and arrested General Manuel Noriega. At the time, Panama had been one of the market leaders in the provision of offshore companies. However, the invasion badly shook investor confidence in Panama, and incorporations in the British Virgin Islands under the Act soared from 1991 onwards.

From 1991 the Act was remarkably successful generating large numbers of incorporations. The Companies Registry in the Territory had to be expanded twice to cope with the volume of incorporations. The Act was then copied widely by other Caribbean offshore financial centres.

Despite its American focus, the key market for IBCs incorporated within the Territory developed in Hong Kong. Use of British Virgin Islands IBCs became so ubiquitous in Hong Kong, that in commercial jargon offshore companies generally were generically referred to there as "BVIs".

In 2000, KPMG were commissioned by the British Government to produce a report on the offshore financial industry generally, and the report indicated that nearly 41% of the offshore companies in the world were formed in the British Virgin Islands, making the British Virgin Islands one of the world's leading offshore financial centres. As a direct result the Territory has one of the highest incomes per capita in the Caribbean.