The number of new companies incorporated in the Virgin Islands in 2023 slumped to its lowest level for 25 years, new figures show.

The tally for the final quarter of the year plunged by 12.58 percent compared to the same period in 2022, according to the Statistical Bulletin issued April 5 by the Financial Services Commission.

In total, 22,317 new companies were incorporated during 2023 — 45 fewer than the 22,362 recorded for 2020, which had previously been the poorest performing year in recent times.

This left the territory with 361,491 registered business companies as of Dec. 31, 2023, nearly 25 percent below the peak of 481,002 active companies recorded at the end of 2011.

The performance for quarter four of last year, which saw 5,845 new incorporations, was also down by 4.56 percent from the number for the previous three months.

Despite the drop in new incorporations, a senior financial services lawyer in the Virgin Islands said the territory is still doing comparatively well when set against rival financial hubs.

Robert Briant, partner and head of VI corporate practice at Conyers, said the VI’s decline was occurring at a slower rate than other business centres.

“The decline in corporation numbers reflects in part the maturing of the jurisdiction,” Mr. Briant told the Beacon. “Take a look at the total number of [business companies]. While the number is declining, it is declining at a slower rate, and far exceeds the number of active companies of competitors.”

However, Mr. Briant warned against complacency.

“I do not want to suggest that we should be complacent with the decline in new incorporations, but the BVI has a healthy number of active companies such that neither is there cause to be pessimistic,” he said.

He added that the VI remains a “desirable” destination for international business.

“The BVI has a quality corporate vehicle product that is appropriate for good clients who need an offshore vehicle,” he said. “This has not changed and continues to be desirable to the global community.”

Decline

The territory’s financial services sector has grappled with a steady decline in demand and fluctuating fortunes in recent years. But before the disappointing downturn recorded in the final three months of 2023, the third quarter of the year had shown a more robust performance, with 6,123 incorporations.

This represented a 35.35 percent increase on the 4,518 recorded in the previous three months. But the figure for the second quarter of last year had the grim distinction of marking a 23-year quarterly low.

Other numbers

In recent years, the VI’s financial services industry has put a lot of stress on diversifying beyond incorporations and spreading out into other areas, including limited partnerships and trademarks. However, the latest figures show 66 new LPs were formed in the final quarter of 2023, which represented a decrease of 13.16 percent when measured against the same period in 2022.

This also showcased a drop of 7.04 percent in the number of LPs formed in the final quarter of last year when set against the tally for the preceding three months.

Trademarks

At 71, the total number of new applications to register a trademark for the final quarter of 2023 remained at the same level for that period in 2022.

However, it represented a 21.98 percent drop on the 91 applications to register trademarks recorded in the third quarter of 2023.

Since the enactment of the Trade Marks Act in September 2015, a total of 2,529 new applications to register a trademark have been filed.

Three-year period

The past three-year period has seen 270 trademarks registered in 2021; 345 in 2022; and 278 in 2023, according to the new FSC figures.