Incorporators in the Virgin Islands formed 41,953 companies during the first nine months of 2013, about 7,300 fewer than were formed in the first nine months of 2012, according to recently released statistics from the Financial Services Commission.

Incorporation numbers declined nearly 21.2 percent during the third quarter of 2013 compared to the same period during the previous year.

Annual company incorporation figures, a key measure of the health of the overall financial services industry, have yet to recover fully after suffering a sharp drop from 2007 highs due to the global recession.

Incorporations have also been hurt by the significant pressure G8 countries have placed on offshore financial centres and a spate of media coverage critical of the industry, analysts have speculated.

In his 2014 budget address this month, Premier Dr. Orlando Smith said that the drop underscores the importance of diversifying the sector and the overall economy.

“Fortunately, company re-registration figures remain strong and government revenue collections from incorporation fees have not decreased,” Dr. Smith said. “However, lower incorporation figures do have implications for the stock level of companies re-registered in the territory annually and future government revenue levels.”

After the 2007 drop, incorporation figures began to rebound from 2009 lows, when only 47,477 companies were formed, but the increase peaked in 2011, when 64,729 companies were formed.

Since then the numbers have been trending downwards, and to date they most closely resemble the 2010 formation rates.

Fund registrations have also seen a steady decline in recent years, with fewer professional, private and public funds being formed. During Q3 2010, for example, there were 2,951 funds of all types active in the VI, but by the most recent quarter, that number dipped to 2,253.

Neither has the captive insurance business expanded as hoped, with no new captives formed during the nine-month period.

However, investment businesses, a field that was opened up with the passage of the 2010 Securities and Investment Business Act, appear to be growing slowly. Seven new investment business licences were granted in Q3 2013, bringing the total number of such

licences issued by the FSC to 527.

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