Amendments to the BVI Business Companies Act 2004
w.e.f. 1 January 2023
The amendments are being introduced to ensure the BVI keep pace and consistent with the international standards established by standard institutions, such as keeping its leading role on the transparency and exchange of information for tax globally and fighting financial crime. The relevant amendments regarding the BVI Business Companies Act 2004 will be effective on 1 January 2023.
Striking-off and dissolution
BVI companies may be struck off in a number of different circumstances but are most often struck because they have failed to pay their annual fees.
Once struck, under the current law, they enter a state where that company (and its directors, members, and any liquidator or receiver) may not take any actions. In the current system, it will remain in that state for seven years, unless it is brought back to good standing. A struck company may generally be restored at any time by paying any accrued fees and penalties, together with rectifying any other defect in its compliance with law (such as appointing a new registered agent where the old one has resigned). If it does not get brought back into life prior to the end of the seven years, it will be dissolved by operation of law.
The Amended Act effectively abolishes this period, so that struck off companies will be dissolved immediately.
Brief transitional arrangements will apply to companies which are currently in a struck off or dissolved state. However, we would strongly urge all clients with struck or dissolved companies with underlying assets or business operations to take immediate action to bring the company back into good standing.
Restoration of dissolved companies
For companies that are in a dissolved state, the process of restoration will change.
Under the current law, dissolved companies are restorable by court order only. Under the Amended Act, the companies could be restored by making an application to the Registrar within five years from the date of dissolution, subject to certain requirements.
However, a company may still also be restored by court order, in any of the following scenarios:
The company was struck off from the Register and dissolved following the completion of a liquidation.
On the date of dissolution, the company was not carrying on any business
The purpose of restoration is to:
(i) initiate, continue, or discontinue legal proceedings in the name of or against the company; or
(ii) to apply for property that has vested in the Crown bona vacantia to be returned to the company.
In any other circumstance where the court considers that, having regard to any particular circumstances, it is just and fair to restore the company.
When a company is restored under either limb, it is deemed never to have been struck off/dissolved.
Director names are available publicly
Going forward, the names of the present directors of BVI companies will be available to the registered users of the VIRRGIN system.
However, the full register of directors, which companies have been required to file with the Financial Services Commission (FSC) on a private basis since 2016, will not be available to public. The information available will not include dates of birth, or address of the Directors. Also, the names of former directors will not be available.
Entities which have not kept their register up to date or which are otherwise not in compliance with their existing obligations should immediately rectify the position.
Financial records and accounts
In addition to their existing record keeping obligations, BVI companies are now required to provide certain financial information in the Annual Return to the Registered Agent. The form of return is yet to be finalized, but it may consist of a simple balance sheet and profit and loss. However, this may not be required to be audited.
The annual return will need to be filed within nine months of the end of an entity’s financial year (which we expect will not necessarily have to be a calendar year). The registered agent will have an obligation to inform the FSC if it has not received the annual return within 30 days of the due time.
The information filed with the registered agent will not be made publicly available, and nor will the registered agent be obliged to file them with any regulator or BVI government authority.
However, there are certain exceptions that will apply to listed companies, companies which pay tax in the BVI and certain BVI regulated entities.
Residency requirement for appointing a Liquidator
A residency requirement has been introduced for persons being appointed to act as liquidators of BVI companies on a solvent basis. To qualify, an individual must have physically lived in the BVI for at least 180 days, either continuously or in aggregate, prior to their appointment.
In recognition of the fact that there may be foreign language, or time zone, benefits in having local liquidators in the place where companies have their main operations or businesses it will also be possible to appoint joint liquidators where only one meets the residency test. Liquidators are now required to take additional steps to obtain accounting records before commencing a liquidation.
Register of persons with significant control
The Amended Act provides for the framework by which the BVI might soon introduce a public register of persons with significant control, although no changes are expected to come into force on 1 January. The BVI government had previously made a commitment to introduce such a register by 2023, subject to certain caveats including such registers becoming an international standard.
The Amended Act provides that the Government may by future regulations, specify the requirements for the format of such registers. Also, it may contain certain exemptions or may restrict access to certain person’s data.
