Significant Amendments to the BVI Business Companies Act
The British Virgin Islands’ (“BVI”) authorities have recently enacted significant amendments to the BVI Business Companies Act, 2004. The new legislation will come into effect on 1 January 2023. These amendments were established in order to ensure that the BVI will continue to be compliance with international standards.
The key changes are briefly listed below.
Striking-off and dissolution
Under current law, a BVI company that has been struck off the Companies Register (the “Register”) usually due to failure to pay annual fees, will not be dissolved immediately. Instead, it must remain deleted for a continuous period of 7 years before it is dissolved. During this time, the company will retain its legal status and may incur liabilities, but is incapacitated for 7 years unless it is restored to good standing.
However, the BVI Amendment Act will rationalize the rules for struck-off companies by abolishing with the 7-year period. This means that all newly struck-off companies from 1 January 2023 under section 213 (4) of the Companies Act will be dissolved immediately after the striking-off is published in the Gazette under subsection (5) by the Registrar of Corporate Affairs. ("Registrar").
Moreover, under 60B. (1) Subject to subparagraph (2) of the BVI Companies Act for existing struck-off companies prior to 1 January 2023 which are not dissolved yet there will be a transition period of six months until 30th of June 2023 to apply to be restored. After that period, it will be dissolved immediately and the registered agent will be resigned on the dissolution date.
Restoration of struck off and dissolved companies
As per the changes to the strike-off regime set out above, a fast-track restoration process will be introduced to facilitate the restoration of companies that may have been struck off and dissolved under the new legislation. Such companies may be restored by a simple application to the Registrar without the need to apply to Court, provided that such application is made within 5 years of the date of dissolution. The Registered Agent for the restored company must declare that all information they hold is up-to-date and in compliance with various BVI regulations. There is also a requirement to take steps to notify the Crown if any property of the company has vested in the Crown bona vacantia.
Under paragraph 60G. (1) of the BVI Companies Act where the Court, in the exercise of powers under section 218 of the Act, makes an order to restore to the Register an existing struck off company that is deemed dissolved under paragraph 60D, the company is liable to pay penalties in addition to complying with the requirements specified in section 218A(1)(a) of the Act.
A company may still also be restored by court order, in any of the following scenarios exists:
- The company was struck off the Register and dissolved following the completion of a liquidation.
- On the dissolution date, the company was not carrying on business or in operation.
- 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 cases where the court considers that, having regard to any circumstances, it is just and fair to restore the company to the Register.
Moreover, once a company is restored, it is deemed never to have been struck off/dissolved.
New qualification and residency requirements for liquidators in solvent liquidations
Currently, a person is eligible to be appointed as a voluntary liquidator of a solvent BVI company if they are not disqualified from acting on the grounds of being a person who is a bankrupt, a minor, a disqualified director or a person who is or was a director or in a senior management position with responsibilities including financial management of the company or an affiliated company within the previous two years.
However, under Section 2 of the BVI Business Companies Act, the new legislation requires that the liquidators of BVI companies must have the requisite professional qualifications and liquidation experience to be appointed as voluntary liquidators and who is physically resident in the Virgin Islands for a period of not less than 180 days and appointed under section 199 or 4 an Insolvency Act liquidator ,either continuously or in aggregate, prior to their appointment. For any companies where joint liquidators are appointed, at least one of the liquidators must meet the residency requirement.
Such resident liquidators should collect the company records maintained and kept by the company in liquidation and after the completion of the liquidation provide copies of all the records collected by the liquidator to the Registered Agent of the company.
Publicly available director names
In compliance with international standards, under Section 118 of the principal Act is amended by inserting after subsection (2), where reference is made in this section and Sections 118A and 118B to a company’s register of directors, the register of directors shall include the names of a company’s current directors and may be available publicly on application to the Registrar via the BVI Financial Services Commission’s (“FSC’s”) online filing platform, VIRRGIN. However, only registered users of VIRRGIN will be able to make such applications.
Since 2016 all companies have filed their full and up-to-date Register of Directors with the Registrar. There is only one change under the new law, the director’s names will be publicly available and searchable however the search will have to be made by company name rather than a director’s name. The rest of the information from the Register of Directors remains private (dates of birth, names of previous directors, addresses).
Financial records and accounts
Moreover to current record keeping obligations, as per the new section 98A inserted in the Companies Act, additional obligations will be established . BVI companies must provide certain financial information, in the form of an annual return, to their Registered Agent. The form of return has not yet been finalised, but it is expected to consist of a simple balance sheet and profit and loss statement, which will not need to be audited.
An annual return must be submitted for each financial year of the company and filed with the Registered Agent within nine months following the end of the financial year to which it relates. The Registered Agent has the obligation to inform the Registrar if they did not received the annual return within 30 days of the due date. Practically, the first deadline for companies with a year-end of 31 December 2023 for the filing is expected to be 30 September 2024. In addition, the information required to be filed with the Registered Agent will not be in public, nor will the Registered Agent be required to file the annual returns or the information therein with any BVI authority. Listed companies and companies that file tax returns in the BVI and certain BVI regulated entities are not required to file an annual return.
Furthermore, as per Section 45 Schedule 1 of the principal Act amended 2B(1) where a company fails to be compliance with this requirement within the period as per Section 98A(2)(a) penalties will apply.
Moreover, if the company is liable to the maximum penalty , the Registrar may strike off the name of the company of the Register as per Section 213(1)(a)(ii) of the Act. However, if a company is complied with its Annual Return requirement it will appear in the Certificate of Good Standing issued by the Registrar.
Register of persons with significant control
As per Section 230 of the principal Act amended outlines a brief framework where the BVI in the future may establish a public register of persons with significant control. This was in agreement with the previous commitments of the BVI Government to present such a register by 2023, subject to certain caveats and qualifications.
The legislation provides that the BVI Government may, by subsequent regulations, indicate the requirements for the format of such registers and also provides that the regulations may include exemptions or restrict access to certain persons’ data.
Resignation of Registered Agent
As per Section 93 of the principal BVI Act amended, the Registered Agents are required to give a 60 days resignation notice to the companies instead of 90 days. Moreover, the Registered Agent may resign of a company if the business relationship between them has been terminated according to the law regarding money laundering, terrorist financing and proliferation financing. In addition, the Registered Agents are not required to issue a notice of intent to resign, the Registered Agent will be deemed to be resigned on the expiry of the date specified in the 60-day notice.