On the 1st of January 2023, various significant amendments of the "Amendments to the BVI Business Companies Act, 2022" will come into force.
Key Revisions will include the following:
- A streamlined process for the dissolution of BVI companies, and a more modern regime for restoration;
- Limited changes to the information on Directors which will be publicly available to registered VIRGIN users;
- Changes to the accounting and record keeping requirements for BVI companies.
Financial Records and Accounts:
In addition to their existing record keeping obligations, BVI companies will be required to provide certain financial information, in the form of an annual return, to their Registered Agent. The form of return has yet to be finalized, but it is expected to consist of a simple balance sheet and profit and loss. This will not need 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, nor will the Registered Agent be obliged to file them with any regulator or BVI government authority.
There are exceptions which will apply to listed companies, companies which pay tax in the BVI and certain BVI regulated entities.
Striking-off and Dissolution
BVI companies may be struck off the Register under a number of different circumstances, but are most often struck because they have failed to pay their annual fees.
Once removed under the current law, they enter a state whereby the company (and its directors, members, and any liquidator or receiver) will not be in a position to take any action. Under 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 the law (such as appointing a new registered agent where the old one has resigned). If the company 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 significantly.
Under the current law, dissolved companies are only restorable by Court order. The Amended Act introduces a simpler method for companies in this state, to restore by application to the Registrar of Corporate Affairs (the Registrar) within five years of the date of dissolution, subject to meeting certain requirements. Chief among these, is that a licensed person has agreed to take on the role of RA for the restored company, and has declared that the 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 has vested in it.
A company may still also be restored by court order, in any of the following scenarios:
- The company was struck off the Register and dissolved, following the completion of a liquidation;
- On the date of dissolution, 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 circumstances where the court considers that, having regard to any circumstances, it is just and fair to restore the company to the Register.
When a company is restored under either method, it is deemed never to have been struck off or dissolved.
Publicly Available Directors' Names
The British Virgin Islands Financial Services Commission (FSC) will be making available the names of the directors of BVI companies to registered users of the online VIRGIN system. There is expected to be an additional cost to the search. Searches will need to be run against a company name, rather than the name of a director.
Clients should note the full register of directors, which companies have been required to file with the FSC on a private basis since 2016, will not be made public. The information available will not include dates of birth, or addresses. The names of former directors will not be available.
We are under the understanding that the FSC will extract this information from the registers they have on file, without the need for new or additional action from clients. Entities which have not kept their register up to date, or which are otherwise not in compliance with their existing obligations should, however, take care to rectify this position as soon as possible.
Limited Access to Directors' Names
The names of directors of BVI companies will be accessible for users of VIRGIN. VIRGIN is the BVI Financial Services Commission's internet-based information network that provides on-line electronic access to the services of the Registrar, including electronic filings of documents. Searches on VIRGIN will not reveal names of former directors or personal information on current directors, e.g. residential address, nationality or date of birth. Whilst further announcements are awaited, as to how the VIRGIN system search will operate, it is our understanding that it will not be possible to carry out searches against a director's name.
Requirements for Liquidators in Solvent Liquidations
The Amendment Act introduces new eligibility criteria for persons wishing to act as a liquidator for solvent liquidations of BVI companies from 1 January 2023. A person must have physically resided in the BVI for at least 180 days prior to the appointment, to be eligible as a liquidator. In certain circumstances it may still be possible to appoint a joint liquidator where only one liquidator qualifies under the new criteria. The Amendment Regulations create additional experience and expertise requirements for any person wishing to be appointed as a liquidator.
Register of Persons with Significant Control
The Amended Act provides for the framework by which the BVI might in the future introduce a public register of persons with significant control, although it is important to note 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. It also provides that the regulations may contain exemptions or restrict access to a certain person's data.
By the end of 2022, all BVI companies should ready themselves to comply with the aforementioned legislation.
Transitional arrangements will apply to companies which are currently in a struck-off state so that, unless the seven years since their strike-off date expires earlier, they will be able to apply to the Registrar until the 1st of July 2023.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.