Amendments to the BVI Business Companies Act, 2004, and BVI Business Companies Regulations, which took effect on January 1, 2023, require BVI companies to file an annual financial return (AFR) containing specified financial information. The filing must be made with the company's BVI registered agent only. It is not a public filing.
The form of the AFR is contained in the BVI Business Companies (Financial Return) Order, 2023, enacted on March 2, 2023. The Order also outlines the AFR's due date and filing date and the entities exempted from filing.
Form of AFR
The AFR must contain the information specified in the Order, including (i) a balance sheet/statement of financial position detailing total assets, total liabilities and shareholders' equity and (ii) an income statement detailing gross profit and net income.
A copy of the form of the AFR is available via this link: [Download PDF of AFR Form Here]
It should be noted that where a company is part of a group of companies that prepares and maintains consolidated accounts, it shall suffice to (a) file the consolidated accounts of the group if the consolidated accounts show the accounts of the company or (b) in the case of more than one company, act in accordance with (a) above or make a single filing which shows the annual returns attributable to each company required to make a filing.
Due date and filing date
AFRs become due at the end of a company's financial year, either the calendar year (default) or after the 12-month period the company has expressly adopted as its financial or fiscal year.
For a company with a calendar year period, its first annual return becomes due on January 1, 2024, since the requirement for filing an annual return came into effect on January 1, 2023.
For a company that adopted a financial or fiscal year that does not correspond with the calendar year, its first annual return becomes due in 2024 or 2025, depending on the month its financial or fiscal year commences.
Every company must file their AFRs with their BVI registered agent within nine (9) months of their due date.
Accordingly, companies with a calendar year financial period must file their first AFR with their BVI registered agent no later than September 30, 2024.
Companies with a financial or fiscal year other than a calendar year must file their AFR within 9 months of the end of their financial year-end, which will allow some companies to make the filing in 2025. For example, a company with a financial year of March to February must file its AFR before November 30, 2024, while a company with a financial year of May to April must file its AFR before January 31, 2025.
Exempt entities
The following entities are not required to file an AFR with their BVI registered agent:
(i) a company that is listed on a stock exchange;
(ii) a company that is regulated under a financial services legislation and provides financial statements to the BVI Financial Services Commission per the requirements of that financial services legislation;
(iii) a company that files its annual tax return with the BVI Inland Revenue Department accompanied by the company's financial statements; and
(iv) a company in liquidation, except that this exemption does not apply if the company's annual return becomes due before the commencement of the liquidation.
Accounting rules and penalties
There are no prescribed accounting policies or principles that need to be followed bearing in mind that a BVI company is required to maintain records and underlying documentation of the company in such form as: (a) are sufficient to show and explain the company's transactions; and (b) will, at any time, enable the financial position of the company to be determined with reasonable accuracy. Also, the financial information included in an AFR is not required to be audited or certified by an accountant, and any applicable currency may be used for the AFR. Where a company fails to file its AFR within the specified period, the following penalties shall apply:
(a) for the first month or part thereof after the filing of the annual return was due, the penalty shall be US $300; and
(b) for each month or part thereof after the first month referred to in (a), the penalty shall be US $200, up to a maximum of US $5,000.
Where a company is liable to the maximum penalty referred to in (b) and has not filed its AFR, the Registrar of Corporate Affairs may strike the name of the company off the register of companies.
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.
