On 1 January 2023, various significant amendments to the BVI Business Companies Act 2004 will come into force.
We hereby introduce in the below the most relevant amendments to the BVI Companies Law.
Liquidation - Choosing a BVI Resident Voluntary Liquidator
In addition to the requirement that the liquidators of BVI companies must have the requisite professional qualifications and liquidation experience to be appointed as voluntary liquidators, the new Legislation will require entities to appoint a BVI resident liquidator to voluntarily liquidate a solvent BVI company. 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.
It will be also possible to have, in addition to the BVI resident, a non-resident voluntary joint liquidator. Moreover, liquidators will be required to take all required actions to obtain financial/accounting records before commencing the liquidation process.
CCS can provide local voluntary liquidator services to your entity if desired.
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 we expect it 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. In practice, the first deadline for companies with a year-end of 31 December 2023 for the filing is therefore expected to be 30 September 2024.
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, unless specifically requested.
There are exceptions that 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 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, while retains its legal status and can incur liabilities. In the current system, it will remain in that state for seven years, unless it is brought back to good standing.
In an attempt to reduce the number of struck-off companies, the Amended Act requires all newly struck-off companies after 1 January 2023 will be dissolved immediately upon publication of the striking-off by the Registrar of Corporate Affairs (“Registrar”). As a brief transition arrangement, the companies which currently have a “struck off” status prior to 1 January 2023, have 6 months starting 01 January 2023, to restore via their Registered Agent and after 30 June 2023, the status will change to “dissolved”.
Please be aware, once dissolved, that the undistributed assets of a dissolved company are at risk of being vested in the Crown if not distributed prior to the dissolution.
If you are planning to restore any companies that are currently struck off, we advise you to take immediate actions to bring them back into good standing.
Restoration of struck off and dissolved companies
With 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.
In such circumstances, 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.
Resignation by the Registered Agent
The period of notice by Registered Agents to give to their clients indicating their intent to resign from representing such clients will be reduced from 90 days to 60 days. The Registered Agent will be deemed to have resigned at the end of the notice period, so there is no need to file another notice indicating actual resignation.
Publicly available director names
In compliance with international standards, under the new legislation, the names of a company’s current directors may be made available publicly on application to the Registrar via the BVI Financial Services Commission’s (“FSC’s”) online filing platform, VIRRGIN. Only registered users of VIRRGIN will be able to make such applications.
The registered user of VIRRGIN must be an employee of a bona fide Register of Corporate Affairs user (firm or individual) and resident in the BVI. A member of the public could ask a registered user to make a search and the search will need to be run against a company name, rather than the name of a director. There is expected to be an additional cost to the search.
All companies have been required to file their full and up-to-date Register of Directors with the Registrar on a private basis since 2016. The only change under the new legislation is that the names of directors will become publicly available and searchable – but searches will need to be run against a company name, rather than the name of a director. Other information from the register of directors will remain private, such as dates of birth, addresses or names of former directors if any.
We recommend you ensure that your Register of Directors filings are correct and up to date.
Register of Persons with Significant Control
The new legislation outlines a brief framework by which the BVI might in the future introduce a public register of persons with significant control. This is in line with the previous commitments by the BVI Government to introduce such a register by 2023, subject to certain caveats and qualifications.
The legislation provides that the BVI Government may, by subsequent regulations, specify the requirements for the format of such registers – and also provides that the regulations may contain exemptions or restrict access to certain persons’ data.
It is important to note that no changes in this area are expected to come into force on 1 January 2023.
Next Steps – What actions should you take
Before 1 January 2023, all BVI companies should be prepared for the new legislation.
As indicated above, the new legislation is in its early stages and we are waiting for more information from the BVI FSC. The same applies in respect of the Regulations which have not been published yet.
As soon as more information is available, we will send out another update with further details and information and in due course.