Overview
The enduring popularity of the British Virgin Islands (“BVI”) business company with international investors is among the key reasons for the success of the BVI financial services industry. The BVI regulatory system is often tweaked to maintain competitiveness and compliance with international standards. Therefore, any amendments to the BVI Business Companies Act 2004 (the “Act”) are keenly noted, and often have a widespread impact on the BVI and further afield. The recently enacted BVI Business Companies (Amendment) Act, 2022 (the “Amendment Act”) and related BVI Business Companies (Amendment) Regulations, 2022 (the “Amendment Regulations”) introduced several important changes which will take effect from 1 January 2023. The changes will apply to all BVI companies
The main changes introduced by the amendments relate to:
- striking-off and dissolution of companies;
- restoration of dissolved companies;
- financial reporting rules;
- public accessibility of director names;
- requirements for liquidators in solvent liquidations;
- continuation of companies out of the BVI;
- register of person(s) with significant interest; and
- bearer shares.
Striking-off and Dissolution of Companies
Pursuant to the Act, the Registrar of Corporate Affairs (the “Registrar”) can strike the name of a company off the Register of Companies on six different grounds, including for the non-payment of annual fees and penalties. If a company continues to be struck-off for seven years it will automatically be dissolved on the seventh anniversary of it being struck off and any assets will vest in the Crown. Subject to a transitional arrangement, the current striking-off regime will be abolished by the Amendment Act with effect from 1 January 2023. Struck-off companies will be dissolved on the date the Registrar publishes a notice of the striking-off of the company in the BVI Gazette. Prior to striking-off the Registrar will send the company a notice giving the company 90 days to rectify its status.
Restoration of Dissolved Companies
Under the Act, dissolved companies can only be restored by court order. In certain circumstances, the Amendment Act permits a dissolved company to be restored without a court order, provided that the application for restoration is made to the Registrar within five years of the date of dissolution. The company will need to pay the restoration fee to the Registrar together with all outstanding fees and penalties. A licenced registered agent will need to consent to act for the company and make a declaration confirming it holds up to date information on the company pursuant to its obligations under the BVI anti-money laundering regime, its directors and owners. If the company held assets at the time of dissolution, notice of the application to restore must also be given to the Crown.
In certain cases, the restoration of a company will still require a court order, for example for the restoration of a company dissolved by way of voluntary liquidation under the Act.
The deadline for the restoration of companies which are struck-off before 1 January 2023 will be the earlier date of either (i) 1 July 2023 or (ii) the lapse of seven years after their struck-off date. The deadline for the restoration of companies dissolved before 1 January 2023 will be the earlier date of either (i) the lapse of the new 5 years period under the Amendment Act or (ii) the lapse of the ten years period of the Act.
New Financial Reporting Rules
Effective 1 January 2023 all companies will be required to prepare annual financial returns. These annual returns will not need to be audited. Companies will need to file their annual returns with their registered agent within nine months of the end of the company’s financial year and retained by the registered for at least five years. Some companies are exempt from this requirement, including companies that are regulated under the Securities and Investment Business Act, 2010.
The registered agent will be under an obligation to inform the BVI Financial Services Commission if the annual returns are not filed within 30 days after the end of the reporting deadline. The annual returns will not be publicly accessible.
Limited Access to Director Names
The names of directors of BVI companies will be accessible for users of VIRRGIN. VIRRGIN 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 VIRRGIN 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 VIRRGIN system search will operate, it is our understanding that it will not be possible to carry out searches against a director name.
Requirements for Liquidators in Solvent Liquidations
The Amendment Act introduces new eligibility criteria for persons wishing to act as 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 liquidator.
Continuation Out of the BVI
A company wishing to continue to another jurisdiction will have to advertise a notice of its intention to continue out in the BVI’s Official Gazette and on its own website (if any) and notify all of its shareholders and creditors (secured or not) in writing of its intention to continue out, at least 14 days before filing a notice of intention to continue out of the BVI with the Registrar.
Bearer Shares
The Amendment Act will put an end to bearer shares in the BVI. Existing bearer shares will be converted into registered shares on 1 July 2023. Should you have any queries on the above, please do not hesitate to contact us
About Hatstone
Hatstone is a multi-jurisdictional group providing legal, investment fund administration, fiduciary and corporate services with offices in the British Virgin Islands, Ireland, Jersey, London, Panama and South Africa. Our team is committed to providing responsive service and innovative solutions to our clients.
