Significant amendments to the British Virgin Islands (“BVI”) Business Companies Act (the “Act”) and the BVI Business Companies Regulations (the “Regulations”) were published by the BVI government and will come into force on 1 January 2023.
The amendments update various parts of the Act to keep the BVI in line with international standards and best practices. The key changes include:
- striking off and dissolution
- restoration process
- voluntary liquidators
- accounting and annual financial returns
- publicly accessible list of directors
Strike Off Regime Changes
The current system permits a seven-year period between the removal of a company from the register of companies (the “Register”) and its dissolution. Starting from January 1, 2023, the Register will dissolve a company immediately upon its removal. The Registrar of Corporate Affairs in the BVI will publish a notice of the striking off in the Gazette and the company will be dissolved.
Transitional arrangements will apply for companies that are struck off but not yet dissolved at the start of 2023 if they wish to be restored to the Register. Any company currently struck off but with assets or ongoing operations should decide whether to restore the company before the amendments take effect.
Procedure for Restoration of Dissolved Companies
The amendments introduce a new procedure for companies to apply to the Registrar to be restored to the Register when they have been dissolved. This is in addition to the existing court procedure. Companies can apply to the Registrar within five years of their dissolution if:
- They were carrying on business or in operation at the date of their dissolution;
- A licensed person has agreed to serve as the company’s registered agent and has confirmed the company’s compliance with anti-money laundering obligations by updating its records;
- The company pays a restoration fee and any outstanding fees/penalties; and
- The Registrar has determined that restoring the company would be fair and reasonable.
If any property of the company was vested in the Crown when the company was dissolved, notice of the application to be restored also has to be given to the Crown. The existing court restoration procedure will also be available if:
- The company dissolved after it finished its liquidation process.
- On the date of dissolution, the company was not carrying on business or in operation;
- The purpose of restoration is to enable the initiation, continuation, or discontinuation of legal proceedings in the company’s name, or to make an application for the return of the company’s property, which vested in the Crown upon the company’s dissolution; and
- In any other case where the court considers it just and fair to restore the company to the Register.
Various parties, including a creditor, former director/member/liquidator of the company, a person who would have had a contractual relationship with the company if it hadn’t been dissolved, a person with a legal claim against the company, or any other individual who can demonstrate an interest in having the company restored, can make a court application.
Annual Financial Returns
Companies will have to file a new annual return with their registered agent setting out certain financial information and detailing financial transactions. We are currently finalizing the format and content details of the annual return. The company must file the annual return within nine months of the calendar year-end or at the end of its financial year. The first return is required for the 2023 financial year,
Exemptions apply for listed companies, companies regulated under BVI financial services legislation that provide financial statements to the Commission, and companies that file annual tax returns (with financial statements) with the BVI Inland Revenue.
We will not submit the annual return to the Registrar, and it will not be publicly available. Registered agents will have to notify the Registrar however if a company does not file its annual return.
Publicly Available List of Director Names
From January 1, 2023, a list of a company’s current directors will be available on request for registered users of the BVI Registry system. This list will only contain the names of the directors and other details such as directors’ address, date of birth, and details of former directors will not be accessible.
Changes for Voluntary Liquidators
The amendments now impose residency requirements on individuals appointed as voluntary liquidators. To qualify individuals will need to be residents of the BVI. When appointing joint voluntary liquidators, only one of them must be a resident of the BVI, enabling the appointment of a joint liquidator in a country where the company conducts its business operations.
Individuals appointed as liquidators will need to meet professional standards to act as voluntary liquidators and they must either hold an insolvency practitioner’s license or be professionally competent to liquidate the company and hold an appropriate professional qualification (i.e. accountant or lawyer).
Voluntary liquidators must collect and send copies of the records, maintained by the company under the Act, to the company’s former registered agent in the BVI at the end of the liquidation.
Bearer Shares Abolished
Companies will no longer be able to issue bearer shares and any existing bearer shares will automatically convert into registered shares on 1 July 2023. We will abolish the current regime of regulated custodians holding bearer shares.
Register of Persons with Significant Control
The amendments provide the framework to allow for registers of persons with significant control for BVI companies in the future. At this time there is no definitive timeframe for implementation of these provisions.
Conclusion
All BVI companies should prepare for the changes that will take effect on January 1, 2023, and consider if changes are needed prior to the amendments coming into force. The amendments to the Act and Regulations aim to uphold international standards.