The Amendments incorporate a number of significant changes to the BVI Business Companies Act (as amended, the BCA) and accompanying BVI Business Companies Regulations (as amended, the Regulations).
Notable amendments address provisions in relation to:
- financial reporting and record keeping requirements;
- disclosure of director details;
- abolition of bearer shares;
- striking off, dissolution and restoration of BVI companies;
- voluntary liquidators; and
- discontinuation of BVI companies.
Financial Reporting and Record Keeping Requirements
Whilst under the current BCA regulated BVI companies (such as banks, insurance companies and regulated funds and fund managers) are required to produce and submit audited financials to the BVI’s Financial Services Commission (the FSC) , a BVI company that is not regulated by the FSC is currently only required to maintain financial records which sufficiently determine the company’s financial position with reasonable accuracy at any particular time.
From 1 January 2023, each BVI company will be required to submit an annual financial return to its registered agent within 9 months after the end of the fiscal year to which it relates. Exceptions apply for listed companies, companies that are regulated and already provide financial statements to the FSC and companies that file tax returns with the BVI Inland Revenue Department with accompanying financial statements. Consolidated financial statements will be accommodated for group entities. The registered agent will have an obligation to retain the annual return for at least five years from the date it ceases to act as the company’s registered agent and to report to the FSC if an annual return is not submitted within 30 days after its filing deadline.
Disclosure of Director Details
Currently, the register detailing the names, addresses, date of birth and nationality of the directors of a BVI company, although required to be filed with the BVI’s Registry of Corporate Affairs (the Registry), can only be requested from that company’s registered agent and provided to third parties if the company’s client of record authorises the registered agent to do so. Once the Amendments come into force, the Registry will be able to provide, on payment of a fee to be determined, the names of the current directors to certain registered users of the online VIRRGIN company search website. The Registry will continue to maintain the confidentiality of all other director details submitted to it pursuant to the BCA.
Abolition of Bearer Shares
Even though the issuance of new bearer shares has been prohibited under the BCA since 1 January 2010 and existing bearer shares were immobilised unless held by a licensed custodian and subject to certain record keeping obligations, the concept of bearer shares continues to exist under current BVI legislation. Pursuant to the Amendments, however, the residual bearer share regime will finally become a thing of the past, as all remaining bearer shares will be deemed to be converted to registered shares on 1 July 2023.
Striking Off, Dissolution and Restoration of BVI Companies
A company struck off the register of BVI companies maintained by the Registry (the Register) would usually remain struck-off and unable to take any actions in relation to the company or its assets for a period of seven years prior to its dissolution. During this period, the company can be restored at any time by remedial action being taken in respect of the issue which has caused that company to become struck off (such action commonly consisting of payment of outstanding annual fees and/or penalties or the appointment of a new registered agent where the previous registered agent has resigned).
The Amendments will effectively remove the seven-year grace period within which the company is able to remedy the issue; the Registry will only give the company a maximum of 90 days’ notice of the proposed strike off date (on which date the company will be struck off the Register and dissolved unless it has shown cause to the contrary).
The period within which a struck off company may apply to the High Court to be restored has been shortened from seven years to five years after the company’s dissolution. However, a faster streamlined process will be available for the restoration of the company by a simple application to the Registry without the need to apply to the High Court, provided that the company’s registered agent agrees to act for the company and all of its records in relation to its shareholders and directors are up-to-date and in good order. Such an application to the Registrar must be made within five years after the company was struck off the Register.
Under the current Regulations, the voluntary liquidator (or one of them if more than one), appointed for the purposes of voluntarily liquidating a BVI company, is required to be a licensed insolvency practitioner and must not fall foul of any of the disqualifications listed in the Regulations. Such disqualifications include the individual being a minor, an undischarged bankrupt, a previous director or person of a senior management position within the last two years prior to the voluntary liquidation, a restricted or disqualified person in the BVI or other jurisdictions, or a family member of any such person.
There is currently no provision either in the Regulations or in the BCA imposing any residency requirement on a voluntary liquidator. Once the Amendments come into force, however, the definition of “voluntary liquidator” is amended so that any voluntary liquidator (or at least one of the joint voluntary liquidators) appointed after 1 January 2023 will be required to be resident in the BVI for a period of no less than 180 days, whether continuously or in aggregate, prior to that person’s appointment.
Discontinuation of BVI Companies
If a BVI company wishes to continue or redomicile outside of the BVI (‘discontinue’), provided that this is permitted under its current Articles of Association and not prohibited by any other agreement which the company has entered into, it can usually do so with relative ease under the current legislation and without having to notify any of its stakeholders.
Pursuant to the Amendments, the company intending to discontinue will be required to advertise the notice of discontinuation in the BVI Gazette and on its own website (if applicable) as well as notify all of its members and creditors in writing of its intention to discontinue out of the BVI at least 14 days before filing a notice of discontinuation with the Registry.
While the above summary highlights the key provisions that will apply once the Amendments come into force, other provisions of the BCA and Regulations will also be amended and new provisions will be introduced. These include, but are not limited to, restrictions in respect of incorporations of charitable or non-commercial companies (which will expressly be permitted to be used globally, with those operating outside the BVI being subject to increased financial oversight), a shorter notice period for the resignation of registered agents, an obligation to enter in a company’s register of members the nature of associated voting rights (unless such information is already included in the company’s memorandum or articles) and a future framework for a register of persons of significant control.
The Amendments signify a positive step towards ensuring that the current legislation is compliant with internationally recognised standards in relation to obtaining transparency and that recommended best practices targeting money laundering and other forms of criminal conduct are upheld and maintained across the BVI’s financial sector.