Key Developments in the BVI Beneficial Ownership Regime

Background

The BVI beneficial ownership regime (the “Regime”) requires BVI business companies, limited partnerships and trusts or other legal arrangements to maintain a BO Register.  Entities falling within the scope of the Regime are required to collect, keep and maintain a BO Register of adequate, accurate and up to date beneficial ownership information containing certain required particulars in relation to their “beneficial owners”.

For entities incorporated, registered or continued into the BVI before 2 January 2025, they must file their beneficial ownership information by 1 January 2026.  From 2 January 2025, any new entities are required to file their beneficial ownership information with the Registrar within 30 days of their incorporation, registration or continuation (as applicable).

For further general details regarding the Regime as originally enacted, please see our Guide of 7 January 2025.

New exemptions under the Regime

The original exemptions found in the BO Regulations applied to BVI companies listed on a recognized exchange and BVI registered or recognized funds (private, professional, public, incubator, approved or private investment funds) provided those funds’ beneficial ownership information is held by a person holding the requisite license from the BVI Financial Services Commission and which can be provided to the Registrar within 24 hours of a request being made.

The exemptions have now been expanded to include:

• a legal entity that is a subsidiary of a fund (including a foreign fund) provided that the requisite beneficial ownership information can be provided to the Registrar within 24 hours of a request;
• a BVI business company that is a subsidiary of a company which is listed on a recognized exchange; or a BVI business company in which the Government of the Virgin Islands or the government of a foreign country or territory holds more than 50% of the shares or voting rights; and
• a company whose shares are held by a trustee that is (i) licensed under the banks and Trust Companies Act, Revised Edition 2020; or (ii) regulated for anti-money laundering, anti-terrorist financing and anti-proliferation financing purposes in a country other than the Virgin Islands.

The BO Regulations, as amended by the Amendment Regulations make clear that it is not necessary to disclose information in respect of which a claim to legal professional privilege could be maintained in legal proceedings or which the person is prohibited from disclosing under any other law.

Restrictions on beneficial owner’s interest

Where an entity has taken steps to identify a person who is a beneficial owner but has not received a response to the notice provided or the response received has not confirmed the identity of the beneficial owner, the entity will not be treated as being in contravention of the BO Regulations if it files a notice with the Registrar.  In such circumstances, the Registrar will then be permitted to issue a restriction notice (Restriction Notice) restricting any right or transactions in the “relevant interest” defined as 10% or more of the shares or voting rights in a company, or 10% or more of the capital or profits or voting rights in a limited partnership.

It is expressly provided in the Amendment Regulations that a Restriction Notice will not affect or prejudice the right of  secured creditor to enforce its security over the relevant interest.  In addition, such Restriction Notice will not take effect if the relevant interest is subject to a pre-existing security interest granted to a third party who is not affiliated with the legal entity.

Effect of a Restriction Notice

For so long as a Restriction Notice remains in effect:

•  any transfer or agreement to transfer the relevant interest is void;
•  no rights are exercisable in respect of the relevant interest;
• no relevant interest may be issued in respect of the relevant interest or in pursuance of an offer made to the person holding the relevant interest; and
• other than in a liquidation:

• •  no payment may e made of sums due from the legal entity in respect of the relevant interest, whether in respect of capital or otherwise; and
  •  an agreement to transfer any of the following associated rights in relation to the relevant interest is void:
  •  a right to be issued with any shares issued in respect of the relevant interest; or
  •   a right to receive payment of any sums due form the legal entity in respect of the relevant interest.

A transfer or agreement to transfer the relevant interest or the above associated rights may be permissible if the agreement results in the relevant interest being transferred for valuable consideration and the Court approves the transfer.

Withdrawal of a Restriction notice

The Registrar shall withdraw a Restriction Notice if they:

•  are satisfied that the beneficial owner to whom the relevant interest relates has been identified in accordance with the BO Regulations;
• discover that the rights of a third party, person with a security interest, registered shareholder or other beneficial owner in relation to the relevant interest are being unfairly affected by the Restriction Notice; or
• are satisfied that there is a valid reason or justification (such as death of the beneficial owner, relocation of the beneficial owner from their usual place of residence or other similar reason) for the failure to identify the beneficial owner in accordance with the BO Regulations.

A legal entity on which a Restriction Notice is serves, or any other person aggrieved by the decision of the Registrar to impose a Restriction Notice may apply to the Court to set aside the Restriction notice or any specific restriction imposed by the Restriction notice.

Access to beneficial ownership information

When originally enacted, information contained in BO Registers was to only be available to competent authorities and law enforcement agencies under certain prescribed circumstances.  The changes introduced in the Amendment Regulations enable third parties who are able to demonstrate a “legitimate interest” to inspect or request a copy of an entry in a BO Register upon submission of a written request in approved form to the Registrar together with a fee of $75.

If a request is granted by the Registrar, the beneficial ownership information which could be provided to the applicant is limited to: (i) in the case of an individual – full legal name, month and year of birth, nationality and the nature of their interest in, or control over the relevant legal entity; and (ii) in the case of a legal entity – name (including alternatives), incorporation number, registered or principal office address, country of incorporation or registration, legal form and the law by which it is governed and the type of register on which it is registered.

Legal entities may object to specific requests for disclosure and may also apply to the Registrar seeking an advance or standing exemption from the disclosure of beneficial ownership information.  If an advance exemption application has been made, the Registrar will first decide on this application before dealing with any applications for access.  Advance exemptions may be general or specific, for a specific period and subject to such conditions as the Registrar may stipulate.

Access application procedure

The application will need to include details regarding the applicant, the purpose for which the beneficial ownership information is to be used and a declaration that the information will be used solely for that purpose. In order to demonstrate a “legitimate interest” an applicant will need to show:

•  the purpose for requesting access is to investigate, prevent or detect money laundering, terrorist financing and/ or proliferation financing;
•  a legal entity connected to the request is connected to a person who has been  convicted of, or is the subject of criminal proceedings for the offence of money laundering, terrorist financing or proliferation financing;
•  the person is an “obliged entity” conducting customer due diligence obligations in accordance with the laws governing anti-money laundering, counter terrorist financing and counter proliferation financing (AML/CFT/CPF) and the information is required for that purpose.

An obliged entity is a financial institution or other person subject to obligations to carry out customer due diligence or enhanced due diligence for AML/ CFT/CPF requirements under BVI law.

Upon receipt of an application, if there is no advance exemption in place, the application complies with the requirements of the Amendment Regulations and it is not otherwise contrary to public policy, the Registrar will notify the legal entity concerned of the request giving it five days to file an objection to disclosure of beneficial ownership information. If no objection is filed, inspection or receipt of the requested information will be allowed within 12 business days.  Any decision by the Registrar to decline an access application, unless overturned on appeal, will be valid for three years from the date of the decision.

Where a notice of objection is filed, then that legal entity has a further five days in which to show cause by submitting an application to the Registrar as to why the request should not be granted.  Reasons for objection may include that:

• the request was not made for a proper purpose;
• the request contains misleading or in accurate information;
• any of the following apply:

• •  a reasonable belief that any disclosure of beneficial ownership information might expose the beneficial owner or members of their immediate family to serious risk of fraud, kidnapping, blackmail, extortion, harassment, violence, intimidation or other similar harm;
  •   the particulars of the information requested relate to a child or a person lacking legal capacity;
  • that the disclosure of the beneficial information requested will or is likely to raise or affect issues of national security, whether in the BVI or elsewhere;
  •  that it is not in the public interest for the information to be provided;
  •  where the Registrar forms an opinion that that such an exemption is reasonably necessary on the basis of such undertaking as the Registrar may specify and for a defined period only.

A person aggrieved by the Registrar’s decision to allow or disallow an objection is entitled to appeal to the Appeal Board within 21 days.  No beneficial ownership information may be disclosed until a determination is made by the Appeal Board.

Next steps

All BVI entities should ensure that they are in compliance with the Regime. Please contact your usual Appleby contact should you require any additional information or assistance in this regard.