The British Virgin Islands ("BVI") continues to demonstrate its commitment to ensuring that its financial services industry is aligned with international best practices, as set by bodies such as the Global Forum on Transparency and Exchange of Information for Tax Purposes and the Financial Action Task Force. Significant changes have been made to the BVI Business Companies Act, 2004 with the recent passing of amendments that will come into force on 1 January 2023. The BVI Business Companies Act and the BVI Business Companies Regulations were recently amended by the BVI Business Companies (Amendment) Act, 2022 (the "Amending Act") and the BVI Business Companies (Amendment) Regulations, 2022 (the "Amending Regulations"). This memorandum identifies the key changes that will have an effect on clients and outlines how best to ensure compliance.
Public availability of director names:
At present, the names of persons performing as directors of BVI companies are not publicly accessible though this information is filed with the Registrar. Clients should take steps to ensure that the register of directors is up to date with the current directors to comply with the new requirement. The information which will be publicly available will be limited to the name of the director. As part of the changes reflected in the Amending Act, the names of the current directors of BVI companies will be made available to registered users of the online VIRRGIN system. It is predicted that it will be required to pay a fee to obtain this information and that director names will only be accessible by way of a search against a particular company.
Register of Members and Voting Rights:
Except such information is already integrated in a company's memorandum and articles of association, pursuant to the Amending Act, a company's register of members will require including the nature of any voting rights.
Bearer Share Abolition:
The capability to subject new bearer shares has been prohibited for some time and any existing bearer shares are 'immobilized' if not held by a licensed custodian and are subject to firm record keeping obligations. This Amending Act will completely eliminate and remove the bearer share concept from BVI law when all bearer shares are deemed rehabilitated to registered shares as from 1 July 2023.
New Annual Financial Return:
Except for companies regulated by the BVI Financial Services Commission, such as Banks, Insurance companies, Funds and Fund Managers, there is general record keeping requirement, but there is not firm requirement for a company to maintain financial records in a prescribed form or to file an annual return. The Amending Act provides that it is now compulsory for all BVI companies to maintain financial records and to maintain such records for a minimum period of five years. In addition they also need to prepare an annual financial return (the "Annual Return") which must be:
• Filed with its registered agent within 9 months of the end of the company's calendar year. If a company's financial year is not a calendar year, the company's financial year, and retained by the company's registered agent for a minimum period of five years.
• The specific form of the Annual Return has not yet been finalized, but we expect this to comprise a simple balance sheet and profit and loss.
• The annual financial return will not be available for public search nor will such information be filed with the Registrar of Corporate Affairs (the "Registrar") or any other regulatory authority. However, a registered agent will have an obligation to inform the Financial Services Commission if it has not received the return within 30 days of the due date.
• A company which forms part of a group of companies that prepares and maintains consolidated accounts will be allowed to file with its registered agent, the consolidated accounts of the group.
The above requirements will not apply to listed companies, companies regulated under the financial services legislation which already provide financial statements to the Commission and companies that file tax returns with the BVI Inland Revenue Department.
Strike Off and Dissolution:
BVI companies are usually "struck off" the register of companies by the Registrar where there has been a failure to pay annual registry fees, the company fails to assign a registered agent or the registered agent resigns without being replaced. Once a company has been struck off, rather than being dissolved, the company enters a 'suspended' state in which neither the company nor its directors, members, receiver or liquidator are permitted to take any actions or act in any way in respect of the company's assets.
If a company is not restored within a period of seven years, the company is dissolved by operation of law and any property of the company vests bona vacantia in the Crown. The Amending Act provides that from 1 January 2023, Companies will be given 90 days' notice by the Registrar before it becomes liable to strike off and the above regime will no longer apply and all newly struck off companies will be automatically dissolved immediately following a strike off.
Restoring a dissolved company:
The Amending Act introduces a simpler process for restoration under which a company can now be restored by means of an application to the Registrar within a period of five years from the date of dissolution. Certain conditions need to be met including that the company has a registered agent in place and that the registered agent has declared that the information it holds on the company is up to date and in compliance with applicable laws.
The existing law provides that dissolved companies can only be restored by a court order.
In cases where a company has been dissolved while still holding assets and those assets have vested in the Crown bona vacantia, there is also a condition to notify the BVI Insolvency Services Financial Secretary that the company is to be restored. Where a company is restored to the register, it is deemed not at all to have been struck off or dissolved.
Continuation outside the BVI:
With effect from 1st January 2023, a company that wishes to continue outside of the BVI will be required to give advance notice to its secured and unsecured creditors and members of the proposed continuation. The Amending Act provides that a BVI company intending to continue to another jurisdiction must, at least 14 days before filing to continue out:
• Advertise notice of its intention in the BVI Gazette.
• Let know its creditors and members in writing of its intention.
Public Register of Beneficial Ownership:
The Amending Act commences enabling provisions for a framework about a public register of beneficial ownership. This includes the ability, by way of upcoming regulations, to set out the format of the register, any exemptions and any restrictions to access.
There exists the ability for BVI companies to be used for wholly charitable or non-commercial purposes. However, charitable companies operating outside the BVI will be subject to greater regulatory oversight than before in recognition of the fact that charitable companies are often used worldwide to support money laundering and terrorist financing activities.
Solvent Liquidations – Liquidator Residency Requirements:
The Amending Act introduces a residency obligation for persons who are appointed to act as liquidators of solvent BVI companies. 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 possible to appoint joint liquidators where only one of the liquidators meets the residency test.
Voluntary liquidators appointed prior to 1 January 2023 are permitted to carry on acting until the conclusion of the liquidation without the requirement to comply with the new BVI residency requirement.
Do you have any question in Mind?
The long time predictable amendments are generally designed to make sure that the BVI's business companies legislation continues to convene international standards and best practice as a leading offshore financial centre. Feel free to contact a member of our team for further information if you have any questions relating to this update or if any assistance is required to make certain compliance with the new legislation.