Upcoming changes to the BVI Business Companies Act
Upcoming changes to the BVI Business Companies Act
The BVI has recently enacted the BVI Business Companies (Amendment) Act, 2002, and BVI Business (Amendment) Regulations, 2022 which will come into force on January 1, 2023, and contains significant amendments to the BVI companies regime. The amendments are driven by BVI’s continued commitment to comply with evolving international standards on transparency and the fight against financial crime.
The key revisions include:
- A new streamlined strike-off, dissolution, and restoration regime.
- Introduction of an annual financial return to be lodged with BVI Registered Agents.
- Directors' names to become publicly available by way of a company search.
- A new residency requirement for voluntary liquidators.
- A framework for the introduction of a Register of Persons of Significant Control
A summary of these key amendments is set out below:
New Strike off, Dissolution, and Restoration regime
Companies that are struck off after 1 January 2023 (“new struck off companies”)
The new legislation provides for an entirely new strike-off, dissolution, and restoration regime.
Previously, a company that gets struck off (usually for non-payment of government fees) would exist for 7 years in a suspended state, during which time the company is prohibited from carrying on business or taking any actions. However, it retains its legal personality and is thus capable of continuing to incur liabilities. During that 7-year strike-off period, a company could easily be restored by paying outstanding government fees to the Companies Registry along with attending to other routine catch-up filings. After that 7-year period, if a struck company had not been restored, it would be treated as dissolved and would need a court order to restore which could be granted up to 10 years after it was dissolved.
From 1 January 2023, any company that becomes struck off going forward, will instead become automatically “dissolved by way of strike off” following a 90-day notice period. Under specified conditions, the Companies Registry will be able to administratively restore a company that has been dissolved by way of strike-off (which will be referred to as the new ‘Fast Track Restoration’ process in the future) for up to 5 years after its automatic dissolution date. If the circumstances do not allow for the Registrar to restore the company, then the company can apply to the Courts to have the company restored within this same 5-year period under specified conditions.
Companies with struck-off status prior to 1 January 2023 but not yet dissolved (“Legacy Struck Companies”)
The changes incorporate transitional provisions to deal with the legacy struck companies that have not yet been dissolved. From 1 July 2023, any legacy-struck companies will become automatically dissolved by way of strike-off. However, a key difference for these legacy-struck companies which will become automatically dissolved by way of strike-off on 1 July 2023 is that they will be ineligible to use the Fast Track Restoration process by the Registrar. Instead, they would need to apply to the courts which would incur more expenses, and the Companies Registry will also impose a penalty fee for these restorations.
WE HIGHLY RECOMMEND YOU URGENTLY REVIEW ANY LEGACY-STRUCK COMPANIES THAT YOU MAY HAVE TO ASSESS WHETHER THEY STILL HOLD ANY ASSETS OR CONTINGENT LIABILITIES. IF SO, PLEASE CONTACT US IMMEDIATELY SO WE CAN HELP YOU RESTORE THE COMPANY IN THE MOST COST-EFFECTIVE MANNER BEFORE THE CHANGES TAKE EFFECT.
Annual Financial Return
The new legislation introduces an annual financial return requirement whereby every BVI company will be required to lodge some form of balance sheet and P&L with its Registered Agent annually within 9 months of its financial year-end. The Registered Agent will be under an obligation to notify the BVI Authorities if a company has not complied with this new law. This requirement will not be effective immediately, instead the first deadline for companies with a financial year-end on 31 December 2023 is expected to be 30 September 2024.
The exact format of the annual financial return is still being finalised by the BVI Authorities, and we hope to provide you with more details on that shortly. The annual financial return will be held by the Registered Agent and is a private document that will not be filed with the BVI Authorities unless a specific request is received. Certain companies are exempted from this requirement, including listed and regulated companies, as well as local companies that operate in the BVI and submit financial statements to the BVI Inland Revenue Department.
Register of Directors
From 1 January 2023, the names of directors of BVI companies will become publicly available by carrying out a company search at the Companies Registry. Sensitive personal information on the directors will not be publicly available. Moreover, former directors’ names before the legislation came into force will not be publicly available. Alternate directors will also now be required to be included on the register of directors.
The BVI is introducing a residency and qualification requirement for voluntary liquidators of BVI companies going forward, as well as certain other record-keeping duties on the appointed voluntary liquidator. Ocorian provides a suite of liquidator services and we would be happy to assist any companies that you are looking to wind down.
Register of Persons of Significant Control
The amendments include a framework to introduce, at some point in the future, a publicly available Register of Persons with Significant Control. The amendments do not include any details on such a register at this time, and we expect to be in a position to communicate more on that area in the next few months.
Other notable changes include a notification requirement for companies continuing out of the BVI and the abolition of the bearer share regime.
Links to the Legislation
Please reach out to your usual Ocorian contact for more information on the above if you have any queries at this stage, or alternatively please contact any of the below.