Recap of Amendments to the BVI Business Companies (BVIBC) Act and changes in Fees in 2023 - CCP GROUP

2023 Amendments to the BVIBC Act

A number of key amendments were made to the BVIBC Act that became effective from January 1, 2023. Below is a recap and discussion of the major items.

Key Amendments

1. Annual Financial Return
Legislation prior to 2023 required a BVI company to keep records and documents that enabled the financial position of the company to be determined with reasonable accuracy. In line with this, clientswere required to advise their Registered Agentof the physical address where the financial records were maintained and the name of the person responsible for such maintenance. However, there was never a formal requirement to provide any information. Under the new regime, it is now mandatory for a BVI company to prepare and file with its registered agent an “annual return” containing certain prescribed financial information.
• The actual form of the annual return comprisesa basic balance sheet and profit and loss statement for the company’s chosen annual reporting period. These reports are not required to be audited.
• The annual return is only filed with the registered agent. There is no further requirement for the registered agent to submit it to the Corporate Registry and as such they are not publicly accessible.
• The period for filing the annual return is within 9 months after the end of the company’s chosen year end. If for example a company’s choses a calendar year basis, then the first reporting period will be the period January 1, 2023, to December 31, 2023, and the annual return is due by September 30, 2024, and will be due on September 30, in each successive year. If a company chose another year end for example September 30, then the first annual return is due by June 30, 2024, and will be due by June 30, in each successive year.
• Public companies, BVI regulated entities that already provide accounts to the BVI Financial Services Commission, or companies that file annual tax returns with financial statements with the BVI Inland Revenue department are not required to file annual returns.
• The registered agent is obligated to notify the BVI Registry of Corporate Affairs of any company that fails to provide the annual return within 30 days of its due date. Such a company will be unable to make filings at the Registry and also cannotobtain a certificate of good standing until the matter of outstanding returnshas been rectified.
Please note that through relationships with our sister company Crowe (BVI) Limited, weoffer a range of bookkeeping and accounting services aimed at ensuring that clients can affordably comply with this new requirement.
2. Names of Directors to be Publicly Accessible
Prior to 2023 the register of directors of each BVI company was filed with the Corporate Registry, but it was not accessible by the public in any way. However as from January 1, 2023, the names of the current directors of BVI companies are now publicly accessible.
• Note that only the names of the current directors are available. Dates of birth, nationality, addresses and other personal information is still not publicly accessible.
• The names and details of former directors is not available.
• Only authorized users of the BVI Registry system such as BVI service providers can conduct searches. Accordingly, searches cannot for example be conducted online by members of the public either locally or abroad.
• Searches are company related and not director related. Itis only possible to search the name of a BVI company and establish the names of the directors. It is not possible to search the name of a person to establish all the BVI companies for which he or she is appointed as a director.
3. Immediate Striking-off and the Importance of Paying Annual Fees on Time

Under the previous legislation, a company that did not pay its annual government fees was “struck-off” five months later. The companythen remainedon the register in this suspended state for a period of seven years before it was dissolved. During this period a company could, be restored upon payment of the outstanding government fees, applicablepenalties, and a restoration fee. Upon payment of the above, the company was automatically restored by the Registrarto the same position as if it had never been struck-off. If the company was not restored within sevenyears, it was then dissolved, and a court application (within seven years of the dissolution date) was required to restore the company.

With effect from January 1, 2023,the period for dissolution has been drasticallyreduced.The seven-year period is now gone, and non-payment of government fees now results in automatic dissolution at the same time as strike off. Clients should be aware of this significant change and the ramifications. If the company was active at the time of strike off it can be restored by the Registrar. However, if the company had assets at the time of dissolution they automatically vest in the crown “bono vacantia”, so the process involves writing to the BVI Financial Secretary to obtain consent to reclaim the assets from the crown in the restoration. (note that if no response is received in 7 days, consent is considered given).The company’s registered agent also needs to provide a declaration that all the company’s records and KYC information are up-to-date and to submit a formal application to the BVI Registry for restoration. To avoid all the above, it is strongly recommendedthat government fees are paid on a timely basis.

If the company was inactive at the time of dissolution there is a separate and more complicated and costly procedure for restoring a company via the courts.

It is a fact that some clients used the strike-off procedure as a cheaperalternative to the formal liquidation of a BVI company. Thenew amendments which eliminate the seven-year waiting period,serve to make this option more attractive.Note that it is still possible for (a) a creditor, director, or shareholder to apply to court to restore the company to deal with any unresolved matter concerning the company; and (b) there remain some risks for directors in allowing strike-off without going through a formal liquidation process involving public advertisements and the identification and repayment of known creditors. However, under the amended legislation, these risks disappear completely within five years of strike-off which is a marked improvement to the fourteen-year period required under the old legislation.

4. New requirements for voluntary liquidators

The previous practice was that a proposed liquidator once they met eligibility requirements could be located anywhere in the world. The amended act provides that the voluntary liquidator of a BVI company (or, if there is a joint liquidation, at least one of the liquidators) must now be resident in the BVI, i.e., they must have physically lived in the BVI for at least 180 days, either continuously or in aggregate, prior to their appointment. In addition, they must now meet certain experience and qualifications requirements such as at least two years’ liquidation experience, professional competence to conduct the liquidation, and an appropriate professional qualification in a field such as law or accountancy or hold an insolvency practitioner’s license issued by the BVI Financial Services Commission.

Liquidators also have new obligations to collect copies of all records kept and maintained by the company under the BVIBC Act including the new annual return etc., and on completion of the liquidation, send copies of those records to the former BVI Registered Agent.

Other Amendments

In addition to the four key amendments outlined above, there were other changes that became effective in 2023.

• Redomiciliations / Continuations to other jurisdictions: A BVI company wishing to redomicile or continue to another jurisdiction must now advertise and notify its shareholders and creditors of its intent to change jurisdictions at least 14 days in advance of the intended date of redomiciliation.
• Charitable and non-commercial companies: new rules apply to BVI companies that have charitable purposes or non-commercial purposes (whether wholly or partially);These include the ability of the Registrar to mandate such companies to prepare audited financial statements. These rules do not apply to companies that engage in charitable or non-commercial activity only for meeting theircorporate social responsibility programme.
• Abolishment of Bearer Shares: In culmination of a process started many years ago,the 2023 amendment provides that any bearer shares still in existence will be automatically converted to registered shares and the memorandum will be deemed to be amended to provide that the company is not authorized to issue or convert registered shares to bearer shares.
• Resignation of Registered Agent: The 90-day resignation notice period previously required for registered agents to give to companies has been reduced to 60 days. In addition, registered agents are no longer required to first issue a notice of intent to resign and thereafter file a notice of resignation once the notice period has elapsed. Resignation is automatic at the end of the 60-day notice period unless the notice is rescinded. Another major development in relation to the resignation provisions, is that the new legislation makes it mandatory for registered agents to resign when the business relationship with an entity has been terminated because of non-compliance by the entity with anti-money laundering regulations.
• Register of persons with significant control: The amended Act includes the legal framework for the introduction of a new public register of persons with significant control or the public register of beneficial owners. Please note however that such a register has not been introduced. In 2020, based on the adoption of certain legislation by the UK Parliament, the BVI Government made a commitment to introducing a public register of beneficial owners when such registers became a global international standard. The global agenda on public registers of beneficial owners has been waning and suffered a major setback following a ruling by the European Court of Justice on November 22, 2022. The ruling stipulates that such registers “constitute a serious interference with the fundamental rights to respect for private life and to the protection of personal data.” Accordingly, it is unclear when such a register would ever be introduced in the BVI.

Changes in Government Fees effective January 1, 2023

The above amendments mentioned above do require some enhanced and additional administrative measures for the Companies Registry.Accordingly, the BVI Financial Services Commission gave notice of some amendments to the fee structure for BVI Business Companies from January 1, 2023