On the 1st of January of 2023, various significant amendments to the Amendments to the BVI Business Companies Act, 2022 will come into force.
The critical revisions include the following:
A streamlined process for the dissolution of BVI companies and a more modern regime for restoration.
Limited changes to the information on Directors, which will be publicly available to registered VIRRGIN users.
Changes to the accounting and record-keeping requirements for BVI companies.
Financial Records and Accounts
In addition to their existing record-keeping obligations, BVI companies will be required to provide specific financial information, in the form of an annual return, to their Registered Agent. The return structure has yet to be finalized, but it is expected to consist of a simple balance sheet and profit and loss, which will not need to be audited.
The annual return will need to be filed within nine months of the end of an entity's financial year (which we expect will not necessarily have to be a calendar year). The Registered Agent will be obliged to inform the FSC if it has not received the annual return within 30 days of the due time.
The information filed with the Registered Agent will not be made publicly available, nor will the Registered Agent be obliged to file it with any regulator or BVI government authority.
Some exceptions will apply to listed companies, companies which pay tax in the BVI and certain BVI regulated entities.
Striking-Off and Dissolution
BVI companies may be struck off the Register in several different circumstances but are most often struck because they have failed to pay their annual fees.
Once struck, under the current law, they enter a state where that company (and its directors, members, and any liquidator or receiver) may not take any action. In the current system, the company will remain in that state for seven years unless it is returned to good standing. A struck company may be restored at any time by paying accrued fees and penalties and rectifying any other defect in its compliance with the law (such as appointing a new registered agent where the old one has resigned). If it is not brought back into life before the end of the seven years, it will be dissolved by operation of law.
The Amended Act effectively abolishes this period so that struck-off companies will be dissolved immediately.
Brief transitional arrangements will apply to companies currently in a struck-off or dissolved state. However, we would strongly urge all clients with struck or dissolved companies with underlying assets or business operations to take immediate action to bring the company back into good standing.
Restoration of Dissolved Companies
The restoration process will change significantly for companies in a dissolved state.
Under the current law, dissolved companies are only restorable by Court order. The Amended Act introduces a more straightforward method for companies in this state to restore by application to the Registrar of Corporate Affairs (the Registrar) within five years of the date of dissolution, subject to specific requirements. Chief among these is that a licensed person has agreed to take on the role of RA for the restored company and has declared that the information they hold is up to date and in compliance with various BVI regulations. There is also a requirement to take steps to notify the Crown if any property has vested in it.
A company may still also be restored by court order in any of the following scenarios:
The company was struck off the Register and dissolved following the completion of a liquidation.
On the date of dissolution, the company was not carrying on business or in operation.
The purpose of restoration is to (i) initiate, continue, or discontinue legal proceedings in the name of or against the company; or (ii) to apply for a property vested in the Crown bona vacantia to be returned to the company.
In any other circumstance where the court considers having regard to any circumstances, restoring the company to the Register is just and fair.
When a company is restored under either limb, it is deemed never to have been struck off/dissolved.
Publicly Available Director Names
The British Virgin Islands Financial Services Commission (FSC) will be making available the names of the directors of BVI companies to registered users of the online VIRRGIN system. There is expected to be an additional cost to the search. Searches will need to be run against a company name rather than the name of a director.
Clients should note that the full Register of directors, which companies have been required to file with the FSC on a confidential basis since 2016, will not be public. The information available will not include dates of birth or addresses. In addition, the names of former directors will not be available.
We are under the understanding that the FSC will extract this information from the registers they have on file without the need for new or additional action from clients. Entities which have not kept their Register up to date or which are not in compliance with their existing obligations should, however, take care to rectify this position as soon as possible.
Limited Access to Director Names
The names of directors of BVI companies will be accessible for users of VIRRGIN. VIRRGIN is the BVI Financial Services Commission's internet-based information network that provides online electronic access to the services of the Registrar, including electronic filings of documents. Searches on VIRRGIN will not reveal names of former directors or personal information on current directors, e.g. residential address, nationality or date of birth. Whilst further announcements are awaited regarding how the VIRRGIN system search will operate, we understand that it will not be possible to conduct searches against a director's name.
Requirements for Liquidators in Solvent Liquidations
The Amendment Act introduces new eligibility criteria for persons wishing to act as liquidators for solvent liquidations of BVI companies from the 1st of January 2023. A person must have physically resided in the BVI for at least 180 days before the appointment to be eligible as a liquidator. In certain circumstances, appointing a joint liquidator where only one liquidator qualifies under the new criteria may still be possible. The Amendment Regulations create additional experience and expertise requirements for anyone wishing to be appointed as a liquidator.
Register of Persons with Significant Control
The Amended Act provides the framework by which the BVI might, in the future, introduce a public register of persons with significant control. However, it is essential to note that no changes are expected to come into force on the 1st of January. The BVI government had previously committed to introduce such a register by 2023, subject to certain caveats, including such registers becoming an international standard.
The Amended Act provides that the Government may, by future regulations, specify the requirements for the format of such registers. It also provides that the regulations may contain exemptions or restrict access to certain person's data.
Next Steps
By the end of 2022, all BVI companies should be ready to comply with the legislation.
Transitional arrangements will apply to companies currently in a struck-off state so that, unless the seven years since their strike-off date expires earlier, they can apply to the Registrar until the 1st of July 2023.
Shall you require additional information, don't hesitate to get in touch with us at Contact@viss.com.hk.
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