The British Virgin Islands, or BVI, is a beautiful and vibrant island nation located in the Caribbean. With its stunning white-sand beaches, crystal-clear waters, and lush tropical forests, the BVI has long been a favourite destination for tourists and adventure-seekers alike. But beyond its natural beauty, the BVI is also renowned for its thriving financial services sector, which has made it one of the world’s most important offshore financial centres.
The British Virgin Islands (BVI) continues to be a leading jurisdiction for international business and finance, and the BVI Business Companies Act (the “Act”) is at the heart of this. The Act governs the formation, regulation, and dissolution of BVI Business Companies (BVIs), which are widely used for international trade, investment, and holding purposes.
In recognition of the evolving needs of international business, the BVI Government has recently introduced a series of amendments to the Act, which came into effect on 1 January 2023. The amendments aim to enhance flexibility and competitiveness while ensuring that the jurisdiction remains in line with international standards for anti-money laundering and countering the financing of terrorism (AML/CFT).
The British Virgin Islands (BVI) Companies Amendment Act has brought about significant modifications to the BVI Companies Act, transforming the way companies in the jurisdiction operate. These alterations, which are highlighted below, will have a significant impact on how businesses are structured and managed in the BVI.
The Act introduces the following changes:
1. Names of current directors now publicly available:
The names of current directors of a BVI company can now be obtained through the Virtual Integrated Registry and Regulatory General Information Network (VIRRGIN). However, the personal details of the current directors will remain confidential, and the names of past directors will not be disclosed.
2. New financial reporting rules:
The BVI Companies Amendment Act has introduced new financial reporting standards for BVI companies. Under these new rules, companies are now required to file an annual financial statement within nine months of the end of their financial year. This statement is required to provide a clear and comprehensive representation of the company’s financial position and must include a balance sheet and the profit and loss account.
It is important to mention that this annual financial statement has no obligation to be disclosed to the public and does not have to be audited.
The requirement to file the annual financial statement does not apply to the following types of companies:
This annual financial statement serves as a self-explanatory representation of a company’s financial position and is a key tool for stakeholders to measure its performance and stability. However, the companies listed above are exempt from these reporting requirements, as they are already subject to regulatory and financial reporting frameworks.
3. Phasing out of bearer shares:
Bearer shares will be phased out in the BVI and it is no longer permissible to issue, convert, or exchange registered shares into bearer shares. Existing bearer shares will be converted into registered shares from July 2023.
4. Register of members:
The register of members must now include the nature of any voting rights, such as whether they are conditional or unconditional.
5. Continuation outside the BVI:
A BVI company must now advertise its intention to redomicile from the BVI and notify its members and creditors in writing of this intention at least 14 days before filing to continue.
6. Striking off, dissolution, and restoration:
This amendment has also introduced significant changes to the exclusion and dissolution regime, effective January 2023. All BVI companies that are excluded after this date will face immediate dissolution. However, there is a 90-day grace period, during which the company can remedy the breaches and regularise its situation before it is formally struck off.
Under the new rules, BVI companies have the option to voluntarily wind themselves up by making a declaration to the Registrar of Corporate Affairs. In such cases, the Registrar will publish a notice in the official gazette and, if there are no objections from creditors or any other interested party, the company will be struck off and dissolved.
In the event that a BVI company is struck off, it may be restored within five years of its dissolution by application to the Registrar of Corporate Affairs or to the court. The company will have to provide evidence of its reinstatement, including a statement of affairs, a list of creditors and a plan to settle outstanding debts.
When a BVI company is wound up, its assets will be frozen and any contracts entered into by the company will be null and void. Liquidators will be appointed to oversee the winding up of the company’s affairs and will be responsible for collecting the company’s assets, paying its debts and distributing the remaining assets to its shareholders.
7. Residency requirement for liquidators in solvent liquidations:
There is now a residency requirement for individuals appointed as liquidators in solvent liquidations of BVI companies. To qualify, the individual must have lived in the BVI for at least 180 days before their appointment. At least one of the joint liquidators must satisfy this requirement, but the requirement does not apply to the other joint liquidator if they are not residents of the BVI.
8. Definition of “persons with significant control”:
The definition of “persons with significant control” has recently been expanded to include those who own or control more than 25% of their voting rights. Moreover, a Persons with Significant Control (PSC) register has been established to record individuals or entities who hold significant control or influence over a company. This register is maintained by the company itself and is a mandatory requirement in the territory of the BVI.
In the BVI, companies are required to keep a PSC register that lists the individuals and entities that have significant control over the company. This information is required to be filed with the Registrar of Corporate Affairs, who may make this information available to the public. The PSC register is a critical tool for increasing transparency in corporate ownership and ensuring that individuals with significant control over a company are held accountable.
In some cases, the PSC register may be kept open, meaning that the information it contains is publicly available. This helps promote transparency and accountability and allows stakeholders to better understand a company’s ownership structure. In other cases, the PSC register may be kept confidential; this is generally only permitted in certain circumstances, such as where a person or entity is at risk of harm or violence, or where disclosure of the information would be contrary to the public interest.
It is vital for companies to ensure that their PSC register is up to date and accurately reflects the persons and entities with substantial control over the company. Failure to comply with these requirements can lead to fines and penalties, as well as damage to the company’s reputation.
Another important amendment relates to the process for the registration of charges.
The Act now provides for the electronic filing of charges, which will simplify the registration process and make it quicker and more efficient. The electronic filing of charges will provide a number of benefits for clients, including:
Registration process under the amended Act:
The amendment to the BVI Business Companies Act allowing for the electronic filing of charges is a significant step forward, it will simplify the process and make it quicker and more convenient for clients who require an efficient mechanism for securing their assets.
It is equally important to note that transparency is a key component of maintaining the integrity of the financial system and ensuring compliance with anti-money laundering and terrorist financing regulations. In line with this objective, the BVI Companies Act has been amended to require corporations to maintain accurate and up-to-date information on their beneficial owners. This information must be filed with the BVI Registrar of Companies and will be accessible to the BVI Financial Investigation Agency (FIA) and other relevant authorities for AML/CFT purposes.
In conclusion, the recent changes brought forth by the BVI Companies Amendment Act have added an extra layer of flexibility and simplicity to the already robust BVI company law. With the various improvements, the BVI remains an attractive destination for individuals and businesses looking for a tropical paradise, a hub for business activities, or an exciting place for adventures. So, if you are looking for a place to thrive, the British Virgin Islands are the perfect location with its breathtaking landscapes, rich history, and thriving financial sector.