When establishing a company in a jurisdiction, it is crucial to have a comprehensive understanding of the applicable legislation. In the British Virgin Islands (BVI), the governing framework is the BVI Business Companies Act (the BCA). This legislation outlines the procedures and regulations concerning the formation, operation, and dissolution of business companies incorporated in the British Virgin Islands.
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For those wishing to do business in the BVI, understanding the BCA is essential. In today’s article, we’ll explore the BCA and its various sections in detail, so that you can make informed decisions for your BVI business. Let’s begin!
The BCA was introduced in 2004 and is comprised of different parts. Each part deals with a particular aspect of business companies, such as formation, directors’ duties, meetings, accounts, and dissolution. The BCA also includes definitions of terms used throughout the legislation.
In addition to the BCA, there are a few other laws that supplement it. These include the BVI Business Companies Regulations, BVI Insolvency Act, BVI Evidence Act, BVI Mutual Legal Assistance Act, BVI Arbitration Ordinance, BVI Financial Services (Companies) Act, and BVI Company Management Act.
The BCA covers a range of topics related to BVI businesses. Some of the key provisions include:
The BCA outlines the requirements for incorporating a BVI business. This includes filing certain forms and documents, paying associated fees, and providing basic information about the company such as its name, purpose, and directors. Additionally, the BCA requires BVI businesses to have at least one BVI resident director and registered office.
The BCA sets out a framework for corporate governance and outlines the duties and responsibilities of directors, members, and executive officers.
BVI companies can be voluntarily liquidated or dissolved or can be subject to involuntary liquidation or dissolution if certain criteria are met. The BCA provides for a clear and transparent process for liquidation and dissolution, which is overseen by the BVI courts.
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An amendment is a change or modification made to an existing law, agreement, or other document. The purpose of an amendment is to revise or update the original document to reflect changing circumstances or to address issues that were not adequately addressed in the original version.
Amendments are typically subject to a formal voting process and may require a certain level of approval before they can be added to the original document.
The BVI Business Companies Act (BCA) has been amended over 20 times since it was first enacted in 2004. The amendments have been made to address a range of issues, including improving corporate governance, enhancing transparency, and ensuring compliance with international standards.
Some of the most significant amendments to the BCA include:
In 2005, an amendment was made to the British Virgin Islands legislation which presented the concept of a “designated representative” that could legally act on behalf of a BVI company in specific scenarios.
The 2009 amendment required BVI companies to maintain registers of directors, officers, and shareholders and also introduced provisions related to the registration and disclosure of beneficial ownership information.
In 2015, a new framework was introduced to facilitate the re-domiciliation of companies into and out of the BVI. Additionally, this amendment provided further clarification on directors’ rights to assign their responsibilities to other individuals or entities.
The 2018 amendment introduced a new regime for the registration of charges over the assets of BVI companies and also made changes to the rules related to mergers and consolidations.
The BVI government regularly reviews and updates the BVI Business Companies Act to ensure that it remains up-to-date and responsive to the needs of international business, so it’s possible that further amendments will be published in the future.
On January 1st, 2023, the BVI Business Companies (Amendment) Act, 2022 come into effect. This update serves to reinforce BVI’s commitment to establishing a legally stable corporate atmosphere and introducing key changes related to the following matters:
Assess to director’s names
Previously, the information regarding BVI company directors was not accessible to the public.
As of January 1, 2023, access to the company’s register of directors will be available upon request to the Registrar. Nevertheless, the search will only disclose the names of the directors. All other personal data such as birthdate, nationality, or address shall remain confidential to the public.
Names of former directors who have resigned before January 1, 2023, will not be disclosed publicly.
Register of Persons with Significant Control
The Amendment outlines a basic structure for the development of the Register of Persons with Significant Control, where companies may need to record and present information to the Registrar concerning those who possess significant control over the company.
Strike-off regime
The Amendments put an end to the seven-year strike-off period. Under the new requirements from 1 January 2023, when the Registrar believes that a company should be struck off for a variety of reasons (e.g., failure to pay annual fees or the company has ceased to carry on business), they may issue a notice, stating that the company will be struck off unless it shows cause to the contrary.
The company has 90 days from the date of notice to provide evidence demonstrating why it should not be struck off. If the Registrar is not satisfied with the evidence provided, the strike-off process may be initiated.
The introduction of this new regime poses the danger of companies being struck off, as there is a drastically shortened time frame for struck-off entities to be dissolved.
Restoration regime
Starting 1 January 2023, the Amendment will come into effect and implement a set of restoration processes as follows:
In the five-year period after dissolution, a BVI company can apply to the Registrar for administrative restoration provided they meet certain qualifying criteria.
If a BVI company applies for administrative restoration within 12 months of its dissolution date, the administration fee is $700. However, if their application takes longer than one year to file then the fee will be raised to $1,600.
The Amendment also specifies a way to restore through Court Order; further details can be found here.
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Bearer shares regime
The Amendment brings an end to the bearer share regime, giving current bearer shareholders until June 30th, 2023 to decide between redeeming their shares or converting them into registered shares.
After July 1st, 2023 any bearer shares that remain will be eliminated and automatically transformed into registered shares.
Record maintenance procedures and annual return filing
The new amendment necessitates that companies must present an annual return to their registered agent within nine months of the company’s fiscal year-end.
Companies that do not submit their annual returns on time will be subject to a penalty of US$300 for the first month and US$200 per month thereafter, up to a maximum sum of US$5,000.
New fee structure applicable to the registration and annual administration of BVI business companies
As of January 1, 2023, the BVI government has raised its charge for company registration and yearly renewal to the following rates:
This article is intended to provide a comprehensive overview of the BVI Business Companies Act and its accompanying Amendments. This information is not intended to replace legal advice and should be used with caution.
If you have any questions about this matter, please do not hesitate to contact us via service@bbcincorp.com.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
