BVI Business Companies Act – What You Should Know

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!

Overview of the BVI Business Companies Act

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:

Incorporation

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.

Corporate governance

The BCA sets out a framework for corporate governance and outlines the duties and responsibilities of directors, members, and executive officers.

• Shareholder rights
  The BCA provides detailed information on shareholder rights and responsibilities. This includes voting rights, receiving dividends or other distributions, inspecting the BVI business documents, and approving certain BVI business resolutions. BVI companies must also ensure that they have accurate records of their shareholders and details of their rights and obligations.
• Director responsibilities and liabilities
  BVI companies must have at least one director, who can be an individual or a corporate entity, including those related to the management, accounting, and financial reporting of the BVI business. Directors have certain fiduciary duties to act in the best interests of the company and can be held liable for breaches of these duties. BVI companies must also have at least one officer, who is responsible for the day-to-day management of the company.
• Meetings and resolutions
  The BCA contains provisions on BVI company meetings and resolutions. BVI companies must hold an AGM at least once a year, which can be done in person or electronically. BVI businesses may also pass written resolutions instead of holding physical meetings.

Administration

• Financial reporting requirements
  BVI companies must prepare financial reports to be presented at the AGM. BVI companies must also keep financial records and books of accounts and make these available to shareholders on request.
• Annual filing requirements
  The BCA requires BVI businesses to file annual returns and other periodic documents with the BVI Registry of Corporate Affairs. This includes financial statements, audited accounts, economic substance filing, and reports on any material changes in the BVI business affairs.

Liquidation and dissolution

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.

Amendments to the BVI Business Companies Act

What is an amendment?

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.

Notable amendments of the BCA so far

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.

Latest amendment: BVI Business Companies (Amendment) Act, 2022

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.

• The company was actively conducting business operations at the date of its striking-off and dissolution.
• The registered agent has agreed to serve and confirmed that the company’s corporate records and due diligence have been fully updated.
• The company pays all necessary fees and penalties due to the BVI Registry
• The company has requested approval from the Financial Secretary to reclaim any property that has been vested by the Crown.
• The Registrar is satisfied that it would be fair and reasonable for the company to be restored to the Register.

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.

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:

• For companies authorized to issue up to 50,000 shares: US$550
• For companies authorized to issue more than 50,000 shares: US$1350

Conclusion

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.

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