To serve your smooth implementation of the BVI Economic Substance Rules as we discussed in the previous article, BBCIncorp continues to enrich your understanding of the BVI Beneficial Ownership Secure Search System (BOSS) regime. Check out our below text lines!
1. An introduction to the BVI BOSS Act
The Beneficial Ownership Secure Search System Act, 2017 (BVI “BOSS Act”) took effect on 30 June 2017. This Act was then further amended several times. The latest adjustment went into force on 1 October 2019, based on the date on which section 16 of the Economic Substance (Companies and Limited Partnerships) Act, 2018 came into force.
How does the BOSS system in the BVI look like? The term becomes easier to visualize if you think of the BOSS system as the place to store and retrieve details of beneficial owners of BVI registered companies and other in-scope entities under this regime. In fact, it’s a centrally managed system of the BVI competent authority to provide access to prescribed information of relevant legal entities maintained by registered agents.
Initially, the law's purpose was to enhance the efficiency of information exchanges in relation to the notes between the country and other authorities. The Act has been then modified several times to better align with information demand laid out by Economic Substance legislation.
Pursuant to the Act, corporate and legal entities (CLEs) with legal personality under the BVI laws are subject to the compliance duties and reporting of prescribed information. Noticeably, it is the Registered Agent (RA) who will primarily be in charge of fulfilling such obligations to the competent authority in the BVI.
Keep reading to help you get insights into who CLEs actually are!
2. Legal entities subject to the Act
2.1. Legal entity definition
The Beneficial Owner Secure Search System Act, 2017 defined legal entities as all registered BVI companies under the BVI Companies Act, 2004, and any limited partnership which has legal personality in the BVI.
The Act obliges legal entities within its purview to provide the required information of their beneficial owners and registrable legal entities to the BOSS system via Registered Agent. To make it clear, you should be aware of these two terms:
A beneficial owner is any person who obtains benefits of the ownership and “ultimately owns or controls” the legal entity. Beneficial owners must also satisfy conditions in the following cases:
- A natural person who ultimately owns or controls, whether directly or indirectly, 25% or more of the shares or voting rights in the legal person (in the case of a legal person other than corporate and legal entities with securities listed on the stock exchange);
- A natural person who otherwise exercises control over the management of the legal person (in the case of a legal person);
- A partner controlling the partnership, a trustee, a settlor, or other persons acting the similar function in controlling or making the legal arrangement (in the case of legal arrangement);
- A natural person who is designated as liquidator, administrator, or administrative receiver of the entity (in the case of the corporate and legal entity in insolvent liquidation, administration or administrative receivership under the BVI Insolvency Act, 2003);
- A creditor appointing the receiver no less than 25% of the shares or voting rights in the corporate and legal entity;
- A natural person who is an executor or representative of the deceased’s estate (in the case of a shareholder who would otherwise be a beneficial owner but is deceased);
- A joint owner in the CLE with two or more persons having qualifying interest jointly.
According to the BOSS Act (2017), a registrable legal entity refers to an entity that:
- Is the beneficial owner of the corporate and legal entity if it were an individual; and
- Is an exempt company; or
- Is a company having its securities listed on a known stock exchange; or
- Is a sovereign state or a 100% owned subsidiary of a sovereign state; or
- Is a licensee or foreign regulated person as prescribed under BVI Anti-Money Laundering Regulations 2008.
2.2. Duties of legal entity
With regard to the information of beneficial owners and registrable legal entities, you must comply with the following reporting timeframes:
- Identify and notify your registered agent of beneficial owners and registrable legal entities within 15 days of identifying such persons or entities.
- Keep beneficial owner information up to date by notifying your registered agent of any changes in the information of BOs within 15 days since becoming aware of these changes.
As for information related to relevant activities, you have to notify your registered agent within 6 months of your financial year-end.
3. Reporting information under BVI BOSS Act
What are the required documents under the BVI BOSS Act? Subject to this regime, your BVI companies must file certain “prescribed information” to the Registered Agent.
Prescribed information shall include:
- The company particulars: name, incorporation number, date of incorporation, status, registered address, information of the company’s stock exchange listing, whether the company is carrying on a relevant activity, and other supporting information contingent on your claim of tax residency;
Further details on what you must file in relation to your claim of relevant activities under the BVI Economic Substance Act can be found in Section 7 (c) of BVI BOSS (Amendment) Act, 2019 (No. 8 of 2019).
- For beneficial owner information: name, date of birth, proof of nationality and residential address;
- For registrable legal entity information: particulars of the registrable legal entity (as listed in The company particulars), the jurisdiction of incorporation, proof of the fact that the entity is appointed as a registrable legal entity, whether the entity in question is a foreign regulated person or a sovereign state, etc;
- For the parent of the corporate and legal entity: particulars and the jurisdictions of incorporation of the parent company;
Note that beneficial owners of corporate and legal entities subject to the BOSS Act, 2017 would not include “exempt persons”. In particular, exempt persons (stated in Section 7, BOSS Act, 2017) cover the following types of entities:
- The entity that is recognized, registered, or otherwise approved as a mutual fund under the BVI Securities and Investment Business Act, 2010. They consist of an approved, incubator, public, private or professional fund;
- The entity whose securities are listed on a recognized stock exchange;
- The entity who is a subsidiary of another entity falling into the two exemptions listed above; or
- The entity as a BVI licensee under the Regulatory Code, 2009.
Unlike the in-scope CLEs as above mentioned, those entities with exemption do not need to submit the information of their company’s beneficial owners. The sole requirement is to report whether their business is carrying on nine relevant activities under the BVI Economic Substance Act.
Be advised that the information retained on the RA database by the Registered Agent must last for 5 years since the dissolution of the corporate and legal entity or from the date on which the entity ceased to be the CLE.
4. A quick look at BVI Beneficial Owner Secure Search System
For those who may be interested in the RA database and the BVI BOSS System, you can take further looks into our brief as the followings:
- A registered agent has a duty to file details of its CLE’s beneficial owners, and then update such information on the RA database connected to the BOSS system.
- Information on that database is NOT publicly disclosed but is kept confidential and secure.
- Only the designated persons will have access to the Beneficial Ownership Secure Search System. A designated person as stated must satisfy certain conditions before being approved to have access to the BOSS system. In particular, he/she must complete a security vetting test as well as participate in the commitment of confidentiality.
It should be noted that any breach of non-compliance by the designated persons pursuant to this law can lead to a financial penalty up to US$75,000 or imprisonment for a period of up to 2 years or both.
Some authorities in the BVI can offer a request for searching for information via the BOSS System are:
- The Financial Investigation Agency;
- The Financial Services Commission;
- The International Tax Authority;
- The Attorney General’s Chambers.
Don’t hesitate to drop us an email via firstname.lastname@example.org if you need further information about this matter.