Explanatory Memorandum on the Draft BVI Business Companies (Amendment) Act, 2022, (Amendment) Regulations, 2022 and (Financial Return) Order, 2022

Summary

This is an explanatory memorandum accompanying draft BVI legislation released by the BVI Financial Services Commission for public consultation: the BVI Business Companies (Amendment) Act 2022, the BVI Business Companies (Amendment) Regulations 2022, and the BVI Business Companies (Financial Return) Order 2022. It explains the policy rationale behind proposed reforms to the BVI Business Companies Act following recommendations of the Company Law Review Advisory Committee and international standards bodies. The measures are still in draft form and open for stakeholder comment before finalisation.

• Bearer shares abolished: Issuing, converting to, or exchanging for bearer shares will be prohibited; existing bearer shares will automatically convert to registered shares held on trust after a specified effective date.
• Struck off company regime reformed: Strike off from the register will automatically trigger dissolution; the restoration period is reduced from 7 years to 5 years, and legacy struck off companies must be restored within 6 months of the Bill's commencement or face automatic dissolution and penalties.
• Registered agent resignation: The notice period for a registered agent to resign is reduced from 90 to 60 days, and agents must resign where a business relationship is terminated on AML/CFT grounds; unrescinded resignation notices will take automatic effect.
• Annual financial returns: A new section 98A requires companies to maintain and file annual financial returns with their registered agent, with registered agents obliged to notify the Registrar of filing failures; the proposed filing window is 6 months after year end, and the form/content will be set by the new Financial Return Order.
• Register of directors: The amendment clarifies that alternate directors must be included on the register of directors, and proposes options for making the register of directors publicly accessible in line with FATF/CFATF standards.
• Continuation outside the Virgin Islands: Companies wishing to continue outside the BVI must give at least 14 days advance notice to members, creditors and the Registrar, and publish notice in the Gazette and on their website.
• Voluntary liquidators: Voluntary liquidators must be resident in the Virgin Islands or licensed insolvency practitioners, must meet prescribed qualifications, and must collect and transmit specified liquidation records to the registered agent, who must retain them for at least 5 years.
• Certificate of good standing: Failure to file an annual financial return will disqualify a company from obtaining a certificate of good standing.

Because this document is a consultation draft, none of these measures are yet in force; the Commission is inviting comments before the legislation is finalised and brought into effect.

Key obligations

• Companies will be required to maintain and file annual financial returns with their registered agent, proposed to be within 6 months of the end of the relevant financial year
• Registered agents will be required to notify the Registrar of a company's failure to file its annual return, including the company name, relevant year, and last filing date
• Registered agents must give at least 60 days notice of intent to resign, and must resign where a business relationship with a client is terminated on AML/CFT grounds
• Registered agents must retain records at the registered office reflecting the position at termination of a business relationship or completion of a one off transaction
• Companies struck off the register (legacy cases) must be restored within 6 months of the Bill's commencement or face automatic dissolution and penalties
• Voluntary liquidators must be resident in the Virgin Islands or licensed insolvency practitioners and must meet prescribed qualifications
• Voluntary liquidators must collect and transmit specified records to the company's registered agent, who must retain them for at least 5 years
• Companies wishing to continue outside the Virgin Islands must give at least 14 days advance notice to members and creditors, publish notice in the Gazette and on their website, and file notice with the Registrar
• Existing bearer shares must be redeemed or converted to registered shares before the effective date, after which unconverted bearer shares automatically become registered shares held on trust
• Companies must file annual financial returns to remain eligible for a certificate of good standing

Applies to

BVI business companies, registered agents, voluntary liquidators, company directors and alternate directors, holders of bearer shares, insolvency practitioners

Deadlines

• 6 months (proposed): Proposed period after the end of the financial year within which a company's annual financial return must be filed
• 60 days: Proposed reduced notice period for a registered agent's intent to resign (down from 90 days)
• 90 days (maximum): Period specified in the Registrar's notice within which a company must show cause against being struck off
• 5 years: Reduced period (from 7 years) during which a dissolved struck off company may apply for restoration to the register
• 6 months after coming into force of the Bill: Period within which legacy struck off companies must be restored before automatic dissolution and penalties apply
• at least 14 days: Minimum advance notice period required before a company continues outside the Virgin Islands
• at least 5 years: Minimum period registered agents must retain records received from a voluntary liquidator