Striking off and Liquidation of Companies Under the BVI Business Companies Act, User Guides No. 5

Summary

This is User Guide No. 5 issued by the BVI Financial Services Commission's Registry of Corporate Affairs, explaining the two routes by which a BVI Business Company can be dissolved: voluntary liquidation under the BVI Business Companies Act, and administrative strike off by the Registrar. It summarises the statutory conditions, procedures and consequences of each route, and highlights the continuing liability risks for directors and members if a company is simply allowed to be struck off rather than liquidated.

Voluntary liquidation

• Solvency requirement: A company may only be liquidated under the Act if it has no liabilities, or can pay them in full as they fall due; an insolvent company must instead be liquidated under the Insolvency Act, 2003.
• Regulated entities: A company regulated by the Financial Services Commission cannot appoint a voluntary liquidator without the Commission's consent.
• Declaration of solvency: Directors must make a declaration of solvency (with an attached statement of assets and liabilities) no more than four weeks before the resolution appointing the voluntary liquidator; false declarations without reasonable grounds are a criminal offence.
• Liquidation plan: Directors must approve a liquidation plan (reasons, timeframe, proposed liquidator) no more than six weeks before the appointment resolution.
• Liquidator duties: The voluntary liquidator must be independent and an individual, must collect and realise assets, pay creditors, distribute surplus to members, file required documents with the Registry, advertise the appointment, and generally send members a statement of account.
• Insolvency discovered mid liquidation: If the voluntary liquidator forms the opinion the company is insolvent, he must notify the Official Receiver and convene a creditors' meeting to appoint a licensed insolvency practitioner; failure to notify is an offence.

Administrative strike off

• Grounds: The Registrar may strike a company off for failing to appoint a registered agent, failing to file required documents, failing to pay annual fees or penalties, or where the company has ceased to carry on business.
• Notice: Except for non payment of annual fees, the Registrar must send a warning notice and publish a Gazette notice at least 30 days before the intended strike off date.
• Effect: A struck off company cannot trade, deal with assets, or bring or defend proceedings (subject to limited exceptions); it is not dissolved until 10 years after strike off, and directors/members remain liable throughout.
• Continuing liability: Strike off does not extinguish liability for unpaid annual fees and penalties, which must be paid in full (plus a restoration fee) if the company is later restored.

The Guide also covers restoration to the Register (by the Registrar for struck off but undissolved companies, or by the Court for dissolved companies within 10 years) and transitional rules for former Companies Act companies (CapCos), including fixed dissolution and restoration dates tied to 30 November 2006 and 1 January 2008.

Key obligations

• Directors seeking to liquidate a company under the Act must make a declaration of solvency no more than 4 weeks before the resolution appointing a voluntary liquidator, with an attached statement of assets and liabilities
• Directors must approve a liquidation plan no more than 6 weeks before the resolution appointing the voluntary liquidator
• A company regulated by the Financial Services Commission must obtain the Commission's consent before appointing a voluntary liquidator
• The voluntary liquidator must file required documents with the Registry, advertise notice of appointment, and generally send a statement of account to members
• On completion of liquidation, the voluntary liquidator must file a statement with the Registrar and advertise the dissolution in the Gazette
• If a voluntary liquidator forms the opinion that the company is insolvent, he must notify the Official Receiver and convene a creditors' meeting to appoint a licensed insolvency practitioner
• A company struck off for reasons other than non payment of annual fees is entitled to a Registrar warning notice at least 30 days before strike off, and a Gazette notice of intended strike off must be published
• An application to restore a dissolved company to the Register must be made to the Court within 10 years of dissolution
• All outstanding annual fees, late payment penalties and a restoration fee must be paid before a struck off or dissolved company can be restored

Applies to

BVI business companies, company directors, company members, voluntary liquidators, registered agents, companies regulated by the Financial Services Commission, former Companies Act companies (CapCos), insolvency practitioners

Deadlines

• 6 weeks before the resolution appointing a voluntary liquidator: Deadline by which the directors' liquidation plan must be approved
• 4 weeks prior to the resolution appointing a voluntary liquidator: Deadline by which the declaration of solvency must be made
• no less than 30 days after the date of the strike off notice: Minimum notice period before the Registrar may strike a company off (except for non payment of annual fees)
• within a 10 year period following dissolution: Deadline for applying to the Court to restore a dissolved company to the Register
• 10 years after the date struck off: A company administratively struck off is automatically dissolved if not restored in the meantime
• 30 November 2006: Date from which Companies Act companies not yet re-registered must appoint voluntary liquidators under the new Act's provisions, and from which court applications to void dissolutions under the Companies Act may be made
• 1 January 2008: Companies struck off under the Companies Act on or before 2 January 1998 are dissolved with effect from this date if not restored; also the cutoff date determining whether restorations occur under the old Companies Act or the new Act
• 3 January 1998 (struck off on or after this date): Such companies are dissolved 10 years after the date they were struck off if not restored