Economic Substance (Companies and Limited Partnerships) (Amendment) Act, 2021 (No. 30 of 2021)

Summary

This Act amends the BVI Economic Substance (Companies and Limited Partnerships) Act, 2018 to refine key definitions, carve investment fund business out of the economic substance regime, set notification timelines for limited partnerships without legal personality, and change the enforcement remedy available to the competent authority from striking a non compliant entity off the register to requiring it to be wound up.

• Definitions revised: The definition of distribution and service centre business is replaced, and new definitions of investment fund and investment fund business are inserted; the definition of limited partnership is amended so that limited partnerships without legal personality are no longer excluded from scope.
• Investment funds excluded from relevant activities: Section 6 is repealed and replaced; the list of relevant activities is retained but investment fund business is expressly excluded from it.
• Notification duty for LPs without legal personality: A limited partnership without legal personality formed before 1 July 2021 must notify the competent authority of a one year period commencing no later than 1 January 2022, and must continue notifying successive one year periods; one formed on or after 1 July 2021 must notify a period of not more than one year from its formation date and successive one year periods thereafter.
• Core income generating activities clarified: Section 7 is amended to state that core income generating activities means activities of central importance to a relevant entity in generating relevant income, which must be carried on in the Virgin Islands.
• High risk IP entity rebuttal requirement extended: Section 9 is amended so that a high risk IP legal entity must satisfy the subsection (4) requirements to rebut the presumption not only when seeking to rebut it, but also throughout any historic periods it carried on the intellectual property business.
• Enforcement remedy changed: Section 12 is amended to replace the remedy of striking a non compliant legal entity off the Register of Companies or Register of Limited Partnerships with an order or requirement that the legal entity be wound up.

The Act took effect on enactment (assented 28 June 2021, gazetted 29 June 2021) and operates by amending the principal 2018 Act rather than imposing wholly new standalone obligations, aside from the new LP notification timelines noted above.

Key obligations

• A limited partnership without legal personality formed before 1 July 2021 must notify the competent authority of a one year reporting period commencing on a date no later than 1 January 2022, and thereafter notify each successive one year period.
• A limited partnership without legal personality formed on or after 1 July 2021 must notify the competent authority of a period of not more than one year from its date of formation, and thereafter notify each successive one year period.
• A high risk IP legal entity seeking to rebut the presumption under section 9 must satisfy the subsection (4) requirements both at the time it seeks to rebut the presumption and throughout any historic periods it carried on the intellectual property business.

Applies to

companies, limited partnerships, limited partnerships without legal personality, investment funds, high risk IP legal entities

Deadlines

• no later than 1 January 2022: Date by which a limited partnership without legal personality formed before 1 July 2021 must have a one year notification period commence with the competent authority.
• 1 July 2021: Threshold formation date distinguishing which notification rule (section 4(1)(d) or (e)) applies to a limited partnership without legal personality.

Related documents

• This document amends Economic Substance (Companies and Limited Partnerships) Act (Revised Edition 2020)