The British Virgin Islands (BVI) integrated significant regulatory changes in 2023. What are the risks of not keeping track? And what new challenges could companies face if they do not stay compliant?
Major regulatory changes in the BVI are intended to show greater commitment to international compliance and transparency standards. Significant amendments have been implemented to the BVI Business Companies Act (BVIBC Act) that could impact individuals and companies.
The latest revisions, announced in March 2023, have set in motion additional filing and reporting requirements for companies operating or registered in the BVI.[1] While each is significant, the change that could be most costly affects the new company strike-off and dissolution regime.
What does this mean for strike-off or dissolution in BVI?
If a BVI company is struck off the register, it’ll be dissolved on the date the Registrar of Corporate Affairs (Registrar) publishes notice of the strike-off in the Gazette. Companies should therefore stay punctual with filings and fees to avoid being struck off and dissolved.
Previously, BVI companies had a seven-year period from the moment they were deemed dissolved to being struck off.
The penalty periods for late filings and fees have not changed. Clients still have six months from the licence fee due date to decide whether to keep a company. For example, if the licence fee is due on May 31 and is not paid, a 10% penalty is issued. If the fees are still unpaid by July 31, clients get an additional 40% added to the fine, payable by October 31. This period (from June to October) allows the company to be brought back into good standing. Beyond that, it would be formally dissolved once the Registrar publishes notice of the strike-off in the Gazette.
Annual financial returns
Under the latest changes, companies must file an annual return with their registered agent every year, unless exempt. The return should be in the form of a basic balance sheet and profit-and-loss statement. There’s no requirement for returns to be audited.
The new filing requirement applies to the 2023 financial year, with filings to be made during 2024. The first annual return must be filed within nine months from the end of the company’s fiscal or calendar year. The company may use any currency when preparing this document, which is privately filed with the company’s registered agent.
If a client fails to file, the agent is obliged to notify the Registrar. A penalty of $300 will be charged for the first month of non-compliance and $200 for each subsequent month until the company makes the filing. The maximum penalty is $5,000. The company will not be able to make filings at the Registry or obtain a Certificate of Good Standing until the annual return is filed.
Exemptions apply to:
- Listed companies
- Companies regulated under BVI legislation that provide financial statements to the Commission
- Companies that file annual tax returns (with financial statements) with the BVI Inland Revenue Department
- Companies in liquidation (the exemption does not apply if the company’s annual return becomes due prior to the commencement of the liquidation)
- Concessions could apply to companies whose financials are consolidated into group accounts
What are the new requirements for BVI voluntary liquidators?
A BVI resident liquidator must be appointed for all voluntary liquidations, and they must have lived in the BVI for at least 180 days prior to their appointment. This change is to bring greater protection for shareholders and to ensure all checks and balances are in accordance with local requirements.
Voluntary liquidators must have at least two years’ liquidation experience, an appropriate qualification, or hold an insolvency practitioner’s licence issued by the BVI Financial Services Commission.
Where joint voluntary liquidators are appointed, only one needs to be a resident in the BVI. This enables a joint liquidator to be appointed in a country where the company has business operations.
Voluntary liquidators will be required to collect all records that were kept and maintained by the company under the BVIBC Act and to send copies to the company’s BVI-registered agent at the end of the liquidation.
Other changes clients should be aware of—and can discuss with our BVI team—include:
- Available list of directors’ names at the Registry
- Reporting requirements for companies continuing outside the BVI
- Segregation and audited financial statements of charitable and non-commercial businesses
- Abolition of bearer shares
How CSC can help
Our BVI team keeps clients informed of changing legislative requirements via email alerts and fee reminders. Our team can maintain your annual returns to ensure you or your company remain compliant and in good standing, avoid unnecessary late fees, and file accounts with local authorities.
We can assist with financial audit and internal control and ensure your monthly, quarterly, and annual financial statements are in line with relevant accounting standards such as local GAAP, U.S. GAAP, and IFRS.
Our management reporting is delivered via a mobile-friendly platform with summarized data sets, dashboards, workflows, document management, detailed reporting, capital activity monitoring, and pre-set formats.
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