The British Virgin Islands (the “BVI”) recently published the BVI Business Companies (Amendment) Act, 2024 (the “Amendment Act”), which introduces changes to the Act and ensures that the BVI keeps pace with international best practices and standards, showing that steps are being taken to ensure the jurisdiction moves quickly to address the recommendations made in the Caribbean Financial Action Task Force’s Mutual Evaluation Report published earlier this year.
The Amendment Act was published in the Gazette on 26 September 2024 and, although not yet in force at the time of writing, will result in certain changes to the filing and compliance obligations on BVI companies. Consequently, shareholders, directors, administrators and stakeholders of BVI companies need to be mindful of the incoming changes.
The key changes that the Amendment Act will make to the BVI Business Companies Act, Revised Edition 2020, once in force, are set out below. We are expecting the Amendment Act to come into force imminently and will issue a further update at that time.
REGISTER OF MEMBERS
The Amendment Act clarifies the information that is required to be kept in a company’s register of members and introduces a new requirement to include information in relation to any nominee shareholder.
This information will not be made publicly available, save in very limited circumstances (to domestic competent authorities and law enforcement agencies), unless the company chooses to file the register publicly (which is commonly seen where security is taken over the shares of the company).
The register of members is required to be filed with the Registrar within 30 days after the incorporation or continuation date of the company. The company will also be required to notify the Registrar of any changes to its members within 30 days.
- the names and addresses of the persons who hold registered shares in the company;
- the names and addresses of the persons who are guarantee members of the company;
- the names and addresses of the persons who are unlimited members of the company;
- the number of each class and series of registered shares held by each shareholder, including (unless already set out in the company’s memorandum or articles) the nature of associated voting rights;
- the date on which the name of each member was entered in the register of members; and
- the date on which any person ceased to be a member.
If applicable, the company will (in addition to the register of members kept) also need to file with the Registrar the following information in relation to any ‘nominee shareholder’:
- the name and address of the nominator;
- the date on which the nominee shareholder ceased to be a member; and
- the date on which a person ceased to be a nominator.
A nominee shareholder is defined as a member of a company who holds shares in the company and exercises the associated voting rights according to the instructions of a nominator without any discretion or receives dividends on behalf of a nominator.
The register of members and, if applicable, the nominee shareholder information may be kept in such form as the directors approve provided the company is able to produce legible evidence of its contents.
Every company will be required to file a copy of its initial register of members (including the required nominee shareholder information, if applicable) with the Registrar within 30 days of incorporation (or continuation in the BVI, as the case may be). Any subsequent changes to the register of members must also be filed with the Registrar within 30 days of the changes occurring.
However, this filing requirement will not apply to:
- listed companies;
- BVI private, professional, public or private investment funds; or
- BVI incubator or approved funds.
It is important to note that certain companies are exempt from the filing requirement, including companies listed on recognised stock exchanges and BVI funds (being private, professional, public, private investment, incubator and approved funds).
The Amendment Act provides for a transitional period, and existing companies must comply with the requirement to file the register of members within six months of the effective date of the Amendment Act.
BENEFICIAL OWNERSHIP
Every company must collect, keep and maintain adequate and up to date beneficial ownership information which, save for certain exceptions, must be filed with the Registrar within 30 days of incorporation (or continuation in the BVI, as the case may be).
Beneficial owner is defined as:
- in the case of a legal person (other than a listed company), a natural person who:
- ultimately owns or controls, directly or indirectly, 10% or more of the shares or voting rights in the legal person;
- holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of the legal person; or
- otherwise exercises control over the management of the legal person;
- in the case of a limited partnership, a natural person who:
- is ultimately entitled to or controls, directly or indirectly, 10% or more share of the capital or profits of the partnership or 10% or more voting rights in the partnership; or
- otherwise exercises control over the management of the partnership;
- in the case of a trust:
- the trustee; the settlor or other person by whom the trust is made; the protector (if any); the beneficiaries or class of beneficiaries with a vested interest in the trust at the time of or before distribution of any trust property or income; and any other natural person exercising ultimate effective control over the trust (including through a chain of control or ownership).
However, the filing requirement for beneficial ownership information will not apply to:
- listed companies;
- BVI private, professional, public or private investment funds; or
- BVI incubator or approved funds
provided, for BVI funds, that the company’s beneficial ownership information is held by:
- a person who holds a Category 6 investment business license pursuant to the Securities and Investment Business Act, Revised 2020; or
- its authorised representative or other person licensed by the BVI Financial Services Commission (BVI FSC) that has a physical presence in the BVI; and
- the beneficial ownership information can be provided by such person to the Registrar within 24 hours of request.
Where the beneficial ownership information of a company is held by a person as detailed above, the company must file the name and address of that person with the Registrar within 30 days of incorporation (or continuation in the BVI, as the case may be).
Before filing beneficial ownership information, the RA must take reasonable measures to verify the information, including the identity of the beneficial owners and to ensure that the particulars provided are adequate, accurate and up to date. The Registrar (or the BVI FSC) may adopt measures to further verify the beneficial ownership information filed by a company and ensure that such information is kept up to date.
Any changes to the beneficial ownership information must be filed with the Registrar within 30 days of the company becoming aware of the relevant changes.
Regulations may be made to permit beneficial ownership information to be publicly accessible by persons who can demonstrate legitimate interest (as may be defined in the relevant Regulations) in acquiring the information. However, access to such beneficial ownership information in such cases will be restricted to beneficial ownership of 25% or more of the shares or voting rights in a legal person.
REGISTER OF DIRECTORS
The Amendment Act makes minor changes to the existing provisions as they relate to directors, including the following:
The period within which a company’s RA is required to appoint the company’s first director(s) will be reduced from 6 months to 15 days. The initial copy of the register of directors will also be required to be filed with the Registrar within 15 days of appointment of the first director(s) (or continuation in the BVI, as the case may be).
The Registrar, which is already required to maintain a copy of the register of directors filed by a company, will only make such copy available to the company, its RA, domestic competent authorities and law enforcement agencies in the lawful discharge of their responsibilities. As is the case currently, the Registrar may make available, upon request (and upon the payment of a fee), a list of directors contained in a filed copy of the company’s register of directors. A company’s full register of directors will not be generally available to the public.
Where a person who is licensed by the BVI FSC to provide director services to companies (licensed director service provider) acts as a director of a company, the company will be required to indicate the capacity in which such licensed director service provider is acting (whether in corporate capacity or individual capacity representing the licensed director service provider) and file this information with the Registrar at the time of filing a copy of the company’s register of directors. The company will also need to record and file with the Registrar the name of the relevant licensed director service provider and, where applicable, the name and address of the individual on whose behalf the licensed director service provider acts.
CONTINUATIONS AND DISCONTINUATIONS
The Amendment Act also brings in new requirements when continuing a company into or out of the BVI.
If a company is intending to discontinue out of the BVI, the following additional declarations will need to be included in the notice of intention to be filed with the Registrar:
- that the company does not have any pending request from a competent authority to produce documents or provide information which has not been satisfied;
- that a receiver has not been appointed over the company or in relation to any assets of the company; and
- that the company is not aware of any legal proceedings pending against the company, or any member, director, officer or agent of the company as it directly pertains to the affairs of the company.
The Registrar will also ensure that the company’s information requirements under the Amendment Act are complied with, making the requisite checks for the filing of the new nominee director/shareholder information and beneficial ownership register.
If a company intends to continue into the BVI, the application will now also need to include a full list of the members as at the date of the application and details of its registered office in its country of incorporation.
CONTINUATIONS UNDER FOREIGN LAW
An application to register a foreign company in the BVI will need to contain additional information such as the registered office address in its country of incorporation and a list of members as at the date of application. The Registrar will only make the list of members of a foreign company available to such foreign company, its RA, a competent authority or a law enforcement agency.
A registered foreign company will also be required to file a notice within 30 days after any change in:
- its RA;
- its corporate name;
- the jurisdiction of its domiciliation;
- the instrument constituting or defining its constitution;
- its directors, or in the information filed in respect of a director;
- its members, or in the information filed in respect of a member; or
- the address of its registered office in its country of incorporation.
The current requirements for a foreign company to keep a register of members and to keep certain documents at the office of its RA have been repealed.
DUTY TO COOPERATE
The Amendment Act puts a real focus on ensuring the BVI regulators have all the information and tools they need to discharge their functions and changes will be brought in so that companies will be required to cooperate (including disclosing information within the company’s knowledge and producing documents in the company’s possession or under its control) with the Registrar, a person conducting an inspection under the Amendment Act, a competent authority or a law enforcement agency in discharging their functions.
OTHER IMPLICATIONS
Whilst the above changes will prompt the most interest, it is worth noting that these changes will have consequential effects to other parts of the Act, including:
- Dissolutions: provisions regarding the striking off of a company will be extended to circumstances where there is a failure to file any information specified under the new requirements.
- Restoration: when restoring a company, the new information requirements must be complied with, and the registered agent will have 14 days from the restoration date to do so.
MARKET EFFECT
The effect of the changes will be to codify the rules relating to beneficial ownership and shareholder and director filings, ensuring that the BVI remains at the forefront of responsible business practices and global transparency requirements.
The compliance process is streamlined, and essentially codifies certain anti-money laundering and know-your-customer requirements that are already in place within the BVI, whilst ensuring that information remains private and protected, guaranteeing that legitimate privacy and data protection requirements are supported.
We consider that the amendments will promote investor confidence in the jurisdiction, given that the rules in relation to the ownership and administration of companies are now clear, transparent and codified.
REGISTERS
A legal framework has been created to enable the Registrar to establish such other registers as may be considered appropriate, including new or existing registers or information which may be included in the electronic VIRRGIN platform administered by the Registrar. This will allow for beneficial ownership information to be exported into VIRRGIN, which is anticipated to take place in the coming months.
RETURNS
Provisions have been included to give the BVI FSC the power to require companies to prepare and submit returns on matters relating to their business or affairs. However, the changes introduced do not currently impose additional returns on companies.
PENALTIES
The penalties for late payment of fees or late filings will be increased and the framework for penalties will be streamlined generally in Regulations (which have yet to be published).
TRANSITIONAL PROVISIONS
Existing companies
Existing companies will be required to comply with the requirement to file their register of members, nominee shareholder information (if applicable), beneficial ownership information and, if applicable, information on any appointed licensed director service provider within 6 months of the Amendment Act coming into force (the Effective Date). However, an existing company which has already opted to file its register of members prior to the Effective Date will not be required to file a copy of another register of members, unless the register of members already filed does not contain all of the required information.
Failure to comply will result in a penalty of US$600 for the first 3 months and US$800 for the following 3 months, after which point the company will be struck off from the Register. Any subsequent application for restoration by a director, former member or former liquidator of the company will be liable to a penalty of US$2,500 (in addition to any other restoration fees or outstanding penalties that may be payable).
Given the limited period for the transitional arrangements, clients with BVI companies should make sure that they keep their registers and beneficial ownership information up to date to ensure that they can comply with the new filing requirements.
EXISTING STRUCK OFF AND DISSOLVED COMPANIES
An existing struck off and dissolved company that seeks to be restored to the Register will not be restored until it has filed its register of members, nominee shareholder information (if applicable), register of directors (including information on any appointed licensed director service provider) and beneficial ownership information or has undertaken to do so within 14 days after the company’s restoration. Failure to file within the 14-day time period will result in the company being struck off again from the Register and deemed never to have been restored to the Register. The company is liable to a penalty of US$5,000 upon any reapplication by the same person for restoration.
NEXT STEPS
For more information and assistance with the Amendments, please reach out to your usual OCRS contact at info@ocrsolutionsltd.com.
