On 26 September 2024, the BVI Business Companies (Amendment) Act, 2024 (the "Amendment Act") was published in the BVI Gazette, marking a significant development in the jurisdiction's corporate legislative framework. Although the Amendment Act is yet to come into force, it introduces notable modifications to the BVI Business Companies Act (the "BCA"). This article outlines key changes that will take effect once the Amendment Act becomes operational.
Beneficial Ownership – Definition, Criteria, and Required Information
The Amendment Act refines the definition of 'beneficial owner' as a natural person who ultimately owns or controls a company or limited partnership. It also specifies the criteria to be met in the context of legal entities, limited partnerships, and trusts.
Every company will be required to collect, maintain, and update comprehensive and accurate information on its beneficial owners, including their name, address, and confirmation of the category of ownership held. This information must be filed with the BVI Registrar of Companies within 30 days of incorporation or continuation into the BVI, as applicable.
Publicly listed companies are exempt from the requirement to file beneficial ownership details. Additionally, private, professional, public, or private investment funds, as well as incubator or approved funds, are similarly exempt, provided that:
the company's beneficial information is held by a person who has either:
1. The company's beneficial ownership information is held by:
1.1. a person with a Category 6 investment business license under the Securities and Investment Business Act, Revised Edition 2020; or2.
1.2. a person licensed by the BVI Financial Services Commission ("BVI FSC") with a physical presence in the BVI; and
2. The beneficial ownership information can be supplied to the Registrar within 24 hours of a request.
It is important to note that the obligation to file beneficial ownership information also applies to exempted entities during the period between incorporation and approval for registration as an exempt entity.
The Amendment Act further mandates that Registered Agents ("RAs") take reasonable steps to verify that beneficial ownership information is accurate and current before filing. The Registrar is granted authority to implement additional measures to verify the information and ensure it remains up to date. Companies are also obligated to notify the Registrar of any changes in beneficial ownership within 30 days of becoming aware of the changes.
Currently, beneficial ownership details are filed on the Beneficial Ownership Secure Search System (BOSS), and public access is restricted. Similarly, under the Amendment Act, information filed with the Registrar will remain confidential, with access granted only to competent authorities and law enforcement agencies. However, regulations may be introduced to permit limited access to ownership information where beneficial owners hold 25% or more of shares or voting rights.
Register of Members
Under the BCA, all companies are required to maintain a register of members, which must be filed with the Registrar except in certain cases. The register must contain:
- The names and addresses of individuals holding registered shares, guarantee members, and unlimited members;
- The number of each class and series of shares held by each member, including (unless provided for in the company's memorandum or articles) any voting rights attached to such shares;
- The date when a person was added to the register; and
- The date of cessation of membership
The Amendment Act provides clarity on the definition of nominee shareholders, describing them as individuals who hold shares and exercise voting rights under the direction of another person (the nominator) or receive dividends on behalf of the nominator. Companies with nominee shareholders must file additional details, including the nominator's name and address, the date the nominee ceased to hold shares, and the date a person ceased to be a nominator.
Every company, except listed companies and funds, must file their initial register of members, including nominee shareholder information (where applicable), with the Registrar within 30 days of incorporation or continuation. Updates to the register must also be filed within 30 days of any changes. Exempted entities must adhere to this requirement during the period between incorporation and the granting of exempt status. Companies that are struck off and later restored are not required to refile their register of members.
The register of members remains private unless the company chooses to make it publicly available. Companies may also opt to include additional relevant information. Companies must comply with the filing requirements within six months from the effective date of the Amendment Act, with a possible six-month extension if deemed necessary by the Registrar.
Appointment of First Directors
The timeline for appointing the first director(s) has been significantly reduced from six months to 15 days. The company's initial register of directors must also be filed with the Registrar within 15 days of the first director's appointment, or within 15 days of the company's continuation into the BVI.
Director Services
When a licensed director service provider, as regulated by the BVI FSC, serves as a director, the company must indicate whether the director acts in a corporate capacity or as an individual representing the licensed director service provider. This information must be filed with the Registrar along with the register of directors. Additionally, the company must provide the name of the licensed director service provider and, if applicable, the name and address of the individual represented by the provider.
Rectification of the Register of Directors
The Amendment Act allows any aggrieved party, including members or directors, to apply to the High Court for rectification of the register of directors if there is an omission, inaccuracy, or unreasonable delay in correcting an error.
Continuation of a BVI Company under Foreign Law
Companies intending to re-domicile outside the BVI must include additional declarations in their notice of intention, including confirmation that there are no outstanding requests from competent authorities for documents or further information, no receiver has been appointed over the company or in relation to any of its assets, and there are no pending legal proceedings concerning the company or its key personnel.
Restoration for struck companies
The process for restoring companies that have been struck off and dissolved has been simplified, making it easier for creditors and other eligible individuals to apply for the company's reinstatement to the Register of Companies. Importantly, current or former RAs are explicitly excluded from applying for a company's restoration.
At present, restoring a struck off company requires a declaration from the RA confirming that the company's records had been updated. The new provisions allow an alternative, where the proposed RA may provide an undertaking to update company records within 14 days of restoration, failing which the company will be struck off again.
Moreover, restored companies must file their register of members and directors within 14 days unless previously filed prior to the company being struck off and dissolved.
Under the new provisions, dissolution will occur on the same date as the strike-off, as stated in the Registrar's notice, eliminating confusion caused by previous requirements. The deadline for submitting a sealed Court order for restoration has also been extended from 30 to 60 days, with penalties for non-compliance instead of invalidation of the order.
Conclusion
In conclusion, the amendments to the BVI Business Companies Act serve to further solidify the British Virgin Islands' standing as a jurisdiction committed to transparency and the observance of international best practices. These legislative enhancements not only improve the regulatory framework but also strengthen the jurisdiction's ability to combat financial crime, particularly money laundering. By aligning its practices with global standards, the BVI reinforces its position as a reputable and secure financial centre, ensuring its continued competitiveness and compliance in the evolving international regulatory landscape.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.