The BVI Business Companies (Amendment) Act, 2015 (the “Amending Act”), which amends the BVI Business Companies Act, 2004 (the “2004 Act”), is expected to come into force in the coming months.
The Amending Act is part of the BVI Government’s continuing process of modernisation of the companies’ regime in the jurisdiction. The Amending Act is complemented by amendments to the BVI Business Companies Regulations, 2012.
The key aspects of the Amending Act are: the Register of Directors and Members and the Registration of register of Directors, Optional registration of members, filing fees, financial records, arbitration, registered agent acting on resolution of directors, issue of shares for non-cash consideration, bonus shares, surrender of shares, execution of deeds, register of charges, restorations, continuations outside BVI, liquidations, fine increase, listed companies and cross-border transactions, bearer shares.
Registration of directors and members and registration of register of directors: Under the Amending Act every company must file for registration with the Registrar a copy of its register of directors.
A company that is incorporated after the Amending Act has become effective must file its initial copy of the register within 14 days of the appointment of first directors. The Registrar must be notified of any subsequent changes within 21 days by the filing of an updated copy of the register. Companies in existence before the commencement of the Amendment Act generally have until 31 December 2016 to make the filing. For these existing companies, the register to be filed need only include the directors as of the date of filing of the register. Optional registration of register of members: The Amending Act provides for the option of filing the register with the Registrar. Where such an election is made, an updated copy of the register must be filed where there are changes, but the election can be stopped at any time by filing a notice with the Registrar. Financial Records: The Amending Act replicates and expands upon provisions currently contained in the 2004 Act and the Mutual Legal Assistance (Tax Matters) Act, 2003. A company shall: (a) keep at the office of its registered agent or at such other places, within or outside the BVI, as determined by the directors, the records and underlying documentation of the company;(b) retain the records and underlying documentation for at least 5 years from the date: (i) of completion of the transaction to which the records and underlying documentation relate; or (ii) the company terminates the business relationship to which the records and underlying documentation relate; and (c) provide the registered agent without delay any records and underlying documentation in respect of the company that is requested by the registered agent in accordance with the Amending Act.
The records and underlying documentation shall be in such form as are sufficient to show and explain the company’s transactions; and will, at any time, enable the financial position of the company to be determined with reasonable accuracy.
Where the records and underlying documentation are kept other than at the registered agent’s address, the company shall provide the registered agent with a written record of the physical address of the place at which the records and underlying documentation are kept; and record the name of the person who maintains and controls the company’s records and underlying documentation.
Arbitration: Complementing the introduction of the Arbitration Act, 2013, the Amending Act allows for the articles of association of a BVI company to provide for any dispute involving the company, or the company and its members, or the members themselves to be settled through arbitration in the BVI.
Registered agent acting on resolution of directors: The provision states that, subject to the memorandum and articles, a registered agent shall: (i) act on the instructions of the directors of the company if those instructions are contained in a resolution passed by the directors and a copy of the resolution is made available to the registered agent; and (ii) recognise and accept the appointment or removal of a director or directors by members of the company.
Issue of Shares for non-cash consideration: Prior to the Amending Act, the 2004 Act required directors, before issuing shares for non-cash consideration, to pass a resolution stating: (i) the amount to be credited for the issue of shares; (ii) their determination of the reasonable present cash value of the non-cash consideration for the issue; and (iii) that, in their opinion, the present cash value of the non-cash consideration is not less than the amount to be credited for the issue of shares. The Amending Act removes requirement (ii).
Bonus Share: Under the Amending Act, a bonus share issued by the company is deemed to be fully paid.
Surrender of shares: The Amending Act introduces an express provision that a company may acquire its own fully paid shares for no consideration by way of surrender of the shares. Any such surrender must be in writing and signed by the shareholder.
Fine increases: Breaches of many provisions of the 2004 Act can lead to fines. The Amending Act has increases some of these fines.
Listed companies and cross-border transactions: The Amending Act recognises that BVI companies are increasingly being listed on various stock exchanges by introducing some new provisions for such companies.
Bearer shares: There are some changes to the authorised custodian regime for those companies with bearer shares in issue.
We encourage you to contact ConnectedSky Legal & Corporate Consultants Limited for any assistance and/or more information with respect to the above and any other topic.