Amendments to the BVI Business Companies Act 2004 - Striking off, dissolution, and restorations - Part 1: The New Rules - FAQs
You will be aware from our updates issued on 18 August and, more recently on 20 September, that on 1 January 2023, various significant amendments to the BVI’s Business Companies Act 2004 (the BCA) will come into force.
The purpose of this note is to try to answer some of the more frequently asked questions relating to the changes affecting the striking off and dissolutions regime (which is now merged) and restorations.
Q1. What are the circumstances when a company can be struck off and dissolved?
The Registrar has power to strike a company off the Register of Companies (the Register) if the:
- company does not have a registered agent;
- company defaults on its filing obligations;
- Registrar of Corporate Affairs is satisfied that it has ceased to carry on business or that the company is carrying on a; business without the requisite licence, permit or authority;
- company fails to pay its annual fees or any related penalty; or
- company has had its licence cancelled or revoked by the Financial Services Commission.
Q2. How will I know if my company has been or is about to be struck off?
The Registrar is required to send a notice to the company giving no less than 90 days’ notice of the striking off and must also publish notice of the intention to strike off in the BVI Gazette (the Gazette).
Q3. Can I prevent my company being struck off during this 90 day period?
Yes – if you are able to rectify the issue that is causing the striking off, for example by paying up outstanding fees and penalties or appointing a new registered agent.
Q4. What if I take no action?
At the expiration of the time specified in the notice, the company may be struck off and dissolved and the Registrar will publish notice of the striking off in the Gazette.
Q5. What is the date of the striking off?
The date of the notice published in the Gazette.
Q6. What about dissolution? I have heard that the rules on this have now changed?
Yes they have. In addition to being struck off, the company will be immediately dissolved on the date the notice is published in the Gazette. Companies will no longer remain “struck off” for seven years, before being dissolved.
Q7. In shorthand what does this mean?
If a company is struck off for any of the reasons set out in Q1 above, it will be immediately dissolved and will cease to exist.
Q8. What is the effect of striking off and dissolution?
Where a company has been struck off and dissolved, the company, and the directors, members and any liquidator or receiver thereof shall not:
- commence legal proceedings, carry on any business or in any way deal with the assets of the company;
- defend any legal proceedings, make any claim or claim any right for, or in the name of, the company; or
- act in any way with respect to the affairs of the company.
It should be remembered however, that the fact that a company has been struck off and dissolved does NOT:
- absolve the company from any liability that arose or would have arisen prior to its striking off and dissolution or that arises as a result of it committing any of (a), (b) or (c) above;
- prevent claims from creditors against the company; or
- affect the liability of any of the company’s members, directors, officers or agents.
Q9. What about restoration? Can this still be done, by whom and how?
Yes. The company, or a member, creditor or liquidator may apply to either the Registrar (in certain circumstances) or to the Court for the restoration of the company.
The simplest way to restore a dissolved BVI company (noting that we are talking about a company which is dissolved post 1 January 2023 here – we discuss the transitional provisions below) is by making an application to the Registrar. This can be made within five years of the date of publication of the dissolution notice in the Gazette.
The application must meet the following conditions:
- the company was carrying on business or in operation at the date of its striking off and dissolution;
- a licensed person has agreed to act as registered agent of the company;
- the registered agent has made a declaration in the approved form that the company’s records have been updated as required;
- if, following the striking off and dissolution of the company, any property of the company has vested in the Crown bona vacantia, the Financial Secretary:
- has signified to the Registrar the Crown’s consent to the company’s restoration to the Register; or
- has, within seven days of receiving a request to give the Crown’s consent to the company’s restoration to the Register, failed to respond to the request giving the Crown’s consent or refusing consent;
- the company has paid the restoration fee and any outstanding penalties in relation to the company; and
- the Registrar is satisfied that it would be fair and reasonable for the company to be restored to the Register.
Q10. What are the requirements with respect to the company’s records?
The registered agent is required to maintain and update those records relating to the company that it is required to keep – including the statutory registers and customer due diligence and certain financial records (such as the new financial return companies are to prepare). Records must be kept for at least five years after the dissolution.
Q11. My company has assets, what will have happened to them as a result of the striking off/dissolution and what do I need to do to claim them back?
Historically, the assets of dissolved companies in the BVI vested in the Crown bona vacantia and were to be returned on restoration but there was no statutory procedure detailing how a company should request their return.
Under the new provisions, where property has vested in the Crown, a request for consent to the restoration of the company (and the related return of any property) needs to be made to the Financial Secretary.
Q12. What if the Financial Secretary fails to respond?
If the Financial Secretary fails to respond within seven days of receiving a request to restore a company, the Registrar can still move to restore the company.
Q13. What is the effect of restoration by the Registrar?
Where a company is restored to the Register by the Registrar, it is deemed never to have been struck off the Register and dissolved.
Q14. What if my company is not carrying on business or is not operational at the time of strike-off and dissolution? Can it still be restored?
Yes. By an application to the Court, made within five years of the date of publication of the dissolution notice in the Gazette in certain circumstances, including where :
- the company was struck off and dissolved following the completion or termination of its liquidation (voluntary or insolvent);
- on the date of dissolution, the company wasn’t carrying on business or in operation;
- the purpose of the restoration is to:
- initiate, continue or discontinue legal proceedings for or against the company;
- make an application for the company property that has vested in the Crown to be returned to the company;
- in any other circumstance where the Court regards it just and fair to restore the company.
Q15. Who can make the application for restoration?
A wide number of stakeholders including the Attorney General or other competent authority in the BVI, creditors, former directors, former members, or former liquidators.
Also, among others, a person who was in a contractual relationship with the dissolved company and someone who with a potential legal claim against the company and importantly, any other person who can establish an interest in having the company restored to the Register.
Q16. Is the Financial Secretary involved in a Court restoration as well?
Yes, as with a restoration by the Registrar, an application for consent needs to be made to the Financial Secretary if there is any property which has vested in the Crown bona vacantia and which is to be returned to the company on its restoration. The same provisions with respect to a failure respond to the request for consent apply as before.
Q17. Will the restoration order have conditions attached by the Court?
Yes. Most likely.
It may impose other conditions, but in every case the Court will need to be satisfied:
- that a licensed person has agreed to act as registered agent;
- the registered agent has made a declaration that the company’s records have been updated as required
- the restoration fee and any outstanding penalties have been paid.
Q18. What is the effect of restoration by the Court?
Similarly to where a company is restored to the Register by the Registrar, where it is restored by the Court, it is deemed never to have been struck off the Register and dissolved.