Boost to BVI asset tracing
January 2023 has seen some significant changes to the BVI Business Companies legislation that has come into effect, providing a pathway for stakeholders to obtain disclosure of the financial position of BVI companies and to identify those in management positions.
Director identification
Previously, even though a BVI company has been obliged to file its register of directors with the BVI Registrar of Companies since 2016, such registers were not publicly available unless the BVI company expressly elected to make them available to the public via a search at the Companies Registry.
This meant that identifying directors behind a BVI company in an asset tracing exercise would require a disclosure order (often via a Norwich Pharmacal application) aimed at the company’s services provider in the BVI (its “registered agent”). These applications are often made under cover of a “seal and gag” order, ensuring that the registered agent could not advise their ultimate clients that they were subject to an investigatory proceeding.
Under the new rules, the identity of the current directors of a BVI company will be available to registered users of the VIRRGIN system. This will sidestep the need to bring proceedings and provide an instant and important piece of information about the management team of a BVI company.
Financial position of BVI companies
BVI companies are utilised for a myriad of commercial reasons from being simple holding companies to active trading entities. Creditors and parties seeking to understand the underlying value of a BVI company have previously been unable to obtain or rely on any form of publicly filed accounts in the BVI. This has often proved to be an initial obstacle in forming an enforcement strategy or identifying fund flows.
In addition to their existing record keeping obligations, BVI companies will now be required to provide certain financial information, in the form of an annual return, to their registered agent. Whilst the form of return has yet to be finalised, we expect it to consist of a balance sheet and a profit and loss statement.
The information filed with the registered agent will not be made publicly available, nor will the registered agent be obliged to file such information with any regulator or BVI government authority. Filings will commence in 2024.
It will, however (if obtained) provide a new and potentially helpful indication of the company’s value.
Consistent with the position in the EU, beneficial owners’ registers remain unavailable to the public. On seeking the Court’s assistance to provide this information, applicants will now be able to seek disclosure of the filed financial information of the company from a registered agent at the same time. This is a very welcome development for disputes and insolvency practitioners alike.
The changes to the legislative framework have been introduced to ensure the BVI keeps pace with international best practices and with international standards established by standard-setting bodies such as the Global Forum on Transparency and Exchange of Information for Tax Purposes and the Financial Action Task Force. The jurisdiction remains committed to its place at the forefront of combatting financial crime in all its forms.
