Recent amendments to the BVI Companies Act (Revised) (the Act) introduced significant changes to the strike off regime and restoration process. We outline the streamlined process and implications around strike off and dissolution of BVI companies under the new regime.
Introduction
What is striking off in the BVI?
Striking off (also referred to as administrative strike off) is a procedure by which the Registrar of Corporate Affairs in the BVI (the Registrar) removes the name of a company from the Register of Companies (the Register). A company that has been struck off the Register on or after 1 January 2023 will be dissolved on the date the Registrar publishes the notice of striking off in the BVI Gazette (the Gazette) in respect of the company.
Under the Act, a company cannot apply to be struck off. Only the Registrar may initiate a strike off.
Reasons for strike off
The Registrar may strike off a company if:
- the company does not have a registered agent
- the company fails to file any return, notice or document that is required to be filed under the Act
- the Registrar is satisfied that the company has either ceased to carry on business or is carrying on business without a required licence, permit or authority
- the company fails to pay its annual fee or any late payment penalty by the due date, or
- the BVI Financial Services Commission (FSC) has revoked or cancelled a licence issued to the company to carry on financial services business.
The most common reason for the Registrar to strike off a company is its failure to pay its annual fee or penalty.
The Strike Off Process
Once the Registrar has reason to initiate a strike off, eg a company fails to pay its annual fee, the Registrar will:
(a) give the company 90 days’ notice, confirming: (i) the company is liable to be dissolved; and (ii) how this can be avoided, and
(b) publish a notice of the Registrar’s intention to strike off the company in the Gazette.
Restoration Process
Where a company has been struck off and dissolved, the company or a creditor, shareholder or liquidator of the company may, within five years of the strike off date, apply to the Registrar to have the company’s name restored to the Register.
Administration Restoration Process
A company that is struck off and dissolved can be administratively restored after 1 January 2023, if:
(a) the company can demonstrate it was carrying on business (or was operational) when it was dissolved
(b) the registered agent agrees to act, and files a declaration confirming the company’s records (including all compliance documents and information) have been updated
(c) the company pays all fees and penalties due to the BVI Registry
(d) the Registrar is satisfied that the restoration is fair and reasonable, and
(e) the Financial Secretary has signified the Crown’s consent to the restoration (such consent is deemed given if no response is received within seven (7) days), if the company has assets that vest in the Crown authority (the BVI state).
Court Restoration Process
A dissolved company can be restored by way of application to the court to grant a Court Order after 1 January 2023, if:
(a) the company was dissolved by virtue of a liquidation
(b) the restoration is being made to initiate, continue, or discontinue legal proceedings in the name of or against the company
(c) the restoration is being made so the company can make an application for its property (vested in the Crown authority (the BVI state)) to be returned to the company, or
(d) the company cannot be administratively restored, and the Court considers it just and fair to restore the company.
Implications of strike off
Once a company is struck off, the company, its directors, members or any liquidator cannot carry on business or deal with any assets, nor commence or defend new legal proceedings. The company’s striking off does not affect the liability of its directors, members or agents and furthermore, the company may continue to incur liabilities.
The company, or its directors, members, liquidator or receiver may only continue to defend or carry on legal proceedings commenced against or on behalf of the company prior to the striking off, or to make a restoration application (as above).
It is generally preferable for a company to be placed into voluntary liquidation and to have its affairs wound up in an orderly manner rather than allowing it to be struck off and dissolved automatically. For further information on the formal liquidation process or any of the above, please contact your usual Marbury advisor or info@marburys.com.