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Closing a British Virgin Islands сompany. Service offer

British Virgin Islands (BVI) companies can terminate their business in 2 ways:
1. Striking the company off the register followed by the company’s automatic dissolution and
2. Voluntary liquidation of the company.

Striking the company off the register followed by the company’s automatic dissolution

If a company fails to pay annual renewal fees which include the government fee and the registered agent’s fees, it is struck off the register 5 months after the renewal date. Under the previous rules, such a company could remain struck off for 7 years and only after the 7 years be automatically dissolved (provided that it was not restored before the expiration of the 7-year period).

According to the BVI Business Companies Act, any property of a struck off company vests in the British Crown and can only be returned to the company upon its restoration to the register. A company could previously be restored to the register within 7 years by payment of all outstanding annual fees and penalties (under an out-of-court procedure).

In accordance with the amendments to the Business Companies Act that came into force on 1 January 2023, a company is struck off the register 90 days after receiving the relevant notice from the Registrar.

The grounds for striking the company off the register are the following:

  • the company does not have a registered agent (for example, the current registered agent of the company has resigned);
  • the company has outstanding government fees and fines (for example, it failed to pay in time the annual government fee which is included in the company renewal)[1];
  • the company has ceased to carry on business.

In all these cases, the company receives a formal notice that it has 90 days to eliminate the contravention / grounds for strike-off. If, during this period, the grounds for strike-off continue to exist, the Registrar publishes a notice in the Gazette that the company is not just struck off the register, but is also dissolved.

The new rules no longer provide for a 7-year period between the company’s striking off the register and its dissolution; a company struck off the register now becomes dissolved immediately (the company is dissolved automatically).

Companies that are currently struck off but not yet automatically dissolved have a 6-month transitional period. If they are not restored or automatically dissolved (after 7 years of being struck off, in accordance with the old rules) within 6 months from 1 January 2023 (i.e. from 1 January to 30 June 2023), they will all be automatically dissolved on 1 July 2023.

An automatically dissolved company can be restored within 5 years of the date of its dissolution (as a general rule, out of court; however, there are certain exceptions). Upon restoration, a company is deemed to have continued in existence as if it had not been struck off or dissolved.

Voluntary liquidation of the company

In the case of voluntary liquidation, a company is deemed officially dissolved and its obligations are terminated. It can only be restored to the register by application to court and only for the correct completion of the liquidation (for example, if any errors were made during the liquidation of the company).

Upon completion of voluntary liquidation, the BVI Registrar issues a certificate of dissolution.

The legal fees to liquidate a company are USD 3 900[2].

The voluntary liquidation will also involve:

  • payment for a pre-liquidation compliance check of the company (Compliance fee*), and
  • payment for filing with the BOSS system of updated information on the company in the course of its liquidation[3] (BOSS System filing fee**).

Liquidation takes approximately 2 – 3 months to complete.

This option is only available to a company that:

  • has no liabilities; or
  • is able to meet its liabilities as they fall due.

You would need to provide us with the documents for the person who will act as the liquidator of the company (if you can appoint a liquidator that meets all the requirements of the BVI legislation) and advise the sum of his/her remuneration (this is necessary for the drafting of liquidation documents). Please note that the liquidator must not have been affiliated with the company in the previous 2 years.

A liquidator can be an individual if such an individual is not disqualified by law from acting as the voluntary liquidator of a company.

A liquidator cannot be:

(a) a disqualified person;

(b) a restricted person;

(c) a minor;

(d) an undischarged bankrupt;

(e) an individual who is, or at any time in the previous 2 years has been, a director of the company or of an affiliated entity;

(f) an individual who acts, or at any time in the previous 2 years has acted, in a senior management position in relation to the company or an affiliated company and whose functions or responsibilities have included functions or responsibilities in relation to the financial management of the company or an affiliated company; and

(g) an individual who is a close family member of an individual specified in paragraph (e) or (f).

We can assist with appointing an independent external liquidator.

The amendments to the Business Companies Act that came into force on 1 January 2023 state that only a BVI resident[4] can act as a voluntary liquidator, which makes the engagement of an independent external liquidator even more relevant.

On top of that, there are now additional requirements for the qualification of a voluntary liquidator.

An individual is qualified to be appointed and act as a voluntary liquidator of a company if he or she:

(a) has liquidation experience of not less than 2 years;

(b) has professional competence to liquidate the specific company concerned;

(c) is able to demonstrate that he or she

  • holds an insolvency practitioner’s licence issued by the Financial Services Commission pursuant to the Insolvency Act; or
  • has an appropriate professional qualification (such as in law or accountancy) and experience of providing legal or financial advice or support to companies in the financial services sector; and

(d) is fully conversant with relevant financial services legislation connected to the business of the company to be liquidated, including the Financial Services Commission Act and BVI Business Companies Act.

An independent external liquidator will usually need to be provided with the following documents (to make sure he/she can act as the liquidator of your company without breaking the applicable BVI law):

  • company documents (certificate of incorporation, memorandum and articles of association, registers of directors and shareholders);
  • company’s bank account statement;
  • copy of the latest financial statements and/or latest management accounts;
  • declaration of solvency and liquidation balance sheet for the company both signed by the beneficial owner.

In addition, if a company had obtained any secured loans or had any of its assets charged or encumbered, the lender’s confirmation of the settlement of these matters is required.

The amendments to the Business Companies Act and to the regulations also require the liquidator, with effect from 1 January 2023, to collect the accounting records of a voluntarily liquidated company and, upon completion of the voluntary liquidation, deliver these records to the company’s registered agent. The Financial Services Commission may request the liquidator to collect any other documentation or information about the company during the liquidation. Any records and documents received from the liquidator must be kept by the registered agent for at least 5 years from the date of receipt.

The fees of an external liquidator start from USD 2 900 and can be increased if substantial problems are identified in the course of the liquidation. Any out-of-pocket expenses such as shipment of documents, translations and certifications are payable on top of that.

Upon receipt of payment and above information we will proceed with drafting documents for signing by the directors, shareholders, and liquidator of the company.

By the time of going into liquidation a company must cease any operations. Please also note that a company must be in good standing when the certificate of dissolution is issued (i.e. all government fees must be paid in a timely manner).

Voluntary Liquidation Procedure

The liquidation procedure includes the following stages:

1. Signing and providing to the registered agent the liquidation documents, in particular:

  • notice of appointment of the liquidator;
  • declaration of solvency;
  • liquidation plan;

2. Obtaining approval of the appointment of the liquidator from the Registrar;

3. Publishing a notice in a newspaper circulating outside the BVI: you need to publish a notice of liquidation (we will provide the text separately) in a newspaper having wide circulation in the country where the company has its principal place of business. The notice must be printed in 2 languages (an English text is obligatory). We will need to receive a scanned copy of the notice page (the name of the newspaper and the date of its issue must be clearly visible on the page) and later the original issue of this newspaper (the original must be kept in the files of the registered agent);

4. On expiration of 21 days of the initial submission of documents, you confirm that no creditor’s claims have been made if the liquidator has not received any;

5. Liquidator filing a notice of completion of liquidation;

6. Obtaining a certificate of dissolution from the Registrar (if necessary, this certificate can be apostilled, apostille will cost USD 510).

A company is deemed dissolved from the date of issue of the certificate of dissolution and can only be restored by court order if there are good reasons for its restoration.

*Compliance fee is calculated as follows:

1) USD 250 (standard rate, includes the check of 1 individual)

+ USD 150 for each additional individual (director, shareholder, or beneficial owner) or legal entity (director or shareholder) if such legal entity is administered by GSL

+ USD 200 for each additional legal entity (director or shareholder) if such legal entity is not administered by GSL

2) USD 350 (rate for high-risk companies, includes the check of 1 individual)

+ USD 150 for each additional individual (director, shareholder, or beneficial owner) or legal entity (director or shareholder) if such legal entity is administered by GSL

+ USD 200 for each additional legal entity (director or shareholder) if such legal entity is not administered by GSL

** BOSS System filing fee is USD 165

[1] In this case, before the notice is sent, the company is given 5 months to pay for its renewal, but with late payment penalties on the government fee: in the first 2 months of delay, there is a 10% penalty, and in the next 3 months it is increased to 50%.

[2] The fee may vary depending on the registered agent of the company.

[3] It is the Beneficial Ownership Secure Search System (BOSS System). During the liquidation, it is necessary to file updates to the company’s status into this system: after the start of the liquidation (the company is changed to “in liquidation”) and upon completion of the liquidation (the company becomes “dissolved”).

[4] For the company liquidation purposes, a BVI resident is a person who has resided in the British Virgin Islands for at least 180 days prior to the date of his/her appointment as the voluntary liquidator.

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