An amendment to the BVI Business Companies Act that passed last Thursday in the House of Assembly includes several provisions designed to strengthen the territory’s compliance with international standards combating harmful tax practices and money laundering, leaders said.
“This bill follows an extensive review by and consultation with practitioners within the financial services industry,” Premier Dr. Natalio “Sowande” Wheatley said last Thursday in the HOA.
He explained that the provisions mainly address issues surrounding struck-off companies, the abolition of bearer shares, and record-keeping measures, among others.
The same day, International Tax Authority Director La Toya James spoke at the BVI Finance Breakfast Forum, where she explained the ITA’s role in the new legislation.
“We encourage the industry to get familiar with the amendments, which may affect them and their clients differently,” she said.
Bearer shares regime
The bill — which awaits the governor’s assent — abolishes a regime that allows for the redemption of bearer shares. Such shares are owned by anyone who holds the physical stock certificate, and they are not registered with any central authority that can track their ownership or transfer.
VI companies have not been allowed to issue bearer shares since January 2010. Accordingly, owners of bearer share companies were required to either convert the shares into registered shares, or deposit all the bearer shares with an authorised custodian, according to the text of the act.Even though the custodianship regime would in theory “allow us to identify the owners of bearer shares, it has proven to be difficult, as many custodians are allowed to be operating outside of BVI,” Ms. James said last Thursday.
Dr. Wheatley called the current regime “challenging and unnecessary in light of emerging international standards on greater transparency,” and said the new provision would abolish the regime altogether.
Another provision in the amendment would allow the registered office of a company to “continue to be the registered office which the company had at the time of termination of any business relationship,” according to the premier.
Dr. Wheatley said this measure will assist the ITA in responding to mutual legal assistance requests from abroad.
Ms. James explained that accounting records “are the only records that are not required to be kept onshore in the BVI right now,” which can make them difficult to access if needed.
“We rely heavily on the cooperation of these companies to provide these records to the assessment team,” she said, adding that the bill’s provisions should make this process easier.
The bill also streamlines rules relating to struck-off companies and specifies the timeline for the resignation of a registered agent when a company is struck off.
In addition, it establishes a framework for requiring companies filing returns with their registered agents to provide a list of directors upon request.
The premier said the amendments “are required for the territory to continue to remain compliant with emerging global standards in financial services.”
Another part of the bill, the premier said, would allow a company the freedom to move out of the VI and register elsewhere as long as it provides advance notice to its members and creditors and publishes a notice in the Gazette.
“These requirements will provide appropriate notice to persons who may, for any reason, object to the continuation and accordingly advise themselves of any step they may wish to pursue in relation to their company,” the premier said.
The reforms will also include amendments to require voluntary liquidators of VI companies to hold specific qualifications and to be either licensed insolvency practitioners or resident in the VI.