When you no longer require your BVI company you have two options:
- The company can be left to be struck off – strike off is automatic and free of charge. The company is effectively on “stand-by” for a 7 year period, and can be restored at any point during that time by paying all outstanding licence fees, penalties and restoration fees.
- The company can be formally liquidated – this is the formal way to close the company in the eyes of the law.
A company is struck off 5 months after its licence fee is overdue (company’s incorporated January to June, on 1 December; companies incorporated July to December, on 1 May of the following year).
Once a company has been struck off it remains liable for all claims, debts, liabilities, and the striking off does not affect the liability of its members, directors, officers, or agents. Creditors may still pursue claims against the company, and the company may continue to incur liabilities.
Whilst struck off, the company and its directors, members, liquidator or receiver may not commence or defend legal proceedings, carry on business or deal with the assets of the company, or act in any way in respect to the company’s affairs, except to make a restoration application or to continue defending or carry on existing legal proceedings.
Where the Registrar believes a defaulting company is trading, instead of striking off the company it can refer the company to the Financial Services Commission for investigation.
A struck off company becomes ‘dissolved’ 7 years after being struck off the register.
Restoration of Struck Off Companies
Where a company has been struck off, but not yet dissolved, the Registrar may, upon receipt of an application, and the restoration fee and all other outstanding fees and penalties, restore the company to the register and issue a certificate of restoration. Once restored the company is deemed never to have been struck off in the eyes of the law.
Once a company has been struck off it remains liable for all claims, debts, liabilities.
Where the company has been struck off because it does not have a registered agent, or the struck off company does not have a registered agent, the Registrar will not restore the company unless an agent is willing to act and he is satisfied that it is fair and reasonable to restore the company.
A company may only be liquidated under the Act if (i) it has no liabilities or (ii) it is able to pay its debts as they fall due and the value of its assets equals or exceeds its liabilities.
On average, the liquidation process takes 8-12 weeks.
The liquidator must be an independent individual, over 18, not bankrupt, and of sound mind. There are no requirements as to residency or formal qualifications.
Where a voluntary liquidation is proposed, the following steps must be taken:
(a) Directors make a declaration of solvency (director making a solvency declaration without reasonable grounds is liable to a fine of US$10,000 on summary conviction)
(b) Directors approve a liquidation plan
(c) The members appoint liquidator(s). In limited circumstances the directors may appoint the liquidator
The declaration of solvency, liquidation plan and appointment of liquidator are filed at the registry. The liquidation period starts when the notice of the liquidator’s appointment is filed.
The liquidation must then be advertised in the Official Gazette in the BVI and one other national newspaper, and in a national newspaper in the main trading jurisdiction.
The liquidator then takes control and custody of the assets. Although the directors remain in office, they cease to have any function or powers, although they may authorise the liquidator to carry on the business of the company, or act as authorised by written instruction from the liquidator.
On completion of the voluntary liquidation the liquidator files a statement that the liquidation is complete with the Registrar. A copy of the declaration of solvency, with the statement of the company’s assets and liabilities attached, must be kept at the registered agent’s office.
The Registrar then issues a certificate of dissolution. The dissolution of the company is effective from the date of issue of the certificate.
Immediately following the issue of the certificate of dissolution the liquidator must publish a notice in the BVI Official Gazette that the company has been struck off the register and dissolved.
Author: Vistra UK Formations Team
Shadow Payrolls: What You Need to Know
04 June 2020
If your organization sends employees abroad, you need to understand what a shadow payroll is and how it works. Register Today June 4, 2020 | 1PM EDT | 6PM BST If your organization…
Webinar: What does China’s Greater Bay Area mean to you and your business?
28 May 2020
International Expansion and Operations Now: A Finance Leader's Guide
27 May 2020
Compliance considerations when managing a global remote workforce
26 May 2020
Running a Global Operation Efficiently
21 May 2020
Preserving Wealth: Adopting a structure to meet relocation needs
20 May 2020