This is particularly true for those corporate entities who are either held by or have their international headquarters domiciled in traditional offshore financial centres such as the British Virgin Islands (the “BVI”) and the Cayman Islands where increased regulatory scrutiny, particularly in the wake of Economic Substance, may be proving logistically difficult to implement or costly to maintain.
While companies looking to migrate into Singapore will need to meet certain qualifications, various corporate formalities will also need to be considered as they relate to the relevant jurisdictions of exit.
This is the first article in a two-part series where we look at the legislative requirements relating to entities seeking to migrate out of the BVI and the Cayman Islands into Singapore.
British Virgin Islands
BVI law provides that, a BVI company (a “BC”) may, by way of a resolution of its members or directors, deregister as an entity incorporated or registered in the BVI in the event that it intends to register as an entity under the laws of any jurisdiction outside the British Virgin Islands if:
- It is in good standing;
- The company proposes to migrate to a jurisdiction, which permits or does not prohibit the transfer of the company (for example, prior to the introduction of the Singapore foreign company migration regime having been introduced in 2017, migrations/ continuations into Singapore would not have been possible by BVI companies); and
- The company has complied with the laws of the foreign jurisdiction (i.e. the Singapore migration in laws have been satisfied, which would include, inter alia the requirement to meet the designated size thresholds).
Upon continuation of the company to the foreign jurisdiction:
- The company will continue to be liable for all of its claims, debts, liabilities and obligations that existed prior to its continuation as a company under the laws of the foreign jurisdiction.
- No conviction, judgment, ruling, order, claim, debt, liability or obligation due or to become due, and no cause existing, against the company or against any member, director, officer or agent thereof, is released or impaired by its continuation as a company under the laws of the foreign jurisdiction.
- No proceedings, whether civil or criminal, pending by or against the company or against any member, director, officer or agent thereof, are abated or discontinued by its continuation as a company under the laws of the foreign jurisdiction, but the proceedings may be enforced, prosecuted, settled or compromised by or against the company, or against a member, director, officer or agent of the company.
- Service of process may continue to be affected on the registered agent of the company, in the BVI, in respect of any claim, debt, liability or obligation of the company during its existence as a company under the Act.
Cayman Islands – Exempted Companies
A Cayman Islands exempted company may de-register itself as an entity in the Cayman Islands and continue its existence as a body corporate under the laws of any alternate jurisdiction outside the Cayman Islands.
The process is generally relatively straightforward, and the Cayman Islands Registrar of Companies (the “Registrar”) will de-register the applicant company (the “applicant”) provided various criteria are met which include, but are not limited to, the following:
- The new jurisdiction must of course not prohibit the migration of foreign companies (as indicated above, prior to the introduction of the Singapore foreign company migration regime having been introduced in 2017, migrations/ continuations into Singapore would not have been possible).
- The applicant has paid to the Registrar a fee equal to three times the annual government fee (as the case may be).
- The applicant has filed notice of any proposed change in its name and its proposed registered office in the jurisdiction in the foreign/ new jurisdiction.
- The applicant entity is not in liquidation and the assets of the applicant company are not the subject to any judicial or administrative action (i.e. receivership, etc.). The applicant is able to pay its debts as they fall due.
- The application for de-registration is bona fide and not intended to defraud creditors of the applicant.
- The transfer is permitted by and has been approved in accordance with the memorandum and articles of association of the applicant.
- The laws of the relevant jurisdiction with respect to transfer have been or will be complied with.
- The applicant will upon registration under the laws of the relevant jurisdiction continue as a body corporate limited by shares; and
- De-registration of an exempted company does not create a new legal entity, affect the property of the applicant, affect any resolutions passed or any rights or obligations it enjoyed while it was an exempted company in the Cayman Islands or affect any legal proceedings to which it is a party.
In the next article, we will detail the criteria that corporate entities will need to consider, according to the Singapore Companies (Amendment) Act 2017, when looking to migrate their entity to Singapore. This will need to be carefully managed to ensure there is minimal loss of corporate history, branding and identity during the migration.
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