Please be informed that changes have been made to both the BVI Anti-Money Laundering legislation and the BVI Business Companies Act. Below are some important changes that will affect the corporate procedures in 2016, and we are now required to undertake on your portfolio to ensure we are compliant with these new requirements.
- Record Keeping Requirements
In addition to the current statutory record keeping requirements (copy registers, seal impression, director’s letters of consent to act, record keeping confirmations), the new requirements mean that each company will have to supply a new written confirmation of the location of the original company books, records, registers and accounting records and the name of the person responsible for keeping those accounting records at that address. Existing companies have until 31 December 2016 to comply.
Please be aware that PO Box addresses can no longer be accepted as a record keeping address. The address and name supplied must be that of a real business or personal address.
In addition to this, a purposely drafted client profile needs to be completed for each client company, both existing and new to satisfy the recent changes made to the AML legislation.
- Due Diligence Information
Registered agents are now required to hold information on the client company’s beneficial owner as well as additional information on the client company itself. We will be using the client profile template to satisfy this requirement.
All the details, concerning the Beneficial Owner of a company, must be provided to the Agents at the time of the company’s incorporation. The necessary information needed is:
- Certified passport copy of beneficiary.
- Certified proof of address.
- Full contact details.
- Reference letters.
- Source of funds.
- Nature of business.
The certification must be as follows:
A correctly certified (translated if necessary) proof of identity and separate proof of address. The proof of identity requires a statement that the photograph is a true likeness of the individual. The photograph and document need to be a clear copy. The certifications need to be dated, and state the name and capacity of the certifier.
- Absence of seal on documents
An instrument (contract, deed, agreement, will, order, warrant, letter, or other document showing an intention to make a formal arrangement of any matter) is not invalid by reason only of the fact that the company seal is not affixed to the instrument or deed.
- Register of Directors
The BVI Government has inserted one final and significant change to the legislation by inserting a new section 118A regarding the register of directors. This provision will come into force on 1st April 2016.
Before the end of 2016 each company will have to file its register of directors at the registry. Unless the company elects for the register to be made public, it will only be accessible on an order of the court, or on a written request by a competent authority acting within its powers. It will also be accessible to the registered agent and any other person authorised by the company. An updated register of directors must be filed within 30 days of any changes taking place and within 21 days of first appointment following the formation of the BVI Company. An existing company must file its register of directors by 31 March 2017. For these existing companies, the register to be filed need only include the current directors as of the date of filing of the register.
An additional fee at the registry will apply for filing the register of directors for companies incorporated from the 01st January 2016. The work required to file the register of directors is unfortunately more time consuming when compared to previous voluntary filings made at the registry, as each directors details must now be entered separately rather than submitting a scanned copy of the register. There will be also a fee to be charged at point of incorporation, and when updated registers are filed at the registry. Please be aware that our fee covers up to 5 directors, with an additional charge made per additional director thereafter.
Please note that we will require the register of directors for filing before we are able to pay the annual licence fee and potentially prior to the completion of ad hoc work. We will also require the register for filing on those companies that were active at the registry as at the 01st January 2016 even if they become struck off or not in good standing before the 31st December 2016.
The Amending Act also contains penalties for failing to file a copy of the register of directors.
Where we are providing secretarial services to the BVI Company we will proceed to file the register and invoice accordingly.
- Optional registration of register of members
The Amending Act provides for the option of filing the register with the Registrar. Where such an election is made, an updated copy of the register must be filed where there are changes, but the election can be stopped at any time by filing a notice with the Registrar.
- Written consent of directors to act
As it is already known, a director must consent in writing to his appointment. Given that an initial copy of the register of directors must be filed with the Registry within 14 days of the appointment of the first directors and that the registered agent is responsible for appointing a company’s first directors, we must have the consents to act before we make first appointment. Clients wishing to have first appointment of directors dated from incorporation will need to provide to us the consent when sending through their order or within 14 days of the company being incorporated. If we do not have the consent in this timeframe, we will be unable to make the appointment of first directors on the date of incorporation.
- Financial records
Since the introduction of the BVI Companies Act in 2004 every BVI company has been required to keep financial records to explain its transactions and be sufficient to show and explain the company's transactions; and will, at any time, enable the financial position of the company to be determined with reasonable accuracy.
The Amending Act replicates and expands upon provisions currently contained in the 2004 Act and the Mutual Legal Assistance (Tax Matters) Act, 2003. A company shall:
(a) keep at the office of its registered agent or at such other places, within or outside the BVI, as determined by the directors, the records and underlying documentation of the company;
(b) retain the records and underlying documentation for at least 5 years from the date: (i) of completion of the transaction to which the records and underlying documentation relate; or (ii) the company terminates the business relationship to which the records and underlying documentation relate; and
(c) provide the registered agent without delay any records and underlying documentation in respect of the company that is requested by the registered agent in accordance with the Amending Act.
In 2012, the requirements in this area have been extended and where the records and underlying documentation are kept other than at the registered agent’s address, the company shall provide the registered agent with a written record of the physical address of the place at which the records and underlying documentation are kept; and record the name of the person who maintains and controls the company’s records and underlying documentation.
In September 2014 the Mutual Legal Assistance (Tax Matters) Act was amended again to provide a definition for ‘records and underlying documentation', which includes accounts in relation to:
i. all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;
ii. all sales and purchases of goods by the company; and
iii. the assets and liabilities of the company.
Where this information changes, the company shall, within 14 day of the change, provide its registered agent with the physical address of the new location of the records and underlying documentation; and the name of the new person who maintains and controls the company’s records and underlying documentation.
Whenever required by the BVI FSC or other competent BVI authority duly empowered by law, the registered agent shall request from the company, records and underlying documentation in respect of the company.
In light of the above, any company incorporated since 2004 must have financial records up to date.
- Register of charges
Currently the 2004 Act requires a register of charges to be kept at the registered office. The Amending Act states that where a change occurs in the relevant charges or in the details of charges, the company must notify the registered agent within 14 days.
Where a company has been struck off but not dissolved, the period of time that the company can be restored by the company, creditor, member or liquidator is reduced from 10 years to 7.
- Striking Off
The time period during which a company can be restored has changed from 10 years to 7 years. This means that after 7 years a struck off company will be deemed to be officially dissolved and cannot be restored.
The Amending Act adds some clarifications to the provisions of the 2004 Act enabling a company whose assets are subject to outstanding registered changes to be voluntarily liquidated subject to certain criteria.
- 2016 annual invoices
The 2016 annual invoices for your existing portfolio will include your usual registered office and agent fee, the annual licence fee and the register of directors filing fee.
- Changes in Relation to new companies in 2016:
The register of directors will have to be filed at the registry once the first director is appointed (within 6 months of incorporation). Your formation invoice will include the usual fees for incorporation and registered office services, plus the fee for filing of the register of directors and compliance fee.
Also, we will need to receive beneficial owner information before an incorporation can proceed. If the company will be a shelf company, we will require a confirmation to that effect.
Once a company is sold, the statutory documents should be provided within 14 days in order to update the company’s BVI records and arrange the filing of the register of directors.
Under the new legislation we have considerably increased obligations in relation to existing and new companies. Therefore, in 2016 we will be introducing additional fees with respect to:
• The filing of the register of directors on existing companies, at point of first directors appointed following the formation of a new client company and when making further filings due to changes in the register;
• Compliance fee to be charged when we receive the updated client profiles and at point of incorporation. This charge will then become an annual compliance charge from 01st January 2017.
If you have any questions in relation to these recent changes or the new charges, then please contact us and we would be happy to answer any questions you may have.