The BVI Business Companies (Financial Return) Order, 2023 (“Order”) was brought into force on 1 January 2023. The Financial Services Commission (“Commission”) has now provided further guidance in respect of the Order during the “Meet the Regulator” event on 3 October 2023.
This article should be read together with Appleby’s previous article on the BVI Business Companies (Amendment) Act, 2022 and BVI Business Companies (Amendment) Regulations, 2022.
The Order provides that every BVI company shall, in respect of each year, file with its registered agent an annual return. The annual return consists of a simple income statement and balance sheet in the form, and containing the information, specified in the Schedule to the Order (form provided here). Where a BVI company has not previously adopted a financial or fiscal year-end or it intends to change its current financial or fiscal year-end date, subject to the provisions of the memorandum and articles of association of the company, a resolution of the directors can adopt or amend its financial or fiscal year-end date.
There are no prescribed set of accounting policies or principles that must be adhered to. Although the default currency will be US$, any major currency may be used for the annual return. There is no need for the annual return to be audited.
The Commission has confirmed that the form of annual return should not be adjusted or amended, save for non-material amendments. A non-material amendment will be interpreted narrowly to include only differences in terminology used in the annual return. The Commission has made clear that the receipt by a registered agent of audited financial statements will not be sufficient and the Commission has stated that the intention of the Order is to ensure the collection of identical data. Directors of a BVI company should bear in mind that they have duties to use reasonable care and to ensure the financial position of the company can be determined with reasonable accuracy. The Order does, however, enable an entity to choose to submit consolidated statements for group companies.
The Commission clarified the terminology used in the Order. An annual return becomes due on the “due date” which is the day after the financial year end or the fiscal year end, as determined by the Company. The annual return must then be submitted on or before the “filing date”. The filing date is the date 9 months after the due date. For example, if a company’s fiscal or financial year runs from 1 April to 31 March, the annual return becomes due on 1 April and must then be filed by 31 December.
The registered agent may, at their discretion, accept electronic submissions of annual returns. The annual return will not be filed with the Commission and details will not be publicly available. The registered agent must retain the annual return for at least five years from the date it ceases to act as the company’s registered agent. A company’s first annual return will become due (but not required to be filed) at the end of the first fiscal or financial year ending on or after 1 January 2024. For example, an annual return that becomes due on 1 January 2024 must then be filed on or before 30 September 2024.
The Order further provides that the provisions of the Order do not apply to a company that is exempted. The list of exempted companies is:
- a company listed on a stock exchange;
- a company that is regulated under a financial services legislation and is required to provide financial statements to the Commission;
- a company that files its annual tax return to the BVI Inland Revenue Department accompanied by the company’s financial statements; and
- a company in liquidation so long as the company’s annual return did not become due prior to the commencement of the liquidation.
A company’s registered agent is required to notify the Registrar where a company does not file its annual return within 30 days after the filing date. A registered agent who fails to notify the Registrar commits an offence and may be fined US$3,000. In addition, a company shall be subject to a fine of US$300 for the first month or part thereof and subsequent fines of US$200 per month or part thereof up to a maximum fine of US$5,000. If a company reaches the US$5,000 fine threshold and continues not to file the annual return, the Registrar has the discretion to strike off the company.
A company should ensure that it notifies its registered agent of its annual return due date. Given the punitive fine applied to registered agents for failure to notify the Registrar of a non-filing, a company should ensure a registered agent is aware of the due date to avoid incorrect fines being levied against the company.
