For years, the BVI Business Companies Act has provided an attractive and appropriate vehicle to hold property in the BVI and abroad, many finding it a particularly useful strategy in estate planning. But persons who neglect their BVI Business Company ownership obligations over the years’ risk losing that property to the Crown.
Unfortunately, such losses are trending and could easily be avoided by simply maintaining your Company’s status on the BVI Register of Companies.
Obligations for maintaining your BVI Business Company’s status.
There are four critical mistakes a BVI Business Company must avoid in order to maintain their status on the Register of Companies:
(1) The Company does not have a registered agent.
(2) The Company fails to file any return, notice, or document required under the BVI Business Companies Act.
(3) The Company is carrying on business for which a licence, permit, or authority is required under the laws of the Virgin Islands without having such licence, permit, or authority.
(4) The Company fails to pay its annual fee or any late payment penalty by the due date.
Neglecting any of these obligations is cause to satisfy the Registry’s requirements of “a Company that has ceased to carry on business.” Such Company will then be struck from the Register.
If a company is struck from the Register for a continuous period of seven years, it is by default dissolved from the last day of that period. Upon dissolution all property and assets of the company which have not been disposed of at the date of dissolution vests in the Crown.
Recourse for a dissolved company.
The only company recourse to regain status is to file an application to restore the dissolved company to the Register. This application cannot be made more than 10 years after the date the company was dissolved. Therefore, it is not only critical to conform to the company’s obligations year over year to remain on the Register, but if for some reason the company has been neglected, restoration efforts must commence immediately, before the 10-year limitation sets in.
Upon restoration of the company, any property, other than money, which was vested in the Crown upon the dissolution of the company and that has not been disposed of during the interim must be returned to the company.
For companies that cannot be restored, the property remains vested in the Crown.
The “onerous” property clause.
It is possible, but unlikely, to reclaim property from the Crown through the onerous property clause. Where property is vested in the Crown, the Minister may disclaim the Crowns’ title if that property is deemed “onerous.”
Onerous property includes that which has an unprofitable contract, is unsaleable or not readily saleable, or which gives rise to a liability to pay money or perform an onerous act, such as extensive repairs.
Title can only be disclaimed by the Crown under two conditions: (1) The property is disclaimed within 12 months of the date upon which the vested property notice was received by the Minister, or (2) where any person interested in the property gives notice in writing to the Minister, which then requires a decision as to whether he will or will not disclaim the property within three months of the date upon which the Minister received the notice, whichever occurs sooner.
Notably, in most circumstances it is difficult to prove that a property is onerous, particularly when it is obvious that a property is being occupied and enjoyed every year and is in perfect condition. Therefore, expecting to reclaim one’s property through the onerous clause is a highly unreliable position.
So, while enjoying the scenic view from your beautiful British Virgin Islands’ property that was purchased through a BVI Business Company, do not forget your obligations to that Company or you may find one day that it is no longer yours.
For additional information or assistance with your BVI Business Company, please contact O’Neal Webster Partner Kerry Anderson at email@example.com or the author, senior associate Jameayla Fahie, at firstname.lastname@example.org.