The BVI Business Companies Act, 2004 (as amended) (the "Act") and its predecessor statute have long recognised that companies which incorporate in one jurisdiction may benefit from the flexibility of being able to migrate to another jurisdiction.
The Act provides a straightforward corporate registry based system for companies to continue into the BVI and, if the BVI is no longer the jurisdiction of choice, for companies to leave the BVI and move to a new jurisdiction.
In this first of two notes relating to continuations (sometimes referred to as migrations or redomiciliations), we look at the requirements and processes for companies which want to continue from one jurisdiction to the BVI.
There are many reasons why companies may choose to change jurisdiction, but international regulatory developments and policies are a contributing factor. Equally, a jurisdictional regime which suited one stage of a company's life may not be as suitable at a later stage (for example, when the need for a stable and recognised regime increases, perhaps in connection with a need to enter into banking relationships or credit facilities). Some of the reasons we have seen companies move to the BVI include:
- comparatively low set up and running costs;
- no BVI tax or duty;
- a modern and flexible legal system based on common law, accompanied by a highly regarded court system with the Privy Council as its ultimate court of appeal;
- recognition of the BVI as a creditor friendly, robust system for banks and counterparties to do business with; and
- no overly onerous or costly requirements for being based in the BVI such as resident directors or auditors.
Continuing in to the BVI
There are few restrictions on a company continuing into the BVI from another jurisdiction (provided the other jurisdiction allows it to do so). It is simply necessary to ensure that:
- the company is not in liquidation or subject to certain other insolvency proceedings;
- a receiver or manager has not been appointed in relation to any of the company's assets;
- the company has not entered an arrangement with its creditors that has not been concluded; and
- no application has been made to a court in another jurisdiction for the liquidation of the company or for the company to be subject to equivalent insolvency proceedings which has not been determined.
Assuming none of the above applies, the requirements from a BVI perspective are as follows:
- registered agent – the company must select and appoint a licensed service provider to be its registered agent;
- constitutional documents – memorandum and articles of association ("M&A") compliant with the requirements of the Act should be prepared;
- corporate authorisations – the continuation and adoption of the memorandum and articles should be approved by resolution of the company's directors or shareholders (the "Resolutions"), or in such other manner as it has established for exercise of its powers – local advice should be obtained where necessary; and
- compliance with laws - a director must sign a standard form certificate (the "Director Certificate") in front of a notary or commission of oaths which (i) confirms the laws of the jurisdiction of incorporation of the company permit the continuation and the company has complied with such laws; and (ii) attaches an extract of the law permitting the continuation.
Once these requirements have been met, the registered agent files the following documents with the Registrar of Corporate Affairs (the "Registrar") in the BVI:
- Director Certificate;
- extract of the Resolutions; and
- certified copy of the company's current certificate of incorporation (or equivalent).
Following the approval of the filing, the Registrar will issue a certificate of continuation and this, together with any other evidence or requirements under the laws of the former jurisdiction (such as a BVI law legal opinion) can be used to complete the discontinuation or de-registration process in the former jurisdiction.
In terms of process, it is necessary to make the registration in the BVI before any de-registration in the former jurisdiction. This is to ensure that a situation does not inadvertently arise where a company is not registered anywhere at a given time (which, if that occurred, could threaten the company's continuing existence).
Effect of continuation
Following the continuation the Act will, as a matter of BVI law, apply to the company as if it had been incorporated in the BVI and the company will be capable of exercising all the powers of a company incorporated under the Act.
The continuation of a company into the BVI does not, as a matter of BVI law, affect: (i) the continuity of the company as a legal entity; or (ii) the assets, rights, obligations or liabilities of the company.
The Act contains additional provisions which are aimed at ensuring that legal actions against the company, its members, directors and officers are unaffected by the continuation and that their obligations and liabilities also remain unaffected.
All shares in the company that were outstanding prior to the issue by the Registrar of a certificate of continuation in respect of the company are deemed to have been issued in conformity with the Act.
Timing will depend not just on the BVI requirements, but also the requirements of the jurisdiction the company is registered in prior to its continuation to the BVI. For some jurisdictions, where there is an equally efficient system and requirements, the continuation can be completed from start to finish in a matter of days. For others, there is a more involved process, and it may be necessary to obtain consent from the existing jurisdiction to any continuation out. It is important for this reason to discuss with legal counsel in both jurisdictions any requirements at the outset.
From a BVI perspective, the continuation filing is submitted electronically (no originals are required and all filings can be based on scanned copies) and is effective on filing (subject to it being approved by the Registrar).
Typically the Registrar will approve the filing within a couple of business days (and often on a same day basis) but for urgent situations it is possible to use a premium filing service which can be expected to secure approval within four hours of filing. An additional Registry fee of $500 applies to the premium service.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.