Company Liquidation in BVI: Liquidation and Striking Off

Company liquidation in BVI is a process through which the company’s activities are terminated, and its assets are distributed accordingly. Our team that can help you with company formation in BVI can also help you close a company.

Quick Facts
Types of dissolution	Liquidation and striking off
When can a company by liquidated	When it is still solvent
Liquidation for insolvent companies	Under the Insolvency Act
Voluntary liquidation in BVI	Via the member’s resolution or the director’s resolution (in some cases).
Liquidator	Appointed according to law
Liquidator appointment	Usually by the members or company directors
Liquidator main duties	Collect the company’s property, pay the creditors, and distribute any remaining assets to the company members.
Who pays the liquidator	The corresponding fees and costs are deducted before making the final asset distribution to the company members.
Conditions for liquidation	The company can fully meet its liabilities
Conditions for companies regulated by the FSC	Cannot appoint a voluntary liquidator without the consent of the Commission.
Relevant documents for company liquidation	The declaration of solvency and the liquidation plan.
Situations in which a company is struck off	Failure to file the needed documents, to appoint a registered agent, or to make the mandatory annual filings.
Company struck off when business ceases	Yes, as per the a prior evaluation performed by the Registrar
Difference between liquidation and striking off in terms of dissolving the company	Since 1 January 2023, a company that is struck off is dissolved at the same time (the former 7-year interval was abolished); restoration is possible within limited periods.
Liquidation process duration	Approximately 6 weeks, longer in some cases.

How can you close a company in BVI?

There are two ways in which a company’s activities can be terminated:

through liquidation;
by having the company struck off from the Registrar of Companies.

The former is a process that takes place voluntarily, as decided by the company shareholders. The latter will occur if the company is struck off as a result of an administrative measure.

Both forms of terminating the life of a company in the British Virgin Islands take place according to the Business Companies Act. One important condition for a company to be liquidated under the laws in the BVI is for the legal entity to be solvent.

What is the difference between liquidation and striking off?

Company liquidation in the BVI is different from the administrative strike-off of the legal entity.

Some of the most important differences are listed below by our team:

Liquidation is a voluntary process that takes place following a resolution taken by the members;
Insolvent companies can be put into liquidation by the court under the Insolvency Act 2003; the Registrar can, however, strike off a company that did not go through the liquidation process;
After liquidation, the company is dissolved immediately; however, since 2023 a company that is struck off is dissolved at the same time;
Striking off the company does not influence the liability of the company’s members or directors.

What are the main conditions for company liquidation in BVI?

A BVI company can be liquidated when it has no liabilities or when it has liabilities, but it can prove that these can be paid in full.

A liquidator is appointed in cases involving voluntary liquidation in BVI; however, if the Financial Services Commission regulates the business, it must receive the approval of the Commission before it can appoint the liquidator.

The process concludes when the liquidator completes the steps under his assignment, and the Registrar dissolves the company. After the Registrar strikes off the company, it ceases to exist.

In some cases, winding up a company in the BVI can also take place by court order.

What are the steps for company liquidation?

Certain steps are mandatory when the company is put into liquidation. The process is listed below by our team, which also specializes in BVI company incorporation.

The first step is to submit a declaration of solvency. This is drawn up by the company director as it reflects their opinion that the company is solvent (thus satisfying one of the conditions for dissolution).
Voluntary liquidations continue with the appointment of a liquidator. The company members will make this decision; however, in some cases, the liquidator can also be appointed by the directors (they have this power in certain cases);
The liquidator starts the process of collecting the company’s assets, determining the claims against the company and their validity, paying off the debts, and distributing any remaining assets to the members, according to their rights.
The liquidation is completed when all the tasks of the liquidator are finalized, and the company is dissolved by the Registrar. Alternatively, it can also end when the liquidation is terminated by a Court order.

The following video summarizes the process:

What if the company becomes insolvent during the liquidation process?

It may be the case that, during liquidation, the liquidator determines that the company does not have sufficient assets to make the due payments to its creditors. If this is the case, the liquidator sends a notice to the Official Receiver.

The following step is to appoint a licensed insolvency practitioner, and they take over as liquidator. Effective immediately, the liquidation is no longer voluntary (meaning that it is not treated under the Business Companies Act) and it is managed under the Insolvency Act.

What are the liquidator’s duties?

When discussing company liquidation in the BVI, the involvement of a liquidator is mandatory. Once they are appointed, their duties involve the following:

Making an inventory of the company’s assets and collecting these;
Identifying all the existing claims against the company (the creditors, any and all undue payments);
Making all the required payments in the name of the company;
If applicable, distribute any remaining assets between the company members, according to their rights.

The liquidator is granted special (and often extensive) powers to undertake all of the tasks above.

In addition to the mentioned duties, the liquidator is also responsible for filing all the required documents with the Registry. These filings are mandatory for the process and fall under the liquidator’s duties and responsibilities, in the absence of which the liquidation process cannot be completed.

What are the effects of liquidation?

Once the liquidator completes the liquidation, they file a statement with the Registrar. The effects of this are that the company is struck off the Register of Companies, thus dissolved.

The Registrar issues a confirmation document for the completion of the liquidation and dissolution. The final task of the liquidator is to publish the dissolution decision in the Virgin Islands Official Gazette.

After the official publication, the company ceases to exist.

How is the liquidation terminated by Court?

In some cases, company liquidation in the BVI takes place following a Court order. The Court has the power to end a liquidation process before it is completed (as per the steps briefly listed above).

Specific grounds for Court involvement during liquidation (for the purpose of its early termination) are not specified in the BVI Business Companies Act; however, motivations are reviewed on a case-by-case basis.

Contact us for more information about company liquidation in the BVI.