Company liquidation in BVI is a process that takes place according to the BVI Business Companies Act. Because it involves several mandatory and essential steps, it is advisable to seek qualified assistance for this process.
Our team assists local and foreign investors with BVI company formation, as well as the formalities needed to end or dissolve the legal entity.
In this brief guide, our team summarizes the steps needed to close a company in BVI. Do not hesitate to reach out to our agents for dedicated assistance. We also specialize in company formation in BVI, should you wish to incorporate a different business form after the closure of an existing one.
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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.
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 |
A liquidated company is subject to immediate dissolvement, while a company subject to administrative strike off is dissolved after 10 years. |
Liquidation process duration | Approximately 6 weeks, longer in some cases. |
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 BVI is for the legal entity to be solvent.
What are the differences between the two methods?
Company liquidation in BVI is different from the administrative strike off of the legal entity. Some of the most important differences are listed below:
- liquidation is a voluntary process that takes place following a resolution taken by the members;
- the company cannot be forced to liquidate; the Registrar, can, however, strike off a company that did not go through the liquidation process;
- after liquidation, the company is dissolved immediately, however, after being struck off the company will not be dissolved for 10 years;
- 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 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.
As an essential step for finishing the company liquidation in BVI, the liquidator will file a statement with the Registrar. Only once this statement is filed, the company will be struck off and thus dissolved.
The Registrar issues the certificate of dissolution. The voluntary liquidator will also publish the dissolution of the company in the Gazette.
The following video summarizes the process:
What are the situations in which a company can be struck off by the Registrar?
Striking off can take place when:
- the company does not appoint a registered agent;
- it fails to file the documents, as required by law;
- it does not pay the annual fee or the applicable late payment penalty;
- when the Registrar decides that the company has ceased to carry out business activities in the BVI.
A situation can occur in which the company is struck off, but it is not dissolved. In this case, such a legal entity may be restored when an application is submitted for this purpose. A company member or creditor, the company’s liquidator, or the company itself can make this application to the Registrar.
A restored company can resume its activities, and, for its business purposes, it will be treated as if it was never struck off the Registrar.
In the case in which the company was dissolved, it may be restored to the BVI Registrar by a Court order. This is a process that can be described by our team specializing in BVI company formation. However, in this case, there is a time limit and the application to restore the company must be submitted within ten years of its dissolution. An application made after this ten-year period will no longer be valid and the company will not be restored.
How can you help me?
As seen in this article, winding up a company in BVI is a process that takes place under clear rules and regulations.
Forming the liquidation plan and making the declaration of solvency can be assisted by our team which also specializes in BVI company incorporation.
Moreover, our lawyers in BVI can give you complete information about the duties and liabilities of the company founders, and those of the company directors, during the course of the liquidation process.
If the company is subject to a transitional period (such as when it is struck off and then the founders decide to re-register it), our team is ready to assist, especially in the case of international business companies.
BVI offshore company formation is attractive to foreign investors for many purposes. However, there are certain important matters to keep in mind before you decide to open a company in the Islands.
BVI company liquidation statistics
The following data concerning liquidations in the Islands is available and presented below by our team, according to the Q1 2024 BVI FSC Statistical Bulletin:
- There were 1,245 filings for a Notice of Appointment of Liquidator;
- 1,204 filings were made to notify the completion of a liquidation process;
- During this period, there was 1 liquidator approval (in March 2024) post-licensing.
Our team can help you meet the ongoing requirements if you decide to open a company in this jurisdiction, as well as assist you in understanding the steps needed to end the activities of an onshore or offshore company registered here.
Contact us for more information about company liquidation in BVI.