Maintenance of accounting records in the British Virgin Islands (BVI)

Recent changes in the BVI

OFFSHORE 离岸

5/7/20244 min read

green trees near body of water under white clouds during daytime
green trees near body of water under white clouds during daytime

A significant change to Section 98A(1) of the Act: Starting 2023, BVI companies are required to file annual financial return (AFR) annual accounts with their registered agent within nine (9) months of the due date of the annual accounts. And the amendment comes into force on 1 January 2023.

If the company fails to file the annual return on time, it will be subject to heavy fines, deregistration and dissolution.

The company must file an annual return with the registered agent as required by the Financial Services Commission (FSC) or any other authority in the BVI.

Applicable dates

Companies with financial year other than the calendar year must file their BVI Annual Return no later than 9 months after their financial year end. For example, a Company with financial year end in 31 March, its Annual Return can be submitted starting from 1st April 2024 and has until 31 December 2024 to submit its annual financial return (AFR).

Privacy Management of Annual Returns

The annual financial return (AFR) is filed with the registered agent and therefore such details remain confidential and in the custody of the agent and are not available to the public. The agent must request information at any time in accordance with the provisions of the Act. Accordingly, the Company and its registered agent are required by law to maintain all records and to alert their cleints to promptly notify our Company of any changes to the information.

The purpose behind this new law

The BVI Government requires all registered companies to keep accurate financial records that include all transactions, assets and liabilities to ensure transparency and accountability. However, a BVI company’s registered agent is not required to submit the returns to any BVI regulatory body unless explicitly requested.

Clients are reminded that the BVI regulator may request access to the records at any time, and that regular bookkeeping ensures that the financial records are in good standing for the purposes of enquiry and presentation of the information they have on file.

Companies Exempt from Filing Annual Returns

The Order exempts the following entities from filing annual returns in line with section 98A(5) of the Act:
(a)    Companies listed on a stock exchange;
(b)    A company that is already compelled by other BVI financial services legislation to provide financial statements to the Commission, i.e. regulated entities;
(c)    A company which files its annual tax returns and financial statements with the Inland Revenue Department; and
(d)    A company in liquidation whose annual return becomes due after liquidation commenced.

The Amendment Act 2023 requires foreign companies to maintain the following at the office of their registered agent:
(a)    The memorandum and articles of the company.
(b)    A current register of members and a list of directors or copies thereof.
(c)    Copies of all notices and other documents filed by the company in the preceding ten years.
(d)    Information on the beneficial owner of the company. 

The register of members is specifically required to state the following:
(a)    The names and addresses of registered shareholders.
(b)    Details of registered shareholders' class and series of shares held and associated voting rights.
(c)    Names and addresses of guarantee members.
(d)    Names and addresses of persons listed as unlimited members.
(e)    The date when each member was entered in the register of members and the date when they ceased to be a member.

Why is BVI used as a SPV?

A Special Purpose Vehicle (SPV) is a subsidiary created by a parent company to isolate financial risk. Its legal status as a separate company makes its obligations secure even if the parent company goes bankrupt. In the context of the BVI, SPVs are often used for asset securitization, property investment schemes, and as holding companies for various assets across different jurisdictions.

In summary, it is important to note the following:

Annual Return Submission: BVI companies must submit an Annual Return, which includes their income statement and balance sheet, to their Registered Agent. Exemptions from this requirement exist, but they are limited.

Submission Deadline: If your company’s financial year aligns with the calendar year (31 December), your first Annual Return submission is due by 30 September 2024.

Audit Not Required: Unlike some jurisdictions, BVI companies are not obligated to undergo an audit for their Annual Return.

Currency Choice: You can use the same currency in your Annual Return that your group uses for its financial statements.

Late Submission Penalties: Be aware that there are penalties for submitting your Annual Return after the deadline.

For more information about our bookkeeping and accounting services, please contact us at adept@adept-cs.com.

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