The British Virgin Islands (BVI) is alongside the State of Delaware in the USA considered the main jurisdiction for foreign company formation and registration. The BVI International Business Companies Act was launched in 1984 and amended several times. The initial Act of 1984 served as the example for offshore frameworks in many other international financial centers. In 2004, the updated and modernized BVI Business Companies Act replaced the International Business Companies Act. Based on the New Zealand Statute, the new corporate framework in the BVI governs both local and offshore companies. Ever since, the jurisdiction remains one of the largest offshore financial centers with over 800.000 active companies included in its corporate registry. The scope and dimension of the registry leads to large numbers of corporate dissolutions. However, sometimes a dissolved company must be reactivated, reinstated, or restored. This can be justified by personal reasons and legal requirements.
Offshore Company Reactivation
In the current era of financial globalization, the offshore financial industry is under a regulatory magnifier. Most measures find justification in the desire to combat financial crime, protect the integrity of the financial system, as well as to promote transparency and good governance. It therefore becomes difficult for small and medium sized enterprises and solo entrepreneurs to maintain an offshore company. Especially where these companies are registered in well-established and leading financial centers such as the BVI.
Unlike other international financial centers, where offshore IBCs are granted exclusive advantages, all companies incorporated and registered in the BVI are subject to the same regulation. To accommodate this framework the BVI implemented one most comprehensive and up to date systems of corporate law in common law jurisdictions. According to the common law approach to corporations, BVI companies have perpetual succession and are separate legal entities from their corporate members. The company therefore continues to exist until it is dissolved and the winding up of a company does not necessarily release its members from their obligations.
Offshore companies can be liquidated, dissolved, and removed from the corporate registry. The official registrar may also strike the name of a company off the corporate registry when the company fails to appoint a registered agent, fails to file a return, ceases trading, has no license, permit or authority to conduct the activities that it does, or fails to pay the annual government fees or penalty payments by the due date. Where a company has been struck off the register, the company and its directors or members may not commence legal proceedings, carry on any business or in any way deal with the assets of the company; defend any legal proceedings, make any claim or claim any right for, or in the name of, the company; or act in any way with respect to the affairs of the company.
The members, beneficiaries and other direct or indirect stakeholders of an offshore company are often unaware of the consequences of an offshore company’s liquidation, dissolution or striking off procedures. Therefore, unexpected mistakes can result in irreparable damage where members and beneficiaries may become liable for the actions of the dissolved company. Reinstatement and restoration of the company can thus mitigate risk and ensure compliance with the applicable legal frameworks. Most BVI company reactivations and restoration applications aim to avoid personal liability and reclaim corporate assets in (bank) liquidation procedures.
BVI Offshore IBC Reactivation and Restoration Procedures
The reactivation and restoration procedure for a BVI offshore IBC company can be initiated by the company, a creditor, member or the liquidator of the company. A company struck off the registry for reasons other than dissolution, must apply within ten years of its removal for reactivation and restoration. For dissolved companies, the court determines whether it is just to declare the dissolution void and reinstate the company with conditions as it deems appropriate.
In recent years, restoration requests for BVI Offshore IBC companies have been triggered by creditors of failed (offshore) banks, heirs of deceased beneficiaries of offshore companies, and members of companies held accountable for corporate conduct. Similar grounds for restoration are expected to continue in the future and those willing to investigate their future prospects are invited to contact us via the form on this page.
The objective of a restoration application is that the company is deemed to never have been struck of the registry and a certificate of restoration is issued by the registrar. Restoration also means that property belonging to the company prior to the dissolution must be returned to the company and traditional activities may resume. Restoration procedures for a BVI offshore IBC include the filing of the application and the payment of the restoration fee and all the outstanding fees and penalties to the registry. Restoration is only granted where it is fair and reasonable to revolve the name to the register.
Did you run an offshore IBC in the BVI in the past? Was the company removed from the registry and do you wish to reinstate the company in good standing? Then you need reliable, predictable and proven strategies to comply with the applicable regulation while considering realistic yet expeditious timeframes. To discuss your case and strategize for BVI offshore IBC reactivation and restoration, please complete the contact form below or call us at the telephone number in the footer of this page.