BVI Company

What has changed in terms of accounting/financial record keeping obligations under BVI  Business Companies (Financial Return) Order 2023?   

The basic principle that all BVI companies were required to maintain accounting records and underlying documentation below remains unchanged:

(a) sufficient to show and explain the company's transactions; and
(b) reasonably accurate at all times in determining the company's financial position.

The following additional obligations have been introduced:

All BVI companies are now required to provide certain financial information/confirmations, in the form of an Annual Return (also known as Financial Return), to their Registered Agent for each financial year of the company.

1)    The Annual Return becomes due the day after a financial year ended.
2)    The Annual Return will need to be filed with the Registered Agent within 9 months following the end of the financial year to which it relates.
3)    The Registered Agent will have an obligation to inform the Registrar if it has not received the Annual Return within 30 days of the filing deadline.

Important notes:

i)    The Annual Return information filed with the Registered Agent will not be filed with any regulator or BVI government authority, nor will it be made publicly available.
ii)   The Registered Agent will need to provide the information to a regulatory body if it receives a request which is within the scope of that body’s investigative powers and existing information exchange agreements.
iii)  The financial information will not need to be audited, nor is a specific accounting standard (or GAAP) prescribed. However, directors of a BVI company have a duty to apply a standard of reasonable care in order to ensure the financial position of the company can be determined with reasonable accuracy. 

Exemptions:
If a company falls under the below criteria, the company will not need to file an Annual Return:
1)     a listed company, meaning a company that is listed on a stock exchange;
2)    a company that is regulated under a BVI financial services legislation and provides financial statements to the BVI FSC in accordance with the requirements of that financial services legislation;
3)    a company that files its annual tax return to the BVI Inland Revenue Department accompanied by the company's financial statements; and
4)    a company in liquidation, except that this exemption does not apply if the company's annual return becomes due prior to the commencement of the liquidation (i.e. if a financial year has completed before liquidation commenced). 

If a company does not fall into one of the above criteria, then the company will need to file an Annual Return.

Examples of Exemptions

1)    A BVI company incorporated in 2018 with financial year from 1 June to 31 May, which decides to end business and commences formal liquidation process in November 2023.

This BVI company will not need to file an Annual Return for 1 June 2023 – 31 May 2024, as the commencement date for the liquidation is before the due date of the Annual Return, i.e. 1 June 2024.

**If the liquidation commence date is in November 2024, then the company will need to file an Annual Return for the period 1 June 2023 – 31 May 2024.

2)    A BVI company incorporated in 2022 with financial year from 1 January to 31 December, which decides to end business and commences formal liquidation process in March 2023.

This BVI company will not need to file an Annual Return for 1 January 2023 – 31 December 2024, as the commencement date for the liquidation is before the due date of the Annual Return, i.e. 1 January 2024.

3)    A BVI company which is a BVI Private Investment Fund, and is required (pursuant to that licensing/ registration) to file financial statements with the BVI FSC.

BVI Private Investment Fund is regulated under a BVI financial services legislation and provides financial statements to the BVI FSC in accordance with the requirements of that financial services legislation.

Timeline and Key Dates 

1)    1 January 2023  - BVI Business Companies (Amendment) Act came into force 

2)    2 March 2023  -  BVIFSC published the BVI Business Companies (Financial Return) Order, 2023 

3)*   1 January 2024  -  Earliest date an Annual Return becomes DUE 

4)*   30 September 2024  -   Earliest deadline to file an Annual Return Within 9 months after the end of the company's financial year end (assuming a financial year of 1 Jan 2023 to 31 Dec 2023)

5)    Within 30 days of the filing deadline Registered Agents are obligated to notify the Registrar of any breach by providing:
- name of the company concerned
- the relevant year to which the Annual Return relates
- the last time the company files its Annual Return 

*The actual due date and filing deadline depends on the financial year end date of a company

a)    The default reporting period for the Annual Return is every calendar year.
b)    If a company has a fiscal or financial year that does not correspond to a calendar year, the due date and deadline to file the Annual Return depends on the date on which the company’s financial year ends.

Examples of Existing BVI Companies With Different Financial Year-ends

a)    It is not a requirement for a BVI company to change its current financial year end date to follow the calendar year.
b)   If the company wishes to amend its current financial year end date, it can reach out to its Registered Agent to update its records on appropriate reporting deadlines.

Format of Financial Information

BVI companies are required to provide financial information (Annual Return) in the form of a simple balance sheet and profit and loss statement with their Registered Agents within 9 months following the end of the financial year to which it relates. The format is prescribed in the BVI Business Companies (Financial Return) Order, 2023.

Important Deadlines for a BVI Company
1)    Annual Licence Fee Renewal
a)    For companies incorporated during H1 (1 January – 30 June):     31 May each year
b)    For companies incorporated in H2 (1 July – 31 December):     30 November each year

2)    Annual Return Filing
The Annual Return will need to be filed with the Registered Agent (“RA”) within 9 months following the end of the financial year to which it relates.

3)    Economic Substance (“ES”) Reporting All in-scope BVI companies are required to submit an annual ES report within 6 months after a ES Financial Period ended (“FP”). Note that the FP end dates for ES are recorded by the RA and BVI International Tax Authority, while the Financial Year for the Annual Return has to be recorded by the RA to comply with its reporting obligation to the FSC.

a)    ES Report for companies with 31 December as FP-end: 30 June next year
b)    ES Report for companies with 31 March as FP-end: 30 September same year
c)    ES Report for companies with 29 June as FP-end: 29 December same year

You may contact your registered agent to arrange the necessary filing or contact us for assistance.

Whatsapp : (852) 6499 4686

Phone : (852) 2186 6936

Email : info@intershores.hk

Disclaimer:

Whilst reasonable care has been taken in provision of information above, it does not constitute legal or other professional advice. INTERSHORES does not accept any responsibility, legal or otherwise, for any error omission and accepts no responsibility for any financial or other loss or damage that may result from its use.  In particular, readers are advised to take appropriate professional advice before committing themselves to any involvement in jurisdictions, vehicles or practice.