Update on BVI Economic Substance requirements

The Economic Substance (Companies and Limited Partnerships) Act, 2018 (“Act”) came into force in the BVI on 1 January 2019. The Act requires legal entities conducting “relevant activities” to demonstrate adequate economic substance in the BVI.

Relevant activities include banking, insurance, fund management, finance and leasing, headquarters business, shipping business, holding business, intellectual property business and distribution and service centre business. Entities which are resident for tax purposes outside of the BVI and limited partnerships that do not have legal personality are excluded.

Industry practitioners are expecting Regulations, Rules or formal Guidance Notes to be issued so as to receive further details and a clearer picture on how to practically implement the economic substance requirements. It is anticipated that draft guidance may be available before the forthcoming Easter holidays and education campaigns will be launched in the BVI and Hong Kong afterwards.

The Companies (Amendment) (No. 2) Ordinance 2018

Following a comprehensive exercise to rewrite the Companies Ordinance (Cap. 32) , the new Companies Ordinance (Cap. 622) (“New CO”) came into force on 3 March 2014. After more than 3 years of operations and receipt of feedback from various stakeholders, the Companies (Amendment) (No. 2) Ordinance 2018 (“Amendment Ordinance”) came into operation on 1 February 2019.

The Amendment Ordinance introduces revisions to the New CO and its subsidiary legislations to incorporate new developments, and amend some provisions to improve clarities and operation of the New CO and further facilitate business in Hong Kong.

You may click this link for highlights on the key changes introduced.

Companies Registry step up enforcement and prosecution against non-compliance

 

To reinforce the enforcement efforts to ensure compliance with statutory requirements, the Companies Registry has embarked on vigorous site inspection programmes on companies and trust or company service providers.

Companies Registry also made use of prosecution cases sharing to remind the public the need of strict compliance.

Read this document to understand more.

Existing registered BVI business companies may be struck from the Register of Companies for failure to file Register of Directors by 31 December 2018

Make sure you read this news carefully if you have companies registered in British Virgin Islands.

BVI Business Companies Act (Amendment of Schedule) (No. 3) Order, 2018 (“Order”) has come into force on 1 September 2018. An Industry Circular No.5 had been issued on 3 October 2018 by BVI Financial Services Commission.

BVI companies that fail to file their Register of Directors (ROD) by 31 December 2018 will be struck from the Register of Companies on 2 January 2019.

We have prepared a quick summary here to highlight the key points of that circular.

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