Practically Speaking

In this episode, Partner Rachel Graham and Managing Director of Client Services Amy Roost, along with guest expert Sonia Dhesi, Owner and Managing Director of Appleton Company Services Limited, provide key information in relation to the newly implemented Overseas Entity register.

Key takeaways

• Any non-UK entity, which holds land in the UK, needs to register as an Overseas Entity at Companies House.
• The deadline for registration is 31 January 2023.
• There are significant penalties (£2500 per day) for failure to register before the deadline, and restrictions are imposed on the ability to acquire and transfer land.
• If you have not already begun the registration process, do so urgently.
• Where an entity held land on or after 28 February 2022 but disposed of it before 5 September 2022, it will likely still need to register with Companies House.
• As part of the registration process, the entity will need to identify its registrable beneficial owners – in simple terms, anyone holding at least 25 per cent of the shares or voting rights in the entity or with significant control of the entity (where there is a trust involved in the ownership structure the process can be quite complicated).
• Seek advice if you need help determining which registrable beneficial owners should be identified and verified.
• Current certified proof of identity and address will need to be presented to a UK verification agent to complete the process.
• We can assist with the registration and verification process via an authorised agent in the UK, where we are the registered agent of an entity.
• Once registered, there is an annual renewal obligation.

What we know so far:

• A list of directors will be available via the Registry on payment of a fee of US$75
• If a BVI service provider is approached to obtain the information from the Registry, it is likely they will charge an additional fee 
• The information available will be limited to the names of current directors - other personal information such as dates of birth and addresses will not be included
• The details of any former directors will not be available
• It will only be possible to request a list of directors of a particular entity – it will NOT be possible to request a list of entities which a particular person is a director of

What do you need to do?

While we are not yet clear on the exact mechanism for the provision of the list of directors by the Registry it is important that you are aware that the Registry will make available, on request and payment of a fee, the names of the directors as at the date of the search.

Take action now to check your register of directors to ensure the copy held by your registered agent is up to date. Harneys Fiduciary clients can log on to the Harneys Connect Portal to check.

We recognise that some clients may have legitimate concerns about their director names being public, and we would be happy to discuss those with you.

If any changes need to be made to the register of directors, please contact your usual Harneys contact urgently to ensure there is time for the registered agent to file the necessary update at the Registry before the 1 January 2023 effective date.

In this episode, Transactional Partner Rachel Graham and Dispute Resolution Counsel Francesca Gibbons look at information disclosure and the available options in respect of BVI companies

Key takeaways:    

The information a BVI company is required by law to maintain and retain includes:

• Statutory records and registers – relating to the company   
• Financial and other Records relating to business of the company  

All BVI companies are required to have a registered agent in the BVI – they are required to hold copies of statutory registers, they make most of the filings, they are considered the administrator of the company in the BVI 

Not all information is available publicly – registered agents can be contacted to request additional information (and sometimes those requests may be declined)

There are three main options available for requesting information about a BVI company: 

• Norwich Pharmacal Orders (NPO) – Allows parties to apply to Court on an ex parte basis most commonly against the registered agent for documents they hold
• Section 100 (of the BVI Business Companies Act 2004) applications– Directors can make this application to Court with statutory backing for an order for delivery up of documents  
• Disclosure – A stage within the litigation process that grants parties disclosure and inspection of documents in the control of other parties where they are directly relevant to an issue in dispute in the claim.

Key takeaways

• A chargee is someone who has the benefit of security that has been granted by a BVI company
• Numerous features make using a BVI company attractive to lenders for structuring finance transactions including:
• Clear and simple registration process
• Robust insolvency legislative regime providing protection – very similar to UK law
• The ability for companies to provide financial assistance to those acquiring their shares
• The validity and effectiveness of any security document that a BVI company enters into is determined by the governing law of the particular document
• There are two registration regimes to consider:
• Mandatory registration – private registration at the companies registered office, on the register of charges maintained by the registered agent
• Public registration (optional) – where filings are made with the Registrar of Corporate Affairs in the BVI and which confers priority over any privately registered or any unregistered charge
• Notations included in the register of members of a BVI company whose shares have been charged by way of security, provide notice of the security for those dealing with the company
• Notice of variation or cessation of a charge can also be filed in the BVI, the variation and release of the underlying charge will be determined by the law of the charge not the filing process

In this episode, Transactional Partner Rachel Graham and Director of Client Services Amy Roost outline the process of becoming a shareholder of a BVI company.

Key Takeaways:

• Do your due diligence as to what your rights as a shareholder will be, BVI law is very flexible in this regard.
• Key documents will be the memorandum and articles of association.
• Decision making for BVI companies tends to be predominantly at board level but protections for shareholders are possible.
• Compliance and regulatory obligations with respect to information about shareholders of BVI companies, different to those in the United Kingdom.

Key takeaways

• The statutory and corporate administration considerations for the average user of a BVI company.
• The importance of ensuring entities' legal and accounting record keeping requirements are met.
• The impact of economic substance requirements on corporate governance.
• Practical steps directors can take to ensure they are up to speed with economic substance and compliance related matters for their BVI company.

In the first episode, Rachel and Amy will be talking about becoming and acting as a director of a BVI company.

Key takeaways

• The importance of directors for BVI companies
• The appointment process for a BVI director
• Resignation and removal of a director
• Use of reserve directors
• Key duties of a BVI director

Find out more information about BVI company directors here.

Providing practical advice and insights on issues applicable to stakeholders of BVI entities. This season focuses on the lifecycle of a BVI company.

Our podcast series Practically Speaking, was launched to provide our listeners with practical advice and insights on issues applicable to stakeholders of BVI entities.

In our eighth episode, Transactional Partner Rachel Graham and Senior Associate within Harneys’ Private Wealth team, Matthew Howson discuss the following:

• What happens when a non-resident holder of BVI shares passes away, whether they held the shares absolutely or via a nomineeship? 
• How to bridge the gap between the law of the BVI company and the law of the Deceased’s home jurisdiction: covering some near universal misperceptions. 
• What works to ensure that BVI assets and shares are transferred directly to beneficiaries, and what doesn’t. 
• Provisions necessary for nominating a reserve director for a BVI company holding vehicle, in the event that the sole individual shareholder and director passes away.  

Our podcast series Practically Speaking was launched to provide our listeners with practical advice and insights on issues applicable to stakeholders of BVI entities. 

In our seventh episode, Transactional Partner Rachel Graham and Director of Fiduciary & Custodial Kerry Graziola discuss how to establish substance for relevant in scope entities in the BVI, outlining: 

• The obligations facing both passive and active entities conducting holding business and how they differ.   
• The requirements for direction and management and how they might be managed practically in a Covid 19 world. 
• How the ITA has been responding to the current travel climate and its effects on obligations. 
• The obligations facing entities which are required to conduct core-income generating activities relating to the relevant business and how outsourcing certain roles and functions to professionals on island might assist. 
• How the requirements for adequate premises and adequate employees in the BVI might be met by companies conducting the relevant activities of finance and leasing, fund management and headquarters business. 

Find out more about the ITA’s updates regarding compliance and reporting in response to the COVID-19 outbreak here.