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BVI Update: Filing of Annual Return

Under the BVI
Business Companies (Amendment) Act 2022 and the BVI Business Companies
(Amendment) Regulations 2022 both with effect from 1^st January 2023
(the “Amendments”), and in
accordance with the relevant guidelines set out in the BVI Business Companies
(Financial Return) Order, 2023 (the “Order”),
every BVI company (with exemptions) is required to file an annual return in prescribed
format within specified period.  The
relevant information about filing of Annual
Return is briefed as below:-

Form of Annual Return

Prior to the
Amendment, a BVI company was required to maintain accounting records and
underlying documentation which was:-

a)       
sufficient to show and explain the company’s transactions; and

b)       
reasonably accurate at all times in determining the company’s financial
position.

Under the
Amendments, the above-mentioned obligation remains unchanged and new
obligations have been introduced. A BVI company shall, in respect of each
financial or fiscal year, file with its registered agent an Annual Return (also known as Financial Return) in the form, and containing certain financial information,
specified in the Schedule to the Order
(as enclosed). 

The Annual
Return shall consist of a simple balance sheet and income statement. The
financial information will not need to be audited, nor is a specified
accounting standard (or GAAP) prescribed. However, directors of a BVI company
shall apply a standard of reasonable care in order to ensure the financial position
of the company can be determined with reasonable accuracy. 

Timeline of Annual Return

The Annual
Return is required to be field with the Registered Agent within nine months following the end of the financial or fiscal year to
which it relates. 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.

The default
financial year of a BVI company is a calendar year (with 31 December as its
financial year end), and the default reporting period for the Annual Return is
every calendar year.

A BVI
company may determine and apply its financial year which does not correspond to
a calendar year. Since the due date and deadline to file an annual return
relate to the company’s financial year-end, please contact us to update the
company’s records on financial year and appropriate reporting deadlines of
annual return.

As the table below shows
examples of existing BVI companies with different financial year-ends: 

Exemptions:

lf a company
falls under the below criteria, the company will not need to file an Annual Return:-

l 
a listed company, meaning a company that is listed on a stock exchange;

l 
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;

l 
a company that files its annual tax return to the BVI Inland Revenue
Department accompanied by the company’s financial statements; and

l 
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). 

Some examples
of exemptions are listed below for reference: 

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 2023, 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. 

Important to note: 

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.
However, 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. 

For more
information, please feel free to contact our Hong Kong office at 852-3465 6988
or via email at excel@ecs.hk with Ms.
Lennie Lam or Mr. Raymond Au; or our Shenzhen office at 86-755 2518 1860 or via
email at cosec@ecs.hk with Miss Joyce Zou.

Excellent
Corporate Services Limited

2^nd
June 2023

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Excellent Corporate Services Limited
We have committed to ensuring that the above information is correct. In case if there is any error, we do not undertake any responsibility. Also, the above-mentioned data and information does not constitute any tax and legal advice or recommendations, if you are using the above information to make any decisions which suffered losses, we shall not bear any legal and financial responsibility.