Knowledge

This briefing addresses the usual manner in which solvent voluntary liquidations proceed under the BVI Business Companies Act 2004, as amended (the "Act"). The observations that follow are subject to the particular provisions of the Memorandum and Articles of Association of any company seeking a voluntary liquidation and we recommend that these are always reviewed in the first instance.

Where a company has no liabilities or is able to pay its debts as they come due and the value of its assets equals or exceeds its liabilities, a voluntary winding up and dissolution may be commenced by a resolution of directors or by a resolution of members.

Where it is proposed to appoint a voluntary liquidator, the directors of the company shall:

• make a declaration of solvency in the approved form stating that, in their opinion, the company is and will continue to be able to discharge, pay or provide for its debts as they fall due and the value of the company's assets equals or exceeds its liabilities; and
• approve a liquidation plan (the "Plan") specifying:
  • the reasons for the liquidation;
  • their estimate of the time required to liquidate the company;
  • whether the liquidator is authorised to carry on the business of the company if he determines that to do so would be necessary or in the best interests of the creditors or members of the company;
  • the name and address of each individual to be appointed as liquidator and the remuneration proposed to be paid to each liquidator; and
  • whether the liquidator is required to send to all members a statement of account prepared or caused to be prepared by the liquidator in respect of his actions or transactions.

The declaration of solvency must be accompanied by a statement of the assets and liabilities of the company as at the latest practical date before the making of the declaration of solvency.

Following approval by the directors, the Plan must be authorised by a resolution of members. The Plan must be sent to all members (regardless of voting rights) regardless of whether such resolution is to be passed at a general meeting or in writing.

Following his appointment under the above, the liquidator shall:

• within 14 days of the date of his appointment (being the date the resolutions authorising his appointment are passed), file the following documents at the Registry of Corporate Affairs (the "Registry"):
  • a notice of his appointment in the approved form;
  • the declaration of solvency made by the directors, and
  • a copy of the Plan;

and

• within 30 days of commencement of the liquidation, advertise notice of his appointment in the manner prescribed.

The advertisements must be placed in a newspaper in the BVI as well as in a newspaper in the jurisdiction outside the BVI where the company has its principal place of business.

The liquidation commences on filing the notice of the voluntary liquidator's appointment at the Registry and continues until terminated in accordance with the Act.

The liquidator needs to be an eligible individual, but need not be resident in the British Virgin Islands and may not be (nor have been for two years prior to the liquidation) a senior manager or a director of the company to be liquidated or an affiliated company.

The principal duties of the liquidator are to:

• take possession of, protect and realise the assets of the company;
• identify all creditors of and claimants against the company;
• pay or provide for the payment of, or to discharge, all claims, debts, liabilities and obligations of the company;
• distribute the surplus assets of the company to the members in accordance with the memorandum and articles;
• prepare or cause to be prepared a statement of account in respect of the actions and transactions of the liquidator; and
• send a copy of the statement of account to all members, if so required.

Where the company to be liquidated is a regulated entity under BVI law, the prior approval of the Financial Services Commission must be obtained. Other than in the case of a regulated fund, the voluntary liquidator of a regulated entity must be a licensed insolvency practitioner.

A liquidator shall, upon completion of a voluntary liquidation, file a statement that the liquidation has been completed and upon receiving the statement, the Registrar of Corporate Affairs ("Registrar") shall:

• strike the company off the Register of Companies; and
• issue a certificate of dissolution in the approved form certifying that the company has been dissolved.

The dissolution of the company is effective from the date of issue of the certificate by the Registrar. Immediately following the issue of the certificate of dissolution, the liquidator publishes a notice in the Gazette, that the company has been struck off the Register of Companies and dissolved.