Recommended contact person
A problem that commonly arises in the company world is the need to find potential solutions or act either against or by, a BVI company that has been struck off or dissolved.
Strike off means that the company’s name has been struck off the register of companies because any annual fees have not been paid on time.
Dissolution brings the company’s legal personality to an end and assigns its property in third-party liquidators or the Government. Dissolution can take place either because of the company being struck off or after its liquidation.
BVI companies that are struck off but not yet dissolved
In the BVI, when a company is struck off, it is not yet deemed to be dissolved. Instead, it remains in existence, although it is not in good standing and subject to several legal restrictions, for a period of seven years. Only after seven years of being struck off will the company be dissolved. This is significant as it means that during the first seven years of being struck off, the company continues to exist, owns its property and is capable of being sued.
This is clarified in Section 215 of the BVI Business Companies Act which explains that:
- A company that has been struck off may not make or defend legal proceedings; but
- Striking off does not stop a creditor from “creating a claim against the company and pursuing the claim through to judgement or execution”.
Given that a struck off company continues to have legal status, there are several practical problems which may still occur. Such concerns include:
- the company being able to incur additional liabilities (including fees and late payment penalties which would need be to be repaid in order to restore the company);
- the company potentially being the subject of a creditor’s claim or judgement; and
- the members, directors, officers, and agents of the company remaining responsible for any liabilities that existed before it was struck off.
Restoration of a BVI company after striking off
A creditor or shareholder may, in certain circumstances, apply to restore a struck off company or unwind a dissolution. If such application is successful, the company will be restored to the register of companies and will be deemed to have continued in existence as if it had not been struck off or dissolved. Its legal personality will be restored and any property that was vested in liquidators or the Government will vest back in the company.
Restoration of a BVI company after its dissolution
For a dissolved BVI company to be restored, a petitioner must draft a formal application to the Court requesting the restoration.
Notice of the application for restoration must be provided to:
- the Registrar;
- the Financial Secretary of the Ministry of Finance; and
- if the company was a regulated person, to the Financial Services Commission, as each of these authorities is entitled to appear in the court hearing of the application in order to restore the dissolved company.
An application to restore the company to the Registrar must be made by a creditor, a former director, a former member (shareholder), or any person who can show an interest in having the company restored. The application to restore a dissolved company must be made within ten years of the date on which the company was administratively dissolved. The application must come with certain corporate documents, and evidentiary documents, that will be requested by your registered agent, or the attorney assisting you with the restoration. It is important to note that a dissolved company may be restored through any BVI attorney, as long as the above criteria are met.
Once the application with its supporting documentation has been filed, and if the application is in good order, a court date will generally be scheduled within 30-45 days of the filing date. The intention of this time frame is to accommodate any responses from the Financial Services Commission and Financial Secretary.
On the day of the court hearing, the court will decide whether the restoration of the company shall proceed and grant the order. After the court order has been finalized and the restoration is granted by the court, the interested party will have to proceed to pay all outstanding fees with the Registrar in order to restore the company.
Nonetheless, in some instances the matter may be challenged by the Registrar and require additional documents from the interested party.
Attorney fees for a restoration application will generally vary depending on the claim and/or assets held by the company prior to strike off or dissolution.
The information provided by A.G. Paphitis & Co. LLC is for general informational purposes only and should not be construed as professional or formal legal advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice.
Should you have any inquiries on this process or any other process regarding BVI companies, please do not hesitate to contact us.