The Beneficial Ownership Secure Search System Act, 2017 (the Act) of the British Virgin Islands requires registered agents (RA) in the BVI to create and maintain a database of beneficial ownership information relating to corporate and legal entities (CLE) for which they act as RA. Each RA database must be uploaded to the Beneficial Ownership Secure Search (BOSS) system which is private but may be searched upon request from certain authorities.
The Act came into force on 30 June 2017 and has been subject to further amendments the most significant of which came into effect on 1 October 2019, pursuant to section 16 of the BVI Economic Substance (Companies and Limited Partnerships) Act, 2018 (as amended), the ESA) and on 31 October 2019, to reflect the Rules on Economic Substance in the Virgin Islands issued by the BVI International Tax Authority. Details on the Act, the amendments and consequent reporting requirements is outlined below. .
Subject to certain exemptions, the Act applies to CLE’s which includes:
- companies incorporated, continued or re-registered as BVI business companies under the BVI Business Companies Act, 2004 (as amended, the BCA);
- foreign companies registered in the BVI pursuant to the BCA;
- BVI limited partnerships with legal personality registered, re-registered or consolidated in the BVI pursuant to the BVI Limited Partnership Act, 2017 (as amended, the LPA); and
- foreign limited partnerships which have continued in the BVI as BVI limited partnerships with legal personality under the LPA.
The Act does not apply to any BVI vehicle, or foreign vehicle registered in the BVI, which does not have legal personality, including partnerships, limited partnerships without legal personality or trusts.
The Act also provides for “exempt persons” who are not required to provide details of beneficial owners. The definition of exempt person includes a CLE which:
- is recognised, registered or otherwise approved as a mutual fund under the BVI Securities Investment Business Act, 2010 (including an approved fund, an incubator fund, a public fund, a professional fund and a private fund);
- has securities listed on a recognised stock exchange;
- is a subsidiary of an entity which falls within the two exemptions listed above; or
- holds a license under the Regulatory Code, 2009 (a licensee).
Obligations to identify beneficial owners and registrable legal entities
The Act requires RAs to identify and collect certain specific information in relation to the beneficial owners and registrable legal entities of each CLE for which it acts as RA. Each in-scope CLE is required to:
- identify its parent(s), beneficial owners and registrable legal entities (or, if it is listed on a recognised stock exchange, provide details of that exchange);
- identify whether it carries on one or more relevant activities and, if so, which ones;
- provide details of any applicable stock exchange listing where its securities are listed on a recognised stock exchange; and
- where the CLE carries on a relevant activity and is not a non-resident, provide certain additional information regarding its parent (if any).
A CLE must notify its RA of the details of the parents, beneficial owners and registrable legal entities within 15 days of identifying them. Further, information regarding the carrying on of a relevant activity has now be set as the period of six months following the end of the financial year in question. CLE’s must, therefore, notify their RAs of such information in a timely fashion to allow for filing within the time limit.
A CLE who becomes aware of a change in theinformation relating to a beneficial owner or registrable legal entity mustnotify its RA of the change(s) and the date(s) on which it or they took place, within 15 days of becoming aware of the change. The RA must then update the RA database (i.e. the BOSS system) within 15 days of being notified or otherwise becoming aware of a change.
The failure of a CLE or RA to comply with the obligations to identify parent(s), beneficial owners and registrable legal entities, establish an RA database (in the case of an RA) and keep the beneficial ownership information up-to-date will constitute an offence under the Act, punishable by the imposition of a fine and/or imprisonment.
Who is a beneficial owner?
The Act defines beneficial owner as being the natural person who ultimately owns or controls a CLE, This includes:
- in the case of a legal person other than a CLE whose securities are listed on a recognised stock exchange, a natural person who ultimately owns or controls, whether directly or indirectly, 25% or more of the shares or voting rights in the legal person;
- in the case of a legal person, a natural person who otherwise exercises control over the management of the legal person;
- in the case of a legal arrangement:
- the partner or partners who control the partnership;
- the trustee or other person who controls the legal arrangement; or
- the settlor or other person by whom the legal arrangement is made;
- in the case of a CLE which is in insolvent liquidation, administration or administrative receivership under the BVI Insolvency Act, 2003, the natural person who is appointed as liquidator, administrator or administrative receiver of the CLE;
- in the case of a receiver being appointed over 25% or more of the shares or voting rights in a CLE, the creditor who appoints the receiver; or
- in the case of a shareholder in the CLE who would otherwise be a beneficial owner but is deceased, the natural person acting as executor or personal representative of the deceased’s estate. Where two or more persons hold any qualifying interest jointly, each joint owner shall be a beneficial owner for the purposes of the Act. A registrable legal entity is defined as a legal entity which: • would be a beneficial owner of the CLE if it were an individual; and • one or more of the following applies to it:
- it is a legal entity which is an exempt person;
- it is a legal entity with securities listed on a recognised stock exchange;
- it is a licensee or a foreign regulated person; or
- it is a sovereign state or a wholly owned subsidiary of a sovereign state.
If the beneficial owner of a CLE is identified by an RA as a registrable legal entity, the RA does not need to look any further to identify the beneficial owners of the registrable legal entity.
An RA must obtain and file Economic Substance Information on an annual basis for each CLE for which it acts as RA. Further information on this can be found out by accessing our online portal which can be found here.