Understanding succession planning solutions in the BVI – Part 2
We are pleased to bring you Part 2 of our series, following on from the introduction provided by Part 1, which was published earlier. The full content of Part 1 can be viewed here
Overview and recap
We are in uncertain times but there are certain things we can control. Succession planning is one of these. This series looks into various succession tools that are available to people who own shares in BVI companies to facilitate the continued operation of a BVI company with minimum disruption following the passing of a shareholder.
Part 2 will focus on BVI Wills and Reserve Directors.
Other topics to be covered in this series are:
- BVI Trusts
- Private Trust Companies
- Joint Tenancy
- Memorandum and Articles of Association with cascading shares
Under BVI law, in order to deal with the shares in a BVI company, a BVI grant of representation must be obtained. Until a grant is obtained, the shares are effectively paralysed and cannot be dealt with in any way. The position is made worse when the single individual shareholder is also the only director. In such a case not only are the shares paralysed but the continued operation of the company is also paralysed as a new director cannot be appointed until such time as a Grant has been obtained. Where there are no directors, the annual fees of a BVI company may not get paid. Non-payment of fees can lead to a company being struck-off. Where a BVI company is struck off for seven years it automatically becomes dissolved. Once a company has been dissolved, it can only be restored to the Corporate Register by the BVI High Court, a costly and time consuming process. If an application to restore is not made within the 10 year period following the dissolution of the company no restoration is possible under the BVI Business Companies Act and there is no certainty that the assets of the company can be recovered.
The advantages of a BVI Will are that it will ensure that you:
- do not lose control over how your shares are distributed in the event of your death;
- make sure your shares pass on to the right people, in the right manner, as efficiently and effectively as possible;
- will be able to appoint people you know and trust to be in control of the process;
Further advantages of making a BVI Will include:
- reduced after death costs – a BVI will has the benefit of being written in English therefore the costs and time associated with getting a certified and qualified translation of the domestic will where written in a language other than English will not exist;
- efficiency – the formalities associated with getting a BVI grant of probate can be addressed at the point of making a will rather than after death; and
- parallel applications – with a BVI Will a BVI application for probate can run at the same time as a domestic application for a grant of probate. If there is only one non-BVI Will it is very difficult to run parallel applications.
Where a BVI company has a sole individual shareholder/director, people should consider appointing a reserve director. A Grant will still need to be obtained in the BVI but it allows the company to continue to operate while the Grant is being processed. It is a simple process.
How can the AMS Financial Group help?
AMS Financial Group (www.amsfinancial.com) is a global, dynamic organization with offices in the main financial centers, a strong infrastructure, know-how, staff and vision that provides real time solutions to corporate and private clients as well to the asset management industry.
AMS Law offers a BVI Will drafting service and also offers a special discounted rate to all clients with companies at AMS Trustees Limited.
AMS Trustees Limited can act as the executor to a Will as well as provide a reserve director where it is necessary.
If you would like to learn more about how to put a BVI Will in place, how to appoint a reserve director or any of our other solutions, please contact Philippa O’Sullivan, Barry Mitchell, Calvin Crilly or your usual contact at AMS Financial Group.