Under the BVI Business Companies Act 2004 (the “Act”), shares in a BVI company are regarded as assets in the British Virgin Islands (“BVI”). Therefore, a deceased’s shares in a BVI company cannot be validly transmitted to his/her heirs or beneficiaries until an application is made to the BVI High Court Probate Registry (the “BVI Probate Registry”).
To deal with the deceased’s BVI shares, a person must be appointed as legal personal representative of the deceased shareholder or beneficial owner by obtaining the appropriate grant from the BVI Probate Registry.
The two standard types of grant obtained are a Grant of Probate and a Grant of Letters of Administration. A Grant of Probate is obtained where the deceased shareholder or beneficial owner left a will which deals with the BVI shares. If the deceased did not leave a will which deals with the BVI shares, then the applicant will apply for the Grant of Letters of Administration.
If a grant has been obtained from a Commonwealth member country, an application for the re-sealing of that grant can be made to the BVI Probate Registry.
Time frame and delays
This very much depends upon how quickly the executors or heirs of the deceased obtain the necessary supporting documents and complete and return the probate application documents for filing. Once filed, it may take 4-6 weeks for the BVI Probate Registry to issue the Grant of Probate / Letters of Administration / Resealed Foreign Grant.
The BVI Probate Registry expects that a grant should be obtained within three years from the date of death of the shareholder. If you are aware that a shareholder has died, it is important that a grant is obtained without further delay; TMF Group can help you with this.
There are no capital taxes, including inheritance tax, in the BVI.
There is a requirement for the probate application to be advertised in a local BVI newspaper. The Grant of Probate will, once issued, be a document of public record. Therefore, the ownership of the shares by the deceased and potentially the beneficiary will be available publicly.
Why use TMF Group to help with probate?
Our fees for preparing the appropriate application documents and assisting you to obtain the correct grant are highly competitive. We can guarantee, once we have received the required information, very fast production of the necessary documents. We can make the process a lot easier for you, the heirs and executor.
Other valid succession planning measures
It is possible to avoid the need for an application to the BVI Probate Registry by:
- Holding the shares through a trust or foundation (so the shareholder does not in fact pass away, but the dispositive wishes of the deceased are communicated to the trustee)
- Holding the shares in joint ownership (so the shares will pass to the surviving owner upon the death of the co-owner)
- Giving a gift to the heir(s) prior to death (so the shares are no longer an asset upon death)
- Cascading share classes (so the heirs are issued with shares, but their rights do not become active until the death of the principal shareholder).
These are all valid and well used succession planning tools and techniques, although they do have their own advantages and disadvantages, and obviously cannot be engaged retroactively. Please let us know if you would like any further information.
Invalid succession planning measures
The following will not avoid the need to obtain a grant:
- Signed but undated share transfer forms (which are typically “back-dated” on the owner’s death)
- Nominee agreements with dispositive arrangements
- Director resolutions amending the register of members (without having obtained a grant)
- Ignoring the fact that a shareholder has died
- Holding bearer shares.
These are just some examples of actions which are invalid, and will only result in making the situation more complicated, and, in the end, more expensive for the heirs to correct. If a shareholder or beneficial owner has passed away without valid succession, this will likely be identified if the company is conducting any sort of transaction that requires a legal opinion or review and will have to be corrected at that point, thus delaying the transaction. There are also significant administrative fines and penalties and corrective costs that may be incurred.
Where a company has a sole director/sole shareholder, who is the same person, it is possible to appoint a reserve director.
A reserve director does not take office unless and until the sole director/shareholder dies or is incapacitated. Appointing a reserve director is a very wise precaution because a BVI company must operate through its directors; if the sole director has died, this can cause considerable delay, disruption and inconvenience to the day-to-day operations of the company. It is vital to note that appointing a reserve director does not remove the necessity to obtain a grant – a grant of probate is still needed.
If you require further information on any of these topics, about making a probate application in the BVI, or alternative succession planning measures, we would be very happy to assist.
Contact TMF Group’s BVI office using the details here.