Baker and Partners (BVI), acting on behalf of Angela Barkhouse and Toni Shukla (Kroll) as Liquidators of a BVI company, successfully obtained an unprecedented ruling allowing the restoration of a dissolved British Virgin Islands (BVI) company to the Register of Companies despite the expiration of the statutory limitation period prescribed under the BVI Business Companies Act, 2004 (the “BCA”).

The Court’s order marks the first successful application under such circumstances, providing clarity on the interpretation of section 218(5) of the BCA. At the time of the company’s dissolution, section 218(5) stipulated that an application for the restoration of a dissolved company “[m]ay not be made more than ten years after the date that the company was dissolved.” The Court examined the precise wording of this provision, particularly the term “may not,” and its legislative intent within the context of the historical language of this section, which had previously employed the word “shall.” In coming to its decision, the Court also considered Counsel’s submissions on jurisprudence from other jurisdictions involving misuse of the voluntary liquidation process.

Given that the period for restoring a company has since been reduced to five years, the significance of this decision is particularly relevant to practitioners dealing with allegations of misconduct in voluntary liquidations.

Key Court Findings and Reasoning

1. Interpretation of “May Not”

The Court held that the words “may not” in section 218(5) should be interpreted as “permissive empowering,” granting the Court limited discretion in exceptional circumstances. This interpretation aligns with section 37(1) of the Interpretation Act, which generally construes “may” in legislative texts as permissive unless the context dictates otherwise.

2. Exceptional Circumstances

The Court determined that exceptional circumstances justified the exercise of discretion in this case, including:

  • Evidence of Fraud: Prima facie evidence indicated that the dissolved company was involved in a multi-billion-dollar large-scale fraud.
  • Abuse of Process: The company had purportedly utilised the voluntary liquidation process to conceal its fraudulent activities.
  • Asset Recovery: Restoration would enable the liquidators to investigate the company’s records and seek recovery of misappropriated assets.

3. Policy Considerations

The Court emphasised that the policy objectives of the BCA favour restoring companies where allegations of fraud exist, enabling transparency, investigation, and recovery efforts.

While the Court did not issue a written judgment, the reasoning behind its decision was set out in the recitals of its order, highlighting the exceptional nature of this ruling and its implications for the interpretation of section 218(5) of the BCA.

Court Order and Policy Implications

The Court declared the company’s voluntary liquidation and subsequent dissolution void, rescinded the dissolution, and appointed liquidators to investigate its affairs.

In reaching its decision, the Court considered the broader legislative purpose of the BCA, which aims to uphold the integrity of the corporate register while balancing justice and public policy objectives. The Court’s order underscores that statutory interpretation must align with fairness and the legislative framework’s purpose. Where the framework is abused, the Court will intervene to prevent individuals from benefitting from improper use of the BVI corporate system at others’ expense.

Implications of the Decision

This ruling carries significant implications for the restoration of dissolved companies in the BVI, especially in cases involving fraud or misconduct.

The Court’s interpretation of section 218(5) confirms that the statutory limitation period for restoration is not absolute, allowing restorations in exceptional circumstances. This decision signals a clear warning to individuals who attempt to evade accountability for fraudulent activities by relying on the expiration of statutory periods.

The decision highlights the Court’s willingness to scrutinise voluntary liquidations, particularly those marked by rapid dissolutions or suspected impropriety. Voluntary liquidators must ensure they fulfil their statutory duties diligently to avoid potential consequences, even years after closing their files.

While recent legislative amendments aim to prevent abuse of the voluntary liquidation process, historical abuses, such as those alleged in this case, may continue to surface. The Court’s order equips creditors, liquidators, and other stakeholders with a powerful tool to seek justice and recover assets, reaffirming the BVI’s role as a jurisdiction that values corporate integrity.