Financial records to be kept
The nature of records and documents to be kept depends on the business undertaken by the company. A holding company with very few transactions must keep the underlying documentation of those transactions (invoices, contracts, and similar documents) – provided that the financial position of the company could promptly be determined from those documents.
On the other hand, a trading company that enters into many transactions would need to keep both the underlying documentation and accounting records – which would help determine the financial position of the company.
Although there is no prescribed form for those accounting records, they typically would include general ledger entries and a cash book as a minimum. What is clear is that there is no statutory or regulatory requirement to produce financial statements – although many companies choose to do so in the interests of their stakeholders.
Most notably, companies are required to retain records for at least five years. In practice – since the limitation period for most actions under contract law is six years – it has always made sense to retain records despite the previous absence of any requirement.
Where should documents be kept?
If records and underlying documents are kept at a place other than at the office of the company’s registered agent, the company must provide the registered agent with a written record of the physical address of the place or places at which the records and underlying documents are kept and must know the name of the person holding such records.
According to the BVIBCA, the records of the company may be kept either wholly or partly as electronic records complying with the requirements of the Electronic Transactions Act 2001.
The bottom line
BVI companies are a great way to achieve corporate flexibility in cross-border transactions with the backing of a court with a sterling reputation, but the perception that it’s a vehicle for maintaining confidentiality may not be wholly accurate. To find out more about offshore companies, get in touch with an offshore law firm such as Harneys.