Liquidation of an offshore company

As good of an instrument an offshore company can be, businesses start and end and you may face a need to close an offshore company that you no longer find useful. So, how can you do it?

Legislation of offshore jurisdictions, even though not identical but still very alike, provides for two basic ways to terminate an offshore company:

  1. Strike off
  2. Voluntary liquidation

Let us consider both available closure procedures in more detail.

Strike off a company

Striking off does not immediately lead to company’s termination but rather results in the loss of good standing which, over a lapse of time, leads to company’s dissolution.

What can trigger strike off?

  • Offshore company no longer has local registered agent

Registered agent could have resigned or lost its license. An offshore company cannot exist without a local registered agent. The company would normally be given some time to find and appoint another registered agent and, if it fails to do so before the deadline, it will be struck off the register.

“If a company does not change its registered agent in accordance with section 92 … the Registrar may … strike the name of the company off the Register”[T.Г.1]
Section 93 of the BVI Business Companies Act, Revised Edition 2020


  • Offshore company failed to provide / file information or documents required under local legislation to authorities or centralized registers

For instance, the company does not file on time register of directors to the Registrar or submit information about company’s beneficial owners on the government portal.

“The Registrar may strike the name of a company off the Register if…(b) the company fails to
(i) file any notice or document required to be filed under this Act;

(iv) keep a register of directors, register of members, register of charges, register of beneficial owners … required to be kept by it under this. Act or any other records required to be kept by it under this Act; …”[T.Г.2]
Section 272(1) of the Seychelles International Business Companies Act 2016


  • Offshore company conducts regulated business activity without holding an appropriate license

If the company provides payment services to third party but does not hold a relevant financial license and this is spotted by the local regulator, failure to comply with licensing requirements will, among other penalties, lead to the struck off.

“The Registrar may strike the name of a company off the Register if… (b) he or she is satisfied that… (ii) the company is carrying on business for which a licence, permit or authority is required under the laws of the Virgin Islands without having such licence, permit or authority;”[T.Г.3]
Section 213(1) of the BVI Business Companies Act, Revised Edition 2020:


  • The Registrar is convinced that an offshore company ceased to conduct any business activity
“The Registrar may strike the name of a company off the Register if… (b) he or she is satisfied that (i) the company has ceased to carry on business;”[T.Г.4]
Section 213(1) of the BVI Business Companies Act, Revised Edition 2020


  • Offshore company fails to meet other legislative requirements such as, for instance, Economic Substance requirements or Account records keeping requirements

Starting from 2018, offshore jurisdictions have been actively implementing economic substance legislation requiring companies to annually review of their status (whether they conduct activities defined as ‘relevant’ and are required to establish economic presence in the jurisdiction) and conduct filings following the end of financial period. Failure to arrange filings or establish economic presence in the required scope can attract various negative consequences including striking off the register. An offshore company can face similar consequences in case it fails to keep accounting records, provide its registered agent with their copies and information about their location as well to prepare financial summary or statement if prescribed under the law.

“… the competent authority may, if it considers it appropriate to do so having regard to all circumstances of the case, recommend to the Commission to strike the legal entity off the Register of Companies or the Register of Limited Partnerships, as appropriate.”[T.Г.5]
Section 12(7) of the BVI Economic Substance (Companies and Limited Partnerships) Act, 2017


  • Offshore company fails to pay its renewal fees (government fee and the registered agent’s fees) or a late payment penalty

In order to be in good standing offshore companies need to pay government fee and pay for registered agent services on an annual basis (known as ‘company renewal fees’). Strike off rules depend on renewal dates which vary between jurisdictions. For example:

Belize companies, regardless of registration date, are renewed on 1st of January, and, if annual fees are not paid within the specified period, are subject to striking off on 1st of January of the following year.

BVI companies registered in the first term should be renewed by May 31st of the following year and are subject to strike off in 5 months from the renewal date if annual fees are not paid.

What happens when an offshore company is struck off the register?

  • Any assets that the company had will normally vest with the state (for instance, British Crown for BVI companies) and can be returned to the company upon its restoration to the register.
  • Since the company is not immediately dissolved after strike off, it will remain in the register for a specified amount of time (for instance, used to be 7 years for BVI companies but following latest changes now is just 90 days, 1 year for Seychelles companies) and during this time:

the company will not be able to conduct any activities, dispose of its assets, initiate proceedings;

the company and its officers will still be liable for any obligations undertaken / imposed on the company before the strike off (including annual filing requirements such as under economic substance legislation);

company’s creditors can still initiate proceedings against the company;

the company can be restored to good standing without having to apply to the court (reasons for striking off should be eliminated – e.g. annual fees paid, registered agent appointed etc).

If the company is restored to the register before it is officially dissolved, it will be considered as if the company had never been struck off the register in the first place and remained in full legal capacity throughout the whole ‘strike off’ period.

Voluntary liquidation an offshore company

Voluntary liquidation is one of official ways to terminate an offshore company. Unlike striking off which can result from omissions, voluntary liquidation is triggered by action. Payment of liquidation fees is also required and sometimes such fees could be compared to offshore company’s incorporation fees.

In order to initiate voluntary liquidation the company needs to be in good standing. To initiate voluntary liquidation, the company needs to adopt a decision to be liquidated, confirm its solvency and appoint a liquidator. Different jurisdictions provide for slightly different qualification requirements for liquidators. Most common ones would require liquidator to be an individual of full legal capacity, solvent, not disqualified to serve as a liquidator, not affiliated with the company.

Examples of other requirements / qualifications:

BVI resident with at least 2 year liquidation experience
corporate liquidators are allowed, should not be controlled by companies / individuals affiliated with a company to be liquidated

Voluntary liquidation normally is regarded as having commenced once filings to the registrar of companies are made. After informing the registrar about company’s decision to be liquidated and details of a liquidator, registrar and company are required to inform the publicity about same. Publications with liquidation notices are made in local government gazette and in a newspaper having wide circulation outside the jurisdictions of company’s registration – in the country where the company has its principal place of business. This is done in order to draw company’s creditors’ attention to the commencement of company’s liquidation. Liquidation notices contain contacts of company’s liquidator so that company’s creditors could forward their claims to the liquidator and have them settled before liquidation is finalized.

After the expiry of specified period (during which creditors can communicate their claims to company’s liquidator) assets remaining after settlement of company’s debts can be distributed to company’s shareholders as proceeds from liquidation and a notice of completion of liquidation is then filed to the registrar of companies. Notices of completion of liquidation should also be published following the issuance of Certificate of Dissolution by the registrar.

Stuck off vs Voluntary liquidation

Why engage in such a complex and costly process as voluntary liquidation if you can do nothing and have your company struck off the register? The answer is quite simple:

  1. Voluntary liquidation terminates company’s obligations and those of company’s officers (you will not receive fines for non-compliance with local laws during a period when the company is not in good standing but not yet dissolved because voluntary liquidation is final and implies no continuing liability).
  2. Any assets that the company has can be distributed as proceeds to company’s shareholders in course of voluntary liquidation rather than vest with the state following company’s striking off the register.
  3. You will receive an official document confirming that the company was successfully terminated (Certificate of Dissolution) which can be presented to banks, counterparties, local authorities in the country of your tax residency (which is essential if you previously submitted information about participation in and/or control over a foreign entity).
  4. The company can only be restored by court order and, as per common practice, such restoration will be available only in limited circumstances and will be temporary (for instance, liquidated BVI company can be restored to the status ‘in liquidation’ (which is not the same as ‘in good standing’) in order to eliminate an error made in course of company’s liquidation and will be returned to ‘dissolved’ status one the error is remedied).

[1] The list is non-exhaustive and may slightly vary depending on the jurisdiction.








[T.Г.8]Articles 80-89 of the Corporation Law of Panama Lw 32 of February 26, 1927

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