Strike-Off and Formal Liquidation of Offshore Companies

International Business Companies, more commonly referred to as offshore companies, can be established for a wide range of purposes. However, regardless of the purpose of incorporation, there might be a point when the company is no longer needed and the owner considers terminating its operations.

The future of an offshore company is not as straightforward as that of an ordinary resident legal entity. This article examines the options available for ceasing the offshore company’s activities.

Offshore Company Status and Loss of Good Standing: What Does It Mean?

Unlike ordinary resident legal entities, offshore companies have traditionally had a limited spectrum of obligations towards the government of their jurisdiction of incorporation. For a long time, this meant a complete exemption from any tax obligations as well as from the requirement to file regular returns with government authorities.

Today, the regulatory environment for offshore companies has changed, and many jurisdictions have introduced requirements for:

• disclosure of beneficial owners;
• keeping accounting records at the office of the registered agent and filing reports;
• maintaining economic substance in the jurisdiction of incorporation.

However, one fundamental obligation remains unchanged: companies must pay a fixed annual fee to the registration authority.

Provided that the company complies with the applicable requirements and submits the necessary documents and information, it remains in good standing. In other words, it is recognised as being in compliance with its statutory obligations.

In this status, the company retains full legal capacity and may enter into transactions and conduct business in any country worldwide, subject to other applicable legal requirements, such as obtaining the necessary licences, implementing internal control procedures, and similar measures.

Failure to pay the annual fee or fulfil other obligations results in the loss of good standing. This is also reflected in the companies register, where the company’s status changes to “not in good standing”. The consequences of losing good standing are as follows:

• penalties are imposed on the outstanding annual fee, with the amount increasing as the delay continues;
• the company cannot obtain a Certificate of Good Standing and therefore cannot confirm its status to a bank or counterparties;
• the company’s legal capacity may be restricted;
• the registered agent may suspend or terminate its services to the company;
• the company cannot carry out notarial acts, such as granting a power of attorney.

If the fee is not paid by the statutory deadline, the offshore company is struck off the register.

Strike-Off (Removal) of a Company from the Register

Strike-off is a lawful means of terminating a company’s existence. As a rule, it does not give rise to additional liability for the company’s directors or shareholders. Nor does it discharge them from obligations that have already arisen.

The grounds for strike-off are largely similar across offshore jurisdictions. Most commonly, it results from:

• non-payment of the annual fee,
• failure to file mandatory returns, or
• breach of other statutory requirements.

The specific grounds are considered below by reference to selected jurisdictions.

Company Struck Off the Register: Consequences

Once a company has been struck off the register, it loses the right to carry on any business activity. Its former directors and shareholders may not:

• conduct business or deal with the company’s assets;
• commence new legal proceedings on behalf of the company;
• take any other action in respect of the company, other than applying to restore the company to the register.

However, the company’s officers and shareholders may continue to defend the company’s interests in court in proceedings commenced before the date of strike-off.

Strike-off does not release the company, its officers, or its shareholders from their obligations to creditors. In particular, a creditor may bring a claim and take legal action to protect its interests. Government authorities may also make claims against the company in accordance with the law of the jurisdiction.

The company remains liable to pay all fees and penalties accrued before the date of strike-off.

In addition, a number of jurisdictions provide that, upon the company’s dissolution, any assets remaining on its balance sheet that have not been distributed among shareholders are transferred to the State. A claim to recover such assets can be made only under certain conditions.

Restoring an Offshore Company to the Register

The laws of offshore jurisdictions allow restoration of a struck-off company to the register. This mechanism exists, among other reasons, so that creditors and other interested parties can bring claims against a company that has ceased to exist without having fulfilled its obligations towards them.

The procedure for restoring an offshore company to the register is as follows:

Administrative Procedure	Judicial Procedure
By application to the Registrar of Companies. The company must pay the restoration fee and all accrued penalties, and comply with any other obligations imposed by law.	Applies where the administrative procedure is unavailable, for example where the company has been struck off for fraudulent activity or has been voluntarily wound up. The company must likewise pay all outstanding penalties and comply with any other obligations.

In practice, the judicial procedure is rarely used, so we discuss the administrative procedure for restoring a company in more detail below.

As a rule, in addition to paying fees and accrued penalties, the company must confirm its compliance with the obligations in respect of:

• keeping accounting records and maintaining supporting documents;
• maintaining registers of directors, members, and beneficial owners.

The company must also have a registered agent to deal with the Registrar on its behalf.

The persons entitled to apply for restoration, and the time limits for filing this application, vary depending on the jurisdiction and the restoration procedure.

A restored company is treated as if it had never been struck off the register. For the company’s owner, this means that all of the company’s own obligations, together with the owner’s duties related to the company, are restored and continue to apply for the entire period of the company’s existence.

The following sections examine the mechanism of strike-off and restoration in the most popular offshore jurisdictions:

• the British Virgin Islands (BVI),
• Seychelles, and
• Belize.

Strike-Off of Companies in the BVI

Companies in the British Virgin Islands are governed by the BVI Business Companies Act 2004, as amended. The 2022 amendments to the BVI Business Companies Act, as well as later amendments made in 2024, are most relevant for strike-off.

Grounds for Strike-Off

The deadlines for payment of the fixed annual fee in the BVI, as well as the deadlines for the accrual of penalties and for striking a company off the register, depend on the company’s incorporation date. They differ for companies incorporated:

• from 1 January to 30 June; and
• from 1 July to 31 December.

Companies incorporated from 1 January to 30 June

Event	Deadline
Annual fee due date	31 May, starting from the company’s second year
10% penalty	Payment between 1 June and 31 July
50% penalty	Payment between 1 August and 31 October
Strike-off	From 1 November

Companies incorporated from 1 July to 31 December

Event	Deadline
Annual fee due date	30 November, starting from the company’s second year
10% penalty	Payment between 1 December and 31 January
50% penalty	Payment between 1 February and 30 April
Strike-off	From 1 May

In addition to non-payment of the annual fee, the grounds for striking a BVI company off the register include:

• absence of a registered agent;
• failure to file mandatory returns, notices or other documents;
• failure to pay other accrued penalties;
• cessation of business;
• carrying on business without the required licence, or revocation of a licence.

Before striking a company off the register, the Registrar sends the company a notice and sets a period of no more than 90 days for the company to submit reasoned objections to the strike-off. The Registrar also publishes a notice of its intention to strike the company off in the official gazette. The company is struck off on the date specified in the notice, provided no valid objections are received.

Previously, a struck-off company retained that status for a certain period and was treated as dissolved only upon its expiry. With effect from 1 January 2023, a struck-off company is deemed to be dissolved from the date of its strike-off from the register.

The Procedure for Restoring a Company

A BVI company may be restored to the register within five years of the date of its dissolution, either by the administrative or judicial procedure.

It is possible to restore the company by filing an application to the Registrar, if:

• the company was carrying on business on the date it was struck off;
• the company has a registered agent that has filed a declaration confirming that the company’s records have been, or will be, brought up to date;
• the BVI Financial Secretary has consented to the recovery of the company’s assets (if they have been transferred to the State), or no response has been received from the Financial Secretary within the prescribed period;
• the registers of members and directors have been filed (or an undertaking has been given to file them within 14 days after restoration);
• the restoration fee and all outstanding amounts have been paid;
• the Registrar considers restoration to be fair and reasonable.

Applications to the Registrar may be made by:

• the company,
• a creditor,
• a member, or
• the company’s liquidator.

It is expressly provided that neither a current nor a former registered agent of the company may file such an application.

Strike-Off of Companies in Seychelles

Strike-off of companies in Seychelles is governed by the International Business Companies Act 2016, as amended. Of particular importance are the amendments to the Seychelles IBC Act, which came into force in December 2024, as well as later amendments made in 2025.

Grounds for Strike-Off

Starting from the second year after the registration of an offshore company in Seychelles, an annual fee must be paid no later than the anniversary of the company’s incorporation. Failure to pay results in the following penalties:

• 10% of the amount payable, if the fee is paid within 90 days of the due date; or
• 50%, if the fee is paid later.

According to the new strike-off rules in Seychelles, if a company fails to pay the annual fee within 180 days after the due date, it will be struck off the register on the following day, that is on the 181st day. A struck-off company is deemed to be dissolved from the date of its striking off from the register.

Apart from the failure to pay the fee, the Registrar may strike a company off the register if it:

• has ceased business;
• is being used for fraudulent purposes;
• damages the reputation of Seychelles as a financial centre;
• carries on business in Seychelles in breach of the prescribed restrictions;
• fails to file mandatory documents, including annual returns, or fails to respond to requests from government authorities;
• fails to maintain registers of directors, members and beneficial owners;
• fails to keep accounting records;
• does not have a licensed registered agent;
• does not have the required number of directors; or
• fails to pay other penalties imposed by the Registrar.

In all cases other than failure to pay the annual fee, the Registrar notifies the company of the proposed strike-off and gives it 30 days to submit objections. If no objections are received by the end of that 30-day period, the Registrar publishes a notice of its intention to strike the company off in the official gazette. The company may be struck off only after the expiry of the 60-day period from the date of publishing that notice.

Restoration Procedure

It remains possible to restore a Seychelles company to the register. An application can be made by either the judicial or the administrative procedure, within five years of the date of strike-off or dissolution. Once this period has expired, restoration is no longer possible.

The following persons may apply to the Registrar:

• a creditor;
• a member, including a former member;
• a director, including a former director; and
• the company’s liquidator, including a former liquidator.

To restore the company, the Registrar must be satisfied that:

• the company complies with the statutory requirements in respect of accounting records and the keeping of registers of members and directors;
• the company complies with the requirements in respect of the register of beneficial owners;
• there is no adverse information about the company or its beneficial owners.

Strike-Off of Companies in Belize

The rules on strike-off are set out in the Belize Companies Act 2022, as amended. Of relevance in this regard are the 2025 amendments to the Belize Companies Act.

Grounds for Strike-Off

Belize offshore companies pay the annual fee in advance: regardless of the date of incorporation, the fee is payable by 31 July (inclusive) each year.

Penalties accrue from 1 August:

• 10% if the fee is paid by 31 October (inclusive),
• 50% if the fee is paid by 31 December (inclusive).

If the annual fee is not paid by these deadlines, the company is struck off the register with effect from 1 January of the following calendar year.

Additional grounds for strike-off include:

• absence of a registered agent;
• failure to file mandatory returns, notices or other documents;
• cessation of business; or
• carrying on business without a licence.

The Registrar gives companies 30 days to submit objections to the strike-off, except where the ground for strike-off is the failure to pay the fee.

Unlike Seychelles and the BVI, Belize retains a five-year period during which a company may remain struck off until it is formally dissolved. In that case, the date of dissolution is the last day of that period.

Restoration Procedure

The procedure for restoring a company in Belize differs for:

• companies that have been struck off but not yet dissolved; and
• dissolved companies.

Until a company is dissolved, restoration is carried out by the Registrar. An application may be made, within five years of the date of strike-off, by:

• the company,
• a creditor,
• a member, or
• a liquidator.

The company must pay the restoration fee as well as all outstanding penalties and annual fees. In addition, before restoring the company, the Registrar must be satisfied that:

• the company has a registered agent; and
• restoring the company would be fair and reasonable.

For companies in Belize that have already been dissolved, the 2025 amendments introduced both an administrative and a judicial restoration procedure. The range of persons who may file such an application is narrow and identical for both procedures:

• a former member of the company;
• a creditor, liquidator or official receiver; and
• the Attorney General.

An application for administrative restoration must be made within ten years of the date of the company’s dissolution. The company must pay the restoration fee, together with all outstanding fees and penalties.

The Registrar restores the company if it is satisfied that:

• the company has a registered agent;
• restoration of the company would be fair and reasonable;
• the procedures for recovering the company’s assets that have been transferred to the State have been complied with;
• the applicant has filed updated registers of directors, members and beneficial owners of the company.

Formal Liquidation of an Offshore Company

How Liquidation Differs from Strike-Off

In addition to strike-off followed by dissolution, traditional offshore jurisdictions provide for a procedure for the formal liquidation of an offshore company. This refers specifically to the voluntary liquidation of a solvent company. Liquidation on grounds of insolvency (bankruptcy) is a separate procedure governed by specialised legislation.

Liquidation also results in the dissolution of the company. However, unlike strike-off, once liquidation is complete, the liability of directors and members for the company’s obligations ceases. A liquidated company can be restored only in special cases, by a court order. Liquidation therefore provides greater certainty and reduces the risk of the company’s restoration, although it does not eliminate that risk entirely.

Main Stages of Voluntary Liquidation

The legislation of the popular offshore jurisdictions is virtually identical as regards the general procedure for voluntary liquidation. The main stages of the procedure are examined below, using the liquidation of an offshore company in the BVI as an example:

Stage	Explanation
Preparing the documents	The company’s directors prepare a declaration of solvency and approve a plan of liquidation setting out, among other things, the reasons for liquidation, its expected duration and the name of the liquidator.
Commencement of liquidation	Liquidation commences on the day when the notice of appointment of the liquidator, together with the supporting documents, is filed with the Registrar. From that moment, the liquidator takes control over the company and its assets, and the powers of directors cease.
Publication of notices	A notice of the appointment of the liquidator must be published within 30 days of the commencement of liquidation.
Settlement and distribution of assets	The liquidator is vested with the powers and duties needed to discharge the company’s obligations, close its bank account and distribute the remaining assets among the members.
Completion of liquidation	Once the liquidation is complete, the liquidator files a notice to that effect with the Registrar. On receipt of the notice, the Registrar removes the company from the register and issues a certificate of dissolution confirming the formal liquidation of the company.

Consequences of Strike-Off and Liquidation of Offshore Companies for CFC Owners

In countries that have controlled foreign company (CFC) rules, controlling persons must report their ownership interests in and control over foreign entities to the tax authorities.

These obligations continue for as long as the company is treated as existing, regardless of whether it carries on business or has any income, and end on the date the person ceases to hold an interest in the company. In practice, the person ceases to hold an interest in the company where:

• the company is closed through formal liquidation; or
• the company that has been struck off the register is dissolved from the date of strike-off (as in the BVI and Seychelles).

If a company that has been struck off the register continues to exist as a legal entity (as, for example, in Belize), the tax authority still treats it as an existing one. This means that all obligations of controlling persons as regards that company continue to apply, and failure to comply with them will result in penalties.

Therefore, when deciding the future of a company, it is important to bear in mind the possible tax consequences.

Comparison of Strike-Off and Liquidation

For convenience, the main differences between strike-off and liquidation are set out in the table below:

Strike-Off	Voluntary Liquidation
Initiated by the Registrar, usually because of the failure to pay the fee or breach of statutory requirements.	Initiated by the company’s owners.
No special procedure is required.	The relevant stages must be completed.
No liquidator is appointed.	A liquidator must be appointed.
No settlement with creditors takes place, and the obligations remain.	Obligations are discharged and creditors are paid.
The company may be restored by the administrative or judicial procedure within the established period.	As a rule, restoration is possible only through the judicial procedure, and only on serious grounds.
CFC obligations (if any) continue if the company continues to exist as a legal entity.	CFC obligations end on the date the company is removed from the register (the tax authority must be notified within the established period).
Suitable where the company has no assets, debts, outstanding obligations or pending disputes.	Suitable where the company has assets or obligations, and for reducing uncertainty for its owners.

What to Check Before Closing a Company

Regardless of how a company’s operations are brought to an end, it is advisable to prepare in advance, while the company is still in good standing.

Above all, it is necessary to ensure that the company has no outstanding obligations or unpaid amounts that could serve as grounds for its restoration.

The bank account must be closed and the company’s assets distributed, as in a number of jurisdictions they would otherwise pass to the State. In addition, in some cases it is important to be able to obtain documents confirming the date on which the company was closed.