Interest in the setting up and distribution of initial coin offerings (ICOs) in the British Virgin Islands and other offshore locations has increased rapidly during 2017, and this is expected to continue. No ICO or blockchain-specific rules or guidelines have yet been issued by the government or regulator; however, there are several important issues for parties in the British Virgin Islands to consider, including the key laws and regulations surrounding the issue.
Under new anti-money laundering legislation, the list of activities classed as relevant financial businesses has been expanded. Unregulated investment funds and some insurance entities have now been given a grace period until May 31 2018 to establish anti-money laundering compliance programmes. This is a welcome move, particularly for unregulated investment funds which were not bound by the preceding regulations and therefore may not have policies and procedures in place.
Cyprus saw its highest increase in gross domestic product in almost a decade in the first quarter of 2017. The dark days of the 2013 financial crisis appear to be in the past and foreign investment remains at the heart of government strategy, aided by factors such as the citizenship-by-investment programme, which will help to attract private investment in the property, retail and pharmaceutical sectors.
The recognition of the powers of an English trustee in bankruptcy in Guernsey is generally pursued either by way of a letter of request issued by the foreign court or an application via common or customary law. A recent decision examines the position – not previously encountered in Guernsey – of an application for recognition under common law in a situation where there were already désastre proceedings in Guernsey.
The Internal Revenue Service (IRS) recently released an updated Form W-8BEN-E and Form W-8IMY. Non-US entities should use these new forms when requested to certify their status under the Foreign Account Tax Compliance Act. Among other things, the new forms clarify confusion over which global intermediary identification number should be reported for the trustee of a trustee-documented trust.
The Foundation Companies Law 2017, which recently came into force, approaches the creation of a foundation company in such a way that it may consequently be established for any lawful purpose. The foundation company shares many of its features with other types of Cayman company and fits seamlessly into the Cayman Islands' legal regime. It will therefore have the benefit of a considerable body of case law on companies.
The government recently adopted updated Anti-money Laundering Regulations. The regulations demonstrate the Cayman Islands' ongoing commitment to comply with the highest international standards on combating money laundering and terrorist financing and aim to ensure consistency with the Financial Action Task Force 2012 recommendations. The move is part of an overall update of the territory's anti-money laundering regime.
The Royal Court recently considered, for the first time in open court, the issue of whether an agreement with a third party to fund litigation would be void as a matter of Guernsey law on the basis that it was champertous. The lieutenant bailiff's judgment provides valuable guidance as to the contractual provisions that should be considered when third-party funding takes place.
The government recently enacted legislation which obliges trustees to collect, maintain and disclose information about trusts and related individuals. The information must be provided via Her Majesty's Revenue and Customs' (HMRC's) new online Trust Registration Service (TRS). As part of the regular new guidance on the practical operation of the TRS register, HMRC has released a set of frequently asked questions which deal with some areas of uncertainty.
Lawyers are often asked to review employment contracts, including post-termination restrictions. It is increasingly common to see covenants that either restrict the former employee from holding any interest in a competing business or limit the amount of shareholding that they can have. If a contract uses this language, it could lead to the entire restrictive covenant being unenforceable.
Macau was previously bestowed with an offshore regime boasting a comprehensive list of 20 offshore activities. This initially attracted many businesses, but the allure was greatly reduced after the removal of 12 activities from the list. Just as many began to believe that offshore activity was over, Macau's mandate to become a commercial and trade cooperation service platform between China and Portuguese-speaking countries came into play.
It seems that 2017 will be remembered as the year of the initial coin offering (ICO). The Cayman Islands is witnessing an upsurge in ICO-related business and structuring an ICO through the territory remains an attractive proposition. However, ICO-specific guidance is yet to be issued by the government or the regulator, and a number of legal uncertainties remain. Existing statutory and regulatory regimes must therefore be considered when structuring an ICO.
The procedure governing the reinstatement of a dissolved Jersey limited company is contained in the Companies (Jersey) Law 1991. Where a company has been dissolved or, most commonly, struck off the register by the registrar of companies after failing to file an annual return, the Royal Court has the power to declare the dissolution void and order the reinstatement of the company.
An 'investment fund' refers to any vehicle which allows investors to pool their money for investment by an investment manager in accordance with a defined investment policy. A 'listed' fund is an investment fund which has been admitted to trading and/or listing on a stock exchange. There are many reasons to establish a fund, including exposure to assets not otherwise available to single investors.
The Supreme Court recently considered whether preferential creditors have any claim against the moneys received by receiver-managers for the sale of assets subject to a charge. The court determined that a floating charge which crystallised before the making of a winding-up order takes priority over other creditors.
The ability to continue a foreign company as a BVI company or to continue a BVI company as a company under the laws of another jurisdiction quickly and seamlessly is just one example of the many flexible features of the Business Companies Act 2004. This is particularly useful in the context of corporate reorganisations, and counsel should be aware of the process and requirements for continuations and discontinuations.
The Beneficial Ownership of Legal Persons (Guernsey) Law 2017 came into force on August 15 2017. From that date, the incorporation or creation of any Guernsey entity requires details of its beneficial owner to be submitted to the Guernsey registrar of beneficial ownership of legal persons. Existing Guernsey entities must do the same by October 31 2017, with the exception of companies, which have until February 2018.
The enactment of the Trust (Amendment 6) (Jersey) Law 2013 saw Jersey introduce a statutory basis for relief to be granted for mistake in the form of Article 47E of the Trusts (Jersey) Law 1984. Although there have been a number of Royal Court decisions in this area since then, a recent decision represents the first time that the court has granted relief for mistake squarely within Article 47E.
A recent Jersey Royal Court decision provides welcome guidance with respect to Article 47 applications to vary a trust. In particular, the court considered the interplay between a settlor's wishes and the court's assessment of 'benefit', a point which it had never previously considered. The decision also examines Article 47 applications alongside public policy considerations affecting a modern society.
The deadline recently passed for legal entities to file details of beneficial ownership and control with Jersey's Companies Registry. Under the revised rules, even if there had been no change to the relevant information since incorporation, legal entities were still required to file the relevant form. While the deadline for the initial disclosure has passed, there are ongoing compliance obligations for affected entities to keep in mind.