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Harneys is a leading international offshore law firm. We provide the world’s top law firms, financial institutions and corporations with legal services relating to British Virgin Islands, Cayman Islands, Cyprus, Anguilla and Bermuda law (provided through Harneys’ exclusive association with Zuill & Co which is an independently owned and controlled Bermudian law firm).

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Updates

Arbitration & ADR

Court appoints receiver under Arbitration Act to preserve assets pending arbitration award
British Virgin Islands | 11 October 2018

A BVI court has appointed Grant Thornton as a receiver over a BVI company under Section 43 of the Arbitration Act 2013 in order to preserve the value of the company pending the determination of foreign arbitration proceedings. The decision illustrates the effectiveness of the interim relief provided under the Arbitration Act to preserve assets against which an arbitration award will be enforced.

Company & Commercial

Are you wearing the right hat? Directors' duties revisited by Court of Appeal
British Virgin Islands | 29 October 2018

The Court of Appeal judgment in Antow Holdings Limited v Best Nation Investments Limited continues the development of the law regarding BVI directors' duties following the Independent Asset Management appeal, which established – for the first time in the British Virgin Islands – clear guidance regarding the proper purpose test. The decision is arguably at the extreme end of the spectrum, with the court describing the motives of the Best Nation directors as self-serving.

Court of Appeal provides guidance on directors' powers
British Virgin Islands | 22 January 2018

A recent Court of Appeal ruling provided guidance on directors' powers after considering whether a fresh issuance of shares by directors which altered the balance of voting power between the shareholders was done for a proper purpose. The court held that directors should not issue shares in a manner that could affect the balance of power between groups of shareholders or create new majorities, irrespective of whether the old or new majority have a proprietary interest in the fund.

BVI continuations and discontinuations – an overview
British Virgin Islands | 23 October 2017

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 feature is particularly useful in the context of corporate reorganisations, and counsel should be aware of the process and requirements for continuations and discontinuations.

Insolvency & Restructuring

Pacific Andes saga: forum shopping, Chapter 11 and just and equitable winding up
British Virgin Islands | 01 September 2017

'Forum shopping' is the practice of choosing the most favourable jurisdiction in which to bring a claim. In principle, there is nothing wrong in seeking to have a case heard in the forum which is most favourable to the client. However, it can lead to some fierce jurisdictional battles, particularly in insolvency, where the choice between debtor and creditor-friendly procedures can be stark. The Commercial Court has been wrestling with this situation over the past 10 months.

Litigation

Singapore and BVI courts cooperate against cross-border fraud
British Virgin Islands | 14 August 2018

The Singapore Court of Appeal recently ruled to reinstate and expand a Mareva injunction against fraudster defendants in a conspiracy claim, providing strong support for an earlier decision of the BVI Commercial Court in related proceedings. The decision demonstrates the importance of consistency between courts in multiple jurisdictions in complex cross-border cases.

Trusts and disclosure: a recent lesson
British Virgin Islands | 31 July 2018

A recent BVI decision highlights the need for trustees to think carefully and, if in doubt, take advice before refusing an information request from a beneficiary. The consequences of getting this wrong (not least in potential personal cost exposure for the trustee) can be severe.

Freezing injunction: what is a good arguable case?
British Virgin Islands | 26 June 2018

The BVI Commercial Court has provided helpful guidance as to the threshold for a good arguable case, dismissing an application to discharge a worldwide freezing injunction obtained by a claimant. The court held that where there is a good arguable case that a defendant has acted fraudulently or dishonestly, or with "unacceptable low standards of morality giving rise to a feeling of uneasiness about the defendant", further evidence is often unnecessary to justify a freezing injunction.

Private Client & Offshore Services

Taking charge: Commercial Court delivers judgment on its jurisdiction to grant charging orders
British Virgin Islands | 06 June 2019

The Commercial Court recently confirmed that the BVI courts have jurisdiction to grant charging orders. Charging orders are a critically important tool, particularly when enforcing foreign judgments, as they allow creditors to take a proprietary interest over assets owned by a debtor and can ultimately facilitate the sale of such assets to allow creditors to realise their debts.

Scope of disclosure orders and contempt of court
British Virgin Islands | 30 May 2019

A BVI court recently considered a contempt application seeking further disclosure by way of an 'unless' order and whether cross-examination of the respondents should be ordered to determine the issue of contempt. This decision highlights the exceptional nature of cross-examination orders and the high standard of proof required for contempt orders.

Relief all round – Court of Appeal upholds relief from sanction
British Virgin Islands | 02 May 2019

The BVI Court of Appeal recently denied an appellant declaratory relief and upheld the respondents' relief from sanction, as granted by the lower court. While this judgment will inevitably provide some comfort to those that find themselves facing sanctions having inadvertently failed to comply with a rule, practice direction or order, it is a timely reminder for everyone that it is better to remain vigilant and compliant than to rely on the court's jurisdiction to grant relief from sanction.

No more second chances: Court of Appeal guidance on strike out
British Virgin Islands | 25 April 2019

The Court of Appeal recently clarified the procedural considerations required following the strike out of an action pursuant to Civil Procedure Rule 26.3. All three of the appellants' procedural grounds of appeal were rejected by the court, which held that (among other things) a judge must give a party which has a defective pleading an opportunity to put right any defect.

Misplaced trust – what happens when your trustee goes AWOL?
British Virgin Islands | 04 April 2019

In a recent case, an applicant succeeded in the increasingly commonplace but frustrating situation where the beneficiary of a revocable bare trust cannot obtain execution of the trust due to an uncooperative or defunct corporate nominee. The court ultimately granted the vesting order sought by the beneficial owner and appointed an insolvency practitioner as the statutory proper person.

Commercial Court provides welcome guidance on Norwich Pharmacal relief in aid of foreign proceedings
British Virgin Islands | 21 March 2019

In a recent ex tempore judgment, the BVI Commercial Court's power to grant Norwich Pharmacal disclosure orders in support of foreign proceedings was clarified. The judgment was given on a successful application for Norwich Pharmacal relief to assist Brazilian clients in bringing claims for the recovery of misappropriated assets. The decision confirms the British Virgin Islands as a particularly helpful jurisdiction in the fight against international fraud and the recovery of misappropriated assets.

This is not a wind up: BVI court approves restructuring provisional liquidation
British Virgin Islands | 14 March 2019

In a major development in BVI insolvency law and practice, the Commercial Court recently held that provisional liquidation is available to facilitate a restructuring. The objective of a restructuring provisional liquidation is to provide a better outcome for creditors than would be likely on a winding up. The Commercial Court's decision will certainly influence the current debate in the British Virgin Islands regarding insolvency legislation reforms.

Reverse engineering: Court of Appeal in rare reversal of findings of fact
British Virgin Islands | 29 November 2018

The BVI Court of Appeal recently considered the scope of its jurisdiction to interfere with findings of fact made at first instance. This is the second time in 2018 that the court has addressed this issue. While the threshold for intervention is high, the court will intervene on appropriate occasions. The thoroughness of the evaluation of evidence and the credibility of the judge's conclusions at first instance are likely to be pivotal to that determination.

Receivers – gateway to unlocking disabled bearer shares
British Virgin Islands | 08 November 2018

In two recent BVI Court of Appeal decisions, disabled bearer shareholders were found to have a constitutional right not to be deprived of their property without compensation. It is now abundantly clear that even where BVI disabled bearer share companies are still without functionaries (ie, directors) to facilitate the traditional redemption of those shares, the court has flexible jurisdiction to appoint receivers to redeem those disabled shares, thereby ultimately restoring the companies to a functional state.

Are you wearing the right hat? Directors' duties revisited by Court of Appeal
British Virgin Islands | 25 October 2018

The Court of Appeal judgment in Antow Holdings Limited v Best Nation Investments Limited continues the development of the law regarding BVI directors' duties following the Independent Asset Management appeal, which established – for the first time in the British Virgin Islands – clear guidance regarding the proper purpose test. The decision is arguably at the extreme end of the spectrum, with the court describing the motives of the Best Nation directors as self-serving.

Think before you blink: court halts cross-border requests without consideration
British Virgin Islands | 18 October 2018

The BVI courts have again stepped in to ensure that proper thought and process is applied to requests made by foreign governmental bodies. In the first case of its kind to successfully challenge the exercise of the attorney general's powers under the Criminal Justice (International Cooperation) Act, the BVI High Court held that the attorney general is required to do more than rubber stamp the requests received under the act.

Court appoints receiver under Arbitration Act to preserve assets pending arbitration award
British Virgin Islands | 11 October 2018

A BVI court has appointed Grant Thornton as a receiver over a BVI company under Section 43 of the Arbitration Act 2013 in order to preserve the value of the company pending the determination of foreign arbitration proceedings. The decision illustrates the effectiveness of the interim relief provided under the Arbitration Act to preserve assets against which an arbitration award will be enforced.

Stanford v Akers: asking a BVI court to reverse a liquidator's decision
British Virgin Islands | 04 October 2018

In a recent case, the BVI Court of Appeal addressed standing in the context of applications under Section 273 of the Insolvency Act 2003, whereby an aggrieved person can ask the courts to reverse or vary a liquidator's decision. The court held that, as a shareholder of a company in liquidation, the appellant was an outsider to the liquidation who had no legitimate interest that entitled him to standing under Section 273.

Revisiting costs awards – BVI Court of Appeal varies costs order based on US appeal decision
British Virgin Islands | 20 September 2018

In Fairfield Sentry Limited (In Liquidation) v Farnum Place LLC the BVI Court of Appeal varied a costs order based on a material change of circumstances – namely, a decision of the US Court of Appeals for the Second Circuit. The BVI court held that the US decision was a "material change of circumstances" which allowed it to vary the costs award by disallowing the costs of Farnum's expert.

Appointing liquidators after alleged loss of substratum
British Virgin Islands | 06 September 2018

The Court of Appeal recently considered the test for appointing liquidators to a company following an alleged loss of substratum. The case provides insight on the principles of loss of substratum, particularly in a case where a company's object is not prescribed by its memorandum and articles of association.

Discretionary beneficiaries' rights to trust information
British Virgin Islands | 30 August 2018

In separate but related proceedings, the BVI courts have permitted an applicant to inspect documentation relating to the liquidation of certain BVI companies. The decisions solidify the open justice policy and highlight the importance of allowing beneficiaries to oversee trustees' activities in order to ensure that the trust property is properly managed and that trustees can be held to account accordingly.

Singapore and BVI courts cooperate against cross-border fraud
British Virgin Islands | 16 August 2018

The Singapore Court of Appeal recently ruled to reinstate and expand a Mareva injunction against fraudster defendants in a conspiracy claim, providing strong support for an earlier decision of the BVI Commercial Court in related proceedings. The decision demonstrates the importance of consistency between courts in multiple jurisdictions in complex cross-border cases.

Court of Appeal reaffirms that it will rarely reverse findings of fact
British Virgin Islands | 09 August 2018

The BVI Court of Appeal recently dismissed an appeal against the liquidators of BVI company Pioneer Freight Futures Company Limited and reaffirmed the established law regarding reversing findings of fact. The court held that it will intervene only in rare cases, such as when there is no evidence to support the conclusion, the conclusion was based on a misunderstanding of the evidence or the conclusion was one that no reasonable judge could have reached.

Trusts and disclosure: a recent lesson
British Virgin Islands | 02 August 2018

A recent BVI decision highlights the need for trustees to think carefully and, if in doubt, take advice before refusing an information request from a beneficiary. The consequences of getting this wrong (not least in potential personal cost exposure for the trustee) can be severe.

Sixtieth anniversary of New York Convention – time to choose BVI arbitration and enforcement
British Virgin Islands | 05 July 2018

The British Virgin Islands is a pro-arbitration jurisdiction. Under the Arbitration Act, with regard to both New York Convention awards and non-New York Convention awards, the party against which the award has been made can make representation to the court regarding a refusal to enforce. An example of the British Virgin Islands' pro-enforcement approach can be seen in Belport Development Limited v Chimichanga Corporation.

Freezing injunction: what is a good arguable case?
British Virgin Islands | 21 June 2018

The BVI Commercial Court has provided helpful guidance as to the threshold for a good arguable case, dismissing an application to discharge a worldwide freezing injunction obtained by a claimant. The court held that where there is a good arguable case that a defendant has acted fraudulently or dishonestly, or with "unacceptable low standards of morality giving rise to a feeling of uneasiness about the defendant", further evidence is often unnecessary to justify a freezing injunction.

Avoiding evasion: court takes pragmatic approach to serving uncooperative defendants abroad
British Virgin Islands | 14 June 2018

International litigation and asset recovery require the pursuit of defendants and their assets across borders; therefore, it is a routine aspect of BVI litigation for claimants to serve legal documents abroad. Two recent decisions should significantly decrease the delay in effecting service abroad and pave the way for a more efficient approach to service out in the future.

No armchair liquidators – court confirms appointment of provisional liquidators to Swiss company
British Virgin Islands | 07 June 2018

In the latest judgment regarding the DPH liquidation, the BVI Court of Appeal upheld the appointment of BVI provisional liquidators in respect of a Swiss company and clarified that evidence of dissipation of assets (in the Mareva sense) may not be a pre-condition to the appointment of provisional liquidators.

Procedure for appeal counter notice clarified – it is a parasite
British Virgin Islands | 31 May 2018

A recent BVI Court of Appeal judgment was issued on a point rarely taken: is leave required to file a counter notice to an existing appeal? The full court found that once an appeal has been commenced with leave, the court's jurisdiction is engaged and the party wishing to cross-appeal may do so by counter notice without bringing a separate leave application. The court described a counter notice as being by its nature "parasitical on a pending appeal".

Tick, tock – the need to keep an eye on the clock in liquidator applications
British Virgin Islands | 24 May 2018

A recent Court of Appeal decision serves as a useful reminder to keep an eye on the clock when seeking the appointment of liquidators to a company in the British Virgin Islands. The decision makes clear that any extension must be expressly granted and legal practitioners must therefore keep an eye on the clock to avoid a deemed dismissal under Section 168 of the Insolvency Act.

Court strikes out passing-off claim in relation to goodwill held outside British Virgin Islands
British Virgin Islands | 17 May 2018

Claims of passing off are rare in the British Virgin Islands and a recent attempt to bring a BVI action in relation to goodwill held outside the jurisdiction has failed. The court examined the law and relevant English authorities on the tort of passing off. It opined that goodwill is governed by territoriality and that in order to succeed, the claimant must prove that it has goodwill in the form of customers in the jurisdiction in which the suit is undertaken.

Substance of Aldi principles apply in British Virgin Islands
British Virgin Islands | 19 April 2018

The Commercial Division of the BVI Court has granted a strike out application on the grounds that the Aldi Stores Ltd v WSP Group plc principles – whereby a party which intends to bring a subsequent action against existing parties must raise the issue with the court – apply in the British Virgin Islands. It held that while the principles may not have been promulgated in this jurisdiction, litigants must put their cards on the table at an early stage or risk being held to have abused the court's process.

Tax information exchange: an overview
British Virgin Islands | 25 January 2018

The BVI tax information exchange system is largely modelled on international principles developed by the Organisation for Economic Cooperation and Development and is split into two types of regime. The 'automatic' exchange of information regime requires financial institutions to exchange formulistic data about the accounts of foreign taxpayers, while the 'on request' regime deals with specific and potentially in-depth investigations into the affairs of named taxpayers with offshore or international holdings.

Court of Appeal provides guidance on directors' powers
British Virgin Islands | 18 January 2018

A recent Court of Appeal ruling provided guidance on directors' powers after considering whether a fresh issuance of shares by directors which altered the balance of voting power between the shareholders was done for a proper purpose. The court held that directors should not issue shares in a manner that could affect the balance of power between groups of shareholders or create new majorities, irrespective of whether the old or new majority have a proprietary interest in the fund.

Launching an ICO in British Virgin Islands
British Virgin Islands | 14 December 2017

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.

BVI continuations and discontinuations – an overview
British Virgin Islands | 26 October 2017

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.

BVI exempts certain categories of people from work permit requirements
British Virgin Islands | 07 September 2017

The government recently enacted the Labour Code (Work Permit Exemption) Order 2017, which excludes certain categories of people from the need to obtain work permits. In particular, the exemption for directors visiting the British Virgin Islands for board meetings supports the territory's position as the leading corporate domicile in the global economy.

Pacific Andes saga: forum shopping, Chapter 11 and just and equitable winding up
British Virgin Islands | 31 August 2017

'Forum shopping' is the practice of choosing the most favourable jurisdiction in which to bring a claim. In principle, there is nothing wrong in seeking to have a case heard in the forum which is most favourable to the client. However, it can lead to some fierce jurisdictional battles, particularly in insolvency, where the choice between debtor and creditor-friendly procedures can be stark. The Commercial Court has been wrestling with this situation over the past 10 months.

Shareholder activism: considerations for BVI companies
British Virgin Islands | 24 August 2017

As the world's leading incorporation vehicles, BVI companies are listed on exchanges and conduct business around the world and may therefore expect to be occasionally involved in activist campaigns or other challenges from shareholders. However, many investors and their advisers may be less familiar with BVI company law than their domestic legislation.

Government raises charter cruising permit fees
British Virgin Islands | 17 August 2017

The government recently enacted two measures regarding the cruising permit fees that each charter boat must pay while carrying paying passengers in the British Virgin Islands. Under the Cruising Permit (Amendment) Act, boats will now be classified as either home-based or foreign-based charter boats, with set fees for each classification. The Statutory Rates, Fees and Charges (Amendment of Schedule) Order 2017 confirms these fees for internal government purposes.

Legislation to change work permit fee calculation enacted
British Virgin Islands | 10 August 2017

The government recently enacted a measure regarding the fees payable for work permits in the British Virgin Islands. The amendment order replaces the employee flat fee system with an incremental calculation based on salary bands, which now generally assume a higher gross salary. It also replaces most exceptions to the previous scheme, keeping only those for domestic workers.

New beneficial ownership regime takes effect
British Virgin Islands | 03 August 2017

The British Virgin Islands has enacted legislation to implement a networked database of beneficial ownership interests in companies incorporated or domiciled in the jurisdiction. The Beneficial Ownership Secure Search System aims to ensure that the British Virgin Islands can comply with its obligations under the UK Exchange of Notes Agreement, which modernises the way in which BVI competent authorities may gain access to beneficial ownership information of BVI companies.

Getting financial services licensees in shape for the Caribbean FATF inspection
British Virgin Islands | 20 July 2017

The British Virgin Islands is expected to undergo its fourth round of mutual evaluation by the Caribbean Financial Action Task Force in 2018, based on the Financial Action Task Force's International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation. In preparation, the Financial Services Commission has commenced a preliminary exercise to ensure that relevant persons have complied with the international standards requirements.

FSC signs multilateral memorandum with GIFCS
British Virgin Islands | 13 July 2017

The BVI Financial Services Commission recently signed a multilateral memorandum of understanding between members of the Group of International Financial Centre Supervisors. The objective of the memorandum is to ensure clarity and effective regulatory cooperation between the authorities responsible for supervising the banking sector in signatory jurisdictions.

Guidelines adopted for communication and cooperation between courts
British Virgin Islands | 29 June 2017

The British Virgin Islands recently adopted new guidelines for communication and cooperation between courts in cross-border insolvency matters. The guidelines are designed primarily to enhance communication between courts, insolvency representatives and other parties in the context of global restructurings and insolvency. As a result of the increased efficiency, it is hoped that stakeholders will see a reduction in delays and costs.

New law gives FSC discretion to restrict publication of enforcement actions
British Virgin Islands | 08 June 2017

The Financial Services Commission Act 2001 was recently amended. The key revisions relate to the routine publication of fines and penalties levied by the Financial Services Commission (FSC). For example, the FSC now has the discretion to determine the types of case where publication of the enforcement may be restricted.

Latin America focus: litigating trusts disputes in the British Virgin Islands
British Virgin Islands | 04 May 2017

The British Virgin Islands has long been hailed as a leading offshore jurisdiction for wealth management and asset protection among Latin American high-net-worth families and individuals. The outcome in a recent case augments the credibility of the British Virgin Islands as a jurisdiction in this regard. The case also highlights the strengths of the BVI-only Virgin Islands Special Trust Act trust structure.

Amended anti-money laundering and terrorist financing code gazetted
British Virgin Islands | 27 April 2017

Schedule 2 of the Anti-money Laundering and Terrorist Financing Code of Practice 2008 sets out a list of jurisdictions with laws and regulations similar to those of the British Virgin Islands. The principal advantage of relying on Schedule 2 is that business coming from recognised jurisdictions will generally attract the application of reduced client due diligence measures.

Government introduces bill to establish ITA as a statutory body
British Virgin Islands | 02 March 2017

New legislative proposals aim to establish the BVI International Tax Authority (ITA) as a fully fledged independent government institution, giving it autonomy over the performance of its functions. Key features of the bill include the implementation of a board of directors and the provision of immunity to the ITA and its officers from suit in relation to the performance of their functions, duties and powers.

Government increases taxes on tobacco, alcohol and hotel accommodation
British Virgin Islands | 02 February 2017

The government recently enacted two revenue-increasing measures: the Customs Management and Duties (Amendment of Schedule 4) Order 2016 and the Hotel Accommodation (Taxation) (Amendment) Act 2016. The order raises the duty on alcohol and tobacco, while the act seeks to increase the existing hotel accommodation tax to bring the British Virgin Islands into line with other premier holiday destinations in the Caribbean, although the rate is still less than that in many US destinations.

Commercial Court appoints three new judges
British Virgin Islands | 26 January 2017

There have recently been three judicial appointments to the Commercial Court designed to increase the capacity of the court in 2017. The appointments should provide further momentum and expertise to the BVI Commercial Division and enhance the court's ability to deal with complex cases promptly and effectively.

FSC issues new guidelines on money services business
British Virgin Islands | 12 January 2017

The Financial Services Commission recently published a guide to ensure that money service business providers and the wider industry are protected by helping to sensitise various stakeholders on matters surrounding money laundering, terrorist financing and other forms of financial crime. The guide touches on customer due diligence, the implementation of internal controls, suspicious activity reports and record keeping, and outlines relevant legislation.

Widening the net: court expands post-judgment Norwich Pharmacal jurisdiction
British Virgin Islands | 08 December 2016

A BVI court recently issued an important judgment in relation to the obligations of a registered agent to provide third-party disclosure to assist a foreign judgment creditor to trace assets. The court held that Norwich Pharmacal relief post-judgment in aid of enforcement is, in principle, available where there is reasonable suspicion that a disclosure defendant is involved in the wilful evasion of another's judgment debt and to assist in securing compliance with freezing orders, both domestic and foreign.

New guidance notes on CRS requirements released
British Virgin Islands | 01 December 2016

The British Virgin Islands has released guidance notes on the requirements of the Common Reporting Standards (CRS) as implemented in the British Virgin Islands. This is welcome news as, until now, there has been no BVI-specific guidance. The additional guidance has provided certainty on some key points, as well as a wealth of commentary and guidance on the specific interpretation of the CRS.

An unusual choice? BVI restricted purposes company
British Virgin Islands | 17 November 2016

Restricted purposes companies offer certain advantages and are a valuable facet of the British Virgin Island's offerings to international finance. While restricted purposes companies are intentionally niche and specialised, they prove that there remains a place in the contemporary legal world for more traditional principles of common law, such as restricted purposes and constructive notice.

Green light for liquidators to draw interim payments without fee approval
British Virgin Islands | 10 November 2016

The BVI Commercial Court recently clarified whether the BVI Insolvency Act 2003 provides a basis for liquidators to draw fees on account before having formal approval from either a creditors' committee or the court. The court also specifically provided that newly appointed liquidators can draw payments of up to 80% on account of their reasonable remuneration and expenses on an interim basis without the need to obtain prior approval from the creditors' committee or the court.

Five questions lenders should ask before contracting with BVI counterparties
British Virgin Islands | 03 November 2016

Lenders of BVI contracting parties are often concerned with whether the company with which they are contracting has the capacity to enter into the transaction. However, there are a number of other questions which prudent lenders should address, and they would be wise to seek specialist advice before entering into contractual arrangements with a BVI company.

BVI leave requirements in derivative actions by foreign companies
British Virgin Islands | 27 October 2016

The BVI Commercial Court recently considered a claim for costs of a discontinued strike-out application, which was brought by the defendants as part of an ongoing multi-jurisdictional family dispute. The claimant's substantive action in the British Virgin Islands involved derivative proceedings, which were brought on behalf of a foreign company, for the recovery of funds which the defendants were alleged to have wrongfully paid to another entity.

Key considerations for using BVI structures in art-secured lending
British Virgin Islands | 13 October 2016

The growth of the art-secured lending market has been accompanied by a parallel increase in the array of financial products and services specifically crafted for art collectors and dealers. As companies incorporated in the British Virgin Islands are among the most popular offshore holding structures in the world, it is not uncommon for art to be owned through BVI structures. For both borrowers and lenders, there are many advantages in doing so.

E-signatures: flexibility in cross-border transactions
British Virgin Islands | 06 October 2016

The European Union's legal framework for e-signatures recently came into effect via the eIDAS Regulation. The British Virgin Islands was one of the first jurisdictions to recognise the validity of e-signatures and electronic records. Along with other BVI statutory developments, the BVI Electronic Transactions Act 2001 provides flexibility in cross-border transactions involving BVI companies.

Brexit: the fall-out
British Virgin Islands | 29 September 2016

Once the United Kingdom has left the European Union, the British Virgin Islands will cease to be one of the European Union's overseas countries and territories. Despite Brexit's uncertainties, the good news for the British Virgin Islands is that it has carefully drafted legislation and a stable legal system, so the consequences of Brexit will be minor from a legal and constitutional perspective.

Iran sanctions to be repealed in line with EU/UK position
British Virgin Islands | 22 September 2016

Under the Joint Comprehensive Plan of Action, the European Union and the United Kingdom agreed to terminate or relax nuclear-related economic and financial sanctions, including related designations. Once the BVI 2011 direction is repealed, the British Virgin Islands' position will be further aligned with that of the United Kingdom and be in keeping with the relaxation of the Iran restrictions.

Costs clarity: Commercial Court finds foreign lawyers' costs generally recoverable
British Virgin Islands | 01 September 2016

The BVI Commercial Court recently handed down new guidance which clarifies its position on the recoverability of foreign lawyers' costs and underlines its clear intent to accommodate and provide practical solutions for international litigation in the British Virgin Islands. The decision will give considerable comfort to those already engaged in matters before the court and to those advising on launching proceedings in the British Virgin Islands.

At what costs? Ruling raises questions about BVI Legal Profession Act
British Virgin Islands | 23 June 2016

The Court of Appeal was recently asked to adjudicate on the costs of a foreign firm that had assisted BVI practitioners in an application for security for costs. The respondents objected to these costs being recovered, on the basis that the firm's lawyers were not licensed to practise BVI law under the Legal Profession Act. The court agreed. However, in seeking to settle the law in this area, the decision has opened up further questions.

Extension of compliance period under AML Regulations 2008
British Virgin Islands | 26 May 2016

The Anti-money Laundering (AML) (Amendment) Regulations 2015 recently came into effect, amending the AML Regulations 2008. The schedule to the new regulations provides a date of compliance for every 'relevant person' conducting 'relevant business', subject to any extension of time sought. The Financial Services Commission recently issued guidance notes which modify the compliance date and outline the conditions of applying for an extension.

Appointment of receivers in the British Virgin Islands
British Virgin Islands | 28 April 2016

The receiver arguably represents the most powerful weapon in the armoury available for asset tracing in the British Virgin Islands. As BVI companies are often used as holding vehicles, using a receiver to take control of the corporate structure and move 'downstream' to the assets is a particularly potent strategy. Recent developments in case law have made this remedy more widely available.

Black Swan: standalone injunctions in support of foreign proceedings
British Virgin Islands | 21 April 2016

BVI courts have jurisdiction to grant standalone injunctions (or Black Swan orders) in support of foreign proceedings. These are 'standalone' in the sense that an injunction order can be made where no other substantive relief is sought within the jurisdiction. A Black Swan order is a helpful tool in support of proceedings where an applicant or claimant has instigated – or intends to instigate – proceedings in a foreign jurisdiction.

Fairfield Sentry – new guidance from BVI Court
British Virgin Islands | 31 March 2016

The Fairfield Sentry saga continued recently with a new BVI judgment concerning the status of the related US Bankruptcy Court proceedings. The applicants were former registered shareholders of the Fairfield Sentry and Fairfield Lambda BVI feeder funds which had redeemed their shares before Bernard Madoff's fraud was exposed. They sought to prevent the liquidators of the funds from recovering their redemption payments in the US proceedings.

Exercise of discretion to wind up company not "head-counting exercise"
British Virgin Islands | 24 March 2016

The BVI High Court recently confirmed that the exercise of the court's discretion whether to make, dismiss or adjourn an order appointing liquidators does not necessarily depend on the wishes of the majority of creditors – even when a vast majority of unsecured creditors both in number and by value oppose the appointment of liquidators.

Key points for lenders and borrowers: snapshot of changes to BVI law in 2015
British Virgin Islands | 03 March 2016

The British Virgin Islands' reputation as the leading offshore jurisdiction is well earned and it is dedicated to maintaining its status as a creditor-friendly and commercially flexible jurisdiction. The developments of 2015 are the latest example of its evolution, and include provisions of the BVI Business Companies (Amendment) Act 2015 that relate to registered agents, liquidation, continuing out, execution of deeds and private registers of charges.

FSC recognises overseas stock and commodities exchanges
British Virgin Islands | 25 February 2016

The Financial Services Commission (FSC) recently issued the Regulatory Code (Recognised Exchanges) Notice under powers set out in the Regulatory Code. The recognised exchanges listed include some of the most important stock and commodity exchanges in the world. Companies listed on recognised exchanges can benefit from light-touch know-your-customer due diligence processes when dealing with BVI-regulated credit or financial institutions.

Arbitration agreements and insolvency proceedings
British Virgin Islands | 11 February 2016

Two recent decisions examined attempts by debtors to rely on the mandatory stay provisions in the BVI arbitration legislation in order to avoid liquidation. On both occasions the court came down decisively against the debtors, which were unable to show a substantive dispute to the debt. The decisions have brought clarity to the situation and closed the door on a potentially abusive practice.

Islamic finance continues to grow in the British Virgin Islands
British Virgin Islands | 04 February 2016

As the Islamic finance market grows and matures, international financial centres such as the British Virgin Islands are being used to facilitate the structuring of Islamic finance products and transactions such as sukuk and musharakah and the incorporation of investment funds and corporate structures. BVI companies are also used by Islamic high-net-worth individuals and families as holding companies for assets in developed markets.

Changes to BVI anti-money laundering regime
British Virgin Islands | 07 January 2016

The British Virgin Islands has announced amendments to its anti-money laundering regime in order to ensure continued compliance with the developing international standards on transparency and anti-money laundering regimes. The changes have the most impact on the eligible introducer regime – in particular, where a BVI-registered agent relies on third-party introducers to obtain and verify the identity of the client.

BVI Business Companies (Amendment) Act 2015: a summary
British Virgin Islands | 10 December 2015

The government recently gazetted the BVI Business Companies (Amendment) Act 2015. If passed into law as expected, it will be the 13th amendment to the BVI Business Companies Act. A number of the proposed changes will dovetail with the recently announced new premium service function at the Companies Registry to facilitate time-sensitive, complex and special transactions, such as continuations to facilitate more difficult commercial transactions.

Voluntary liquidation: an almost irreversible procedure
British Virgin Islands | 26 November 2015

Can a company that has been voluntarily wound up be restored to good standing on an application by a former shareholder, liquidator or director who has a change of heart regarding the company's liquidation? A recent High Court decision confirmed the BVI position that the onus is on the claimant seeking restoration to prove that the circumstances warrant it and to address the potential prejudice that could befall third parties.

BVI insolvency law in 60 seconds
British Virgin Islands | 05 November 2015

Insolvency law in the British Virgin Islands is almost entirely codified in the Insolvency Act and supplemented by the Insolvency Rule. The Insolvency Act was modelled largely on the UK Insolvency Act, but with a number of key differences. This update summarises its features, including provisions for insolvency, liquidation, priority, set-off, challengeable transactions, misfeasance and receiverships.

British Virgin Islands insurance legislation overhauled
British Virgin Islands | 29 October 2015

The British Virgin Islands has gazetted the Virgin Islands Insurance (Amendment) Act 2015 and the Insurance Amendment Regulations 2015. These acts have been introduced to modernise the provision of insurance business in and from the British Virgin Islands. Some significant changes will open up new opportunities and improve functionality for both captives and insurers.

Shareholder disputes: when is just and equitable liquidation appropriate?
British Virgin Islands | 03 September 2015

Unfair prejudice claims have been common since the introduction of bespoke provisions in the Business Companies Act and have all but replaced old-fashioned just and equitable winding-up petitions. However, in Wang Zhongyong v Union Zone Management Limited the Court of Appeal for the first time considered a standalone just and equitable petition brought under Section 162 of the Insolvency Act.

Asset tracing in the British Virgin Islands
British Virgin Islands | 09 July 2015

Confidentiality of corporate documents and information is one of the key attractions of incorporating a company in the British Virgin Islands. In light of this, what means are available to a party in the British Virgin Islands which seeks to recover property that has been misappropriated, where the identity of the wrongdoer or the whereabouts of the misappropriated property is unknown?

For the record: British Virgin Islands Trustee (Amendment) Act 2015
British Virgin Islands | 28 May 2015

The BVI Trustee (Amendment) Act has added new obligations for trustees to maintain trust records into the BVI Trustee Ordinance. The new section is not groundbreaking, but the penalties for non-compliance are punitive and trustees should take steps to ensure full adherence. Further, they should be careful not to fall foul of a number of unclear aspects of the provisions.

Privy Council clarifies power to rectify share registers of BVI companies
British Virgin Islands | 21 May 2015

The Privy Council recently handed down a decision clarifying the power of the courts to rectify the share register of a BVI company under Section 43(1)(a) of the Business Companies Act 2004. The judge confirmed that the primary issue was the validity of the contract, and that the question of which court was the most appropriate forum should be viewed as a matter of contract rather than company law.

Seeking fair value: court provides guidance for appraisers valuing shares
British Virgin Islands | 19 February 2015

The BVI Commercial Court recently issued important guidance to accountancy professionals, BVI companies and their shareholders as to how shares should be valued following a squeeze-out, merger or dissent from other restructuring provisions. The decision is consistent with the court's proactive stance in assisting parties utilising the restructuring mechanisms provided under the act.

Power to assist foreign insolvency proceedings
British Virgin Islands | 18 December 2014

Since Rubin v Eurofinance, enforcement of judgments in insolvency proceedings is no longer elevated above that of other foreign judgments. However, Singularis Holdings Limited v PricewaterhouseCoopers demonstrates that the ability of foreign office holders to seek assistance such as disclosure continues to develop, through both statute and the common law.

Arbitration Act 2013 now in force
British Virgin Islands | 27 November 2014

The British Virgin Islands Arbitration Act 2013 recently came into force. The act – modelled on the UNCITRAL Model Law on International Commercial Arbitration – provides for the creation of the BVI International Arbitration Centre, as well as containing provisions concerning the construction of arbitration agreements, the composition of arbitration tribunals and the court's role in proceedings.

Japan-BVI TIEA comes into force
British Virgin Islands | 20 November 2014

The Tax Information Exchange Agreement (TIEA) between Japan and the British Virgin Islands came into effect on October 11 2014. The BVI-Japan TIEA is consistent with the Organisation for Economic Cooperation and Development standard model template for TIEAs. It provides for assistance through exchange of information relevant to the administration or enforcement of the laws of both countries concerning taxes.

Priority and statutory ship mortgages in the British Virgin Islands
British Virgin Islands | 23 October 2014

The British Virgin Islands has two regimes for the registration of ship mortgages and determination of their priority: the Merchant Shipping Act and the BVI Business Companies Act. In an enforcement action, liquidation or other situation in which priority is a relevant factor, there is the potential for conflict in determining priority if lenders opt to register their security interests under either regime, as opposed to both.

Draft FATCA guidance notes published
British Virgin Islands | 04 September 2014

In the latest move towards the implementation of the Foreign Account Tax Compliance Act intergovernmental agreements signed by the British Virgin Islands with the United States and the United Kingdom, the BVI government has released draft guidance notes for public consultation.

Courts consider arbitration agreements and default judgments
British Virgin Islands | 28 August 2014

Recent decisions have looked at two aspects of offshore litigation: the impact of arbitration agreements and default judgments. One decision reaffirmed that the language of an arbitration clause must make the resolution of disputes by arbitration mandatory, while another showed that a party served with a BVI claim which fails to take any steps in the proceedings faces the risk of having a default judgment entered against it.

National risk assessment scheduled
British Virgin Islands | 24 July 2014

The British Virgin Islands is scheduled to undergo its fourth round of mutual evaluation by the Caribbean Financial Action Task Force in 2017, based on the Financial Action Task Force's International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation. The Cabinet has established the National Risk Assessment Council to manage this process effectively.

BVI government signs Model 1B IGA in relation to FATCA
British Virgin Islands | 17 July 2014

The BVI government has signed a Model 1B (non-reciprocal) inter-governmental agreement in relation to the US Foreign Account Tax Compliance Act. As expected, the final inter-governmental agreement is in substantially the same form as the model agreement. However, a number of special provisions deal with the treatment of BVI retirement plans.

Financial institutions now able to obtain a GINN
British Virgin Islands | 29 May 2014

The US Internal Revenue Service (IRS) recently announced that financial institutions in jurisdictions that have already reached an "agreement in substance" on the terms of a Model 1 or Model 2 Intergovernmental Agreement (including the British Virgin Islands) can now register with the IRS and obtain a global intermediary identification number, notwithstanding that the agreement is yet to be signed.

BVI concludes Foreign Account Tax Compliance Act negotiations
British Virgin Islands | 08 May 2014

The BVI government recently announced the conclusion of negotiations with the United States on a Model 1 Intergovernmental Agreement under the US Foreign Account Tax Compliance Act. In a statement the Ministry of Finance of the BVI government said the final text of the agreement had been initialled, paving the way for its imminent signing and implementation.

Court ruling highlights potential risk in some standard form M&As
British Virgin Islands | 01 May 2014

The Commercial Court recently handed down its ruling in C v W Inc. In that case a shareholder with more than 30% of the company's shares tried to exercise its power to requisition a shareholder meeting under Section 82(2) of the Business Companies Act 2004. However, the court held that in order to give effect to the requisition, a resolution of the board was required.

Door opened to foreign enforcement actions in the BVI
British Virgin Islands | 06 March 2014

The law relating to the BVI courts' authority to enforce a foreign judgment has changed due to a successful court action in the Court of Appeal. The decision was quickly followed by a change in the civil procedure rules to reflect the judgment. The change in the law provides access to a raft of enforcement provisions such as charging orders, orders for sale and attachment orders.

The Commercial Court – interfacing with arbitration
British Virgin Islands | 27 February 2014

Recent Commercial Court decisions have shaped the applicability and enforcement of arbitration clauses and how they interface with BVI statutory remedies and liquidations. Parties to arbitration should have one eye on the efficacy of future enforcement and be aware that blurred awards containing matters that may not properly have been subject of arbitration may prove to frustrate the ability to enforce in the British Virgin Islands.

BVI signs tax information exchange agreement with Poland
British Virgin Islands | 20 February 2014

The BVI government entered into its 25th tax information exchange agreement with Poland on November 29 2013. The BVI-Poland agreement supplements similar treaties entered into by the British Virgin Islands in 2013 with Canada and Guernsey. This new treaty will enter into force three months after the completion of domestic implementation procedures by both the British Virgin Islands and Poland.

Multiple derivative actions: tried but not tested?
British Virgin Islands | 09 January 2014

The Court of Appeal recently issued its ruling in Microsoft Corporation v Vadem Ltd. The judgment initially appears quite definitive – that "BVI law does not permit double derivative proceedings". However, the manner in which the case was presented and recent developments in English case law suggest that, while the BVI Business Companies Act 2004 does not provide for double derivative actions, at common law the jurisdiction may well live on.

New regulations for use of restricted words and phrases in company names
British Virgin Islands | 07 November 2013

The Financial Services Commission has introduced new regulations for use of restricted words and phrases in company names. Under the guidelines, the registrar shall not register a company that contains a restricted word or phrase in its name unless the Financial Services Commission has granted prior written consent for its use.

Ready for business: following the EU AIFM Directive
British Virgin Islands | 17 October 2013

Since the Phase II implementation of the EU AIFM Directive, interest in the directive has been as high as ever as investment fund managers seek to determine what effect it will have on their structures, as well as their ability to market within the European Union. This update serves as guidance on the BVI perspective and assesses the projected impact of the AIFM Directive om BVI funds.

BVI case notes
British Virgin Islands | 12 September 2013

Recent cases from the BVI courts include further developments in Black Swan relating to free-standing relief, insolvency assistance to foreign office holders, economic torts and unjust enrichment and clarification of the meaning of 'member' under BVI company law.

Court clarifies the meaning of 'member' under the BVI Company Law
British Virgin Islands | 05 September 2013

In a recent case the defendants' application for a stay in favour of arbitration in New York was refused because the defendants were not members of the respondent claimant company for the purposes of the articles of association and/or the BVI Business Companies Act 2004. The corollary of their inability to demonstrate membership was an absence of standing to invoke an arbitration clause in the articles of association.

Memoranda of understanding signed with 25 European countries
British Virgin Islands | 15 August 2013

The BVI financial services regulators have announced memoranda of understanding with 25 European countries, which will enable the continued marketing of BVI funds throughout the majority of the European Union. The memoranda of understanding relate to the EU Alternative Investment Fund Managers Directive.

Commercial Court rules on third-party costs and freezing relief
British Virgin Islands | 27 June 2013

Recent cases out of the BVI Commercial Court deal with issues including third-party costs and the applicability of Black Swan freezing relief in support of foreign derivative claims. The former has now become an authority for the proposition that a non-party cannot be liable for costs in proceedings where it has not been joined and which were not being conducted with its approval or for its benefit.

BVI signs new tax agreement with Canada
British Virgin Islands | 20 June 2013

As evidence of its continued commitment to transparency in the financial services industry and its compliance with international standards, the British Virgin Islands has executed a much-anticipated tax information exchange agreement (TIEA) with Canada. The TIEA establishes a formal regime for the exchange of information between Canada and the British Virgin Islands relating to taxes and tax matters.