The BVI Business Companies (Amendment) Act, 2015 (the "Amendment Act"), which has been published in the BVI's Official Gazette and is expected to become effective shortly, introduces a number of modernising amendments to the BVI Business Companies Act, 2004 (the "BCA") which will be of interest to banks and other financial institutions that lend to BVI companies, or take supporting security from BVI companies.
Some of the key amendments to the BCA in this respect are as follows:
Execution of Deeds
First is the welcome news that execution requirements in relation to BVI law governed deeds will be clarified. Specifically, the BCA will be amended to address the application of the English case of R (on the application of Mercury Tax Group and another) v HMRC [2008] EWHC 2721. This case presently gives rise to practical issues in connection with the execution of BVI law governed deeds, in as much as it casts into doubt the practice of attaching pre-signed signature pages to the final version of deeds. The Amendment Act will clear up the uncertainty around these issues by amending the BCA to provide that a deed will still be validly executed if a pre-signed signature page is attached, with the signing party's authority, to the document at closing of a transaction.
Changes to Charges to be Notified to Registered Agent
The Amendment Act introduces a new requirement for a BVI company to notify its registered agent of details of changes to any charges recorded in the BVI company's internal register of charges, where the register is kept at the office of the registered agent. This requirement will help to ensure that such internal register of charges is kept current and up-to-date.
Consent of Secured Creditors Where the Company Proposes to Continue Out of the BVI
The Amendment Act will amend the BCA to introduce certain requirements with respect to the notification and consent of the secured creditors of a BVI company that proposes to continue out of the BVI to another jurisdiction.
The revised provisions will oblige a BVI company with a registered charge over its assets to provide a written declaration to the BVI Registrar of Corporate Affairs that either: (a) notice of the release or satisfaction of that charge has been filed and registered; or (b) that the chargee has consented or not objected to the continuation out of the BVI; or (c) if no such consent have been given or the chargee has objected, that the chargee's secured interest will not be diminished or in any way compromised by the continuation to the new jurisdiction.
Liquidation of Company with Secured Creditor
A new provision will be introduced into the BCA to clarify the position in relation to a proposed shareholders' voluntary liquidation of a BVI company with a secured creditor.
Such a company will still qualify to be voluntarily liquidated (assuming other key pre-requisites are satisfied, i.e. that the company has no liabilities or that the value of the company's assets exceed its liabilities and that it is able to discharge, pay or provide for its debts as they fall due), provided that the liquidator will be obliged to give effect to the rights and priority of the claims of the secured creditor.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
