Walkers Partners Rosalind Nicholson and John O'Driscoll and associate Cate Barbour acted for the successful defendants in an important case in which the BVI Commercial Court has held that a beneficial owner of shares in a BVI company does not have standing to bring a claim under Section 184B of the BVI Business Companies Act.
In a reserved Judgment, Mr Justice Davis-White QC agreed with the Defendants' submissions holding that:
- Section 184B BCA confers a right on a "member" with regards to conduct of the company or of a director of the company which contravenes the BCA or the memorandum or articles of the company;
- A "member" is defined for the purposes of section 184B by 184A as "a shareholder" or a personal representative of a shareholder;
- A "shareholder" is defined by ss2 and 78 BCA as "a person whose name is entered in the register of members as the holder of one or more shares, or fractional shares, in the company";
- That since it was accepted that the Claimant's name was not entered in the register of members as the holder of shares and so was not a member within the meaning of the Act; and
- Therefore the Claimant had no locus standi to bring proceedings under section 184B.
The Judge rejected the Claimant's submission that the beneficial owner holding an interest through a nominee is nonetheless "a shareholder" within the meaning of s78 BCA, and thus "a member" for the purposes of s184B BCA;
In reaching his decision, the Judge declined to follow the decision in Headstart Class F Holdings Limited and Citco Global Custody NV v Y2K Finance Inc  BVIHCV2007/0278), holding that the Judge in that case had erred in her interpretation of the key English authority Atlasview v Brightview  BCC 542 in holding that that a shareholder for the purposes of Section 184I (unfair prejudice claims) may include the beneficial owner of shares in a BVI company, where the registered shareholder is acting as nominee for the beneficial owner. Davis-White J noted that the Court in Brightview had decided that the beneficial owner was not entitled to make such an application and on that basis struck out their Claim petition.
The case has broader ramifications since the definition supplied by section 184A also applies to claims under 184C (derivative claims) and 184I (unfair prejudice).
Walkers has a depth and breadth of experience in corporate litigation and associated advice on strategy and risk management unparalleled in the BVI of which this case provides a further example.
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.