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Renowned BVI corporate legislation enhanced
The British Virgin Islands ("BVI") is the world's leading offshore corporate domicile and is known for continuously refining its laws to accord with, and improve upon international standards whilst promoting a business oriented framework.
With that in mind and notwithstanding the fact that the principal corporate legislation in the BVI - the BVI Business Companies Act, 2004 (the "Act") has been a great success, the BVI has recently found room for enhancement of the Act.
The Act will be amended by the BVI Business Companies (Amendment) Act, 2012 which comes into force later this year. The amendments to the Act will clarify certain issues within the Act and codify some existing practices whilst introducing new principles which users of the jurisdiction will find extremely useful.
The primary changes to be implemented by the Act are as follows:
Company names will be available for re-use on a more generous basis than previously allowed. In addition, the extremely popular system which allows BVI companies to be registered with foreign character names has now been formalised and will therefore continue to be of great importance especially for foreign language clients.
Share class conversion
The conversion of shares of one class into another has now been given greater clarity. The provision introduced expressly allows for the issue of convertible shares with the mechanism for conversion specified in the memorandum and articles.
Under the current regime, bearer shares must be held by an authorised or recognised custodian. The amendment to the Act has now confirmed that the custodian of a bearer share is not regarded as the shareholder. The registered agent must now also maintain some additional information with respect to bearer shares.
Security documents governed by BVI law creating security over shares in BVI companies can now provide that a chargee may exercise their statutory enforcement rights immediately upon the occurrence of a default. Previously there was a moratorium period prior to enforcement.
Alternate directors are now permitted to sign written resolutions (previously they could only attend meetings). This change will make it much easier for companies to carry out business functions quickly where directors are unavailable and have appointed an alternate.
Resignation of registered agent
Registered agents will now be able to rescind a notice of intention to resign (formerly they were unable to). In addition, the amendment to the Act also provides that if a company does not have a registered agent then the members or (if authorised by the memorandum and articles) the directors may appoint one.
It has now been clarified that former directors and senior mangers of a company are prohibited from acting as a company's liquidator. Also to enter into solvent liquidation the company must now be both cash-flow and balance-sheet solvent. The date that a solvent liquidation commences has also been changed to the date of filing of the notice of appointment of a voluntary liquidator rather than the date the resolution appointing the voluntary liquidator is passed.
Companies which are struck off will be deemed to be dissolved after seven (7) years rather than ten (10). The amendment to the Act also gives clarity regarding the restoration of dissolved companies by the court.
Listed companies and funds
Provision has been made for future regulations dealing with record keeping requirements for listed companies and funds. These
regulations are intended to compliment and work alongside rules of international stock exchanges and international rules which may be applicable to funds. No timeline has yet been set for the implementation of such regulations.
The above changes are all beneficial to the BVI regime, its current and potential users, and will undoubtedly increase the BVI's attractiveness as the jurisdiction continues to move from strength to strength as the world's leading offshore corporate domicile.
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