The Legal 500

The British Virgin Islands has welcomed the final terms of the European Union’s Alternative Investment Fund Managers Directive (the Directive), and expressed confidence that BVI Managers and Funds will have access to the EU market under the private placement regime and, in due course, the passport regime.

Although we are still in a recessionary state, there is no doubt that the global markets have picked up somewhat over the last year or so. Companies are again looking to raise capital via initial public offerings and BVI companies as usual are in the mix. BVI companies are listed on major stock exchanges around the world including the New York Stock Exchange, Nasdaq, the Frankfurt Stock Exchange, the Main Board of the London Stock Exchange, the AIM market of the London Stock Exchange, the Toronto Stock Exchange and the Singapore Stock Exchange. BVI companies may also now be listed on the Hong Kong Stock Exchange.

As offshore legal counsel based in Hong Kong, we commonly deal with the book ends of inbound private equity investment into the People’s Republic of China (“PRC”), that being, the initial establishment of the offshore investment fund structure, typically structured as a limited partnership and domiciled in either the Cayman Islands or British Virgin Islands (the “PE Fund”) at one end, and at the other, investments made by PE Fund’s in certain offshore target entities (“Offshore Target”), indirectly holding strategic PRC assets which are subject to such acquisition. 1

With the enactment of the Securities and Investment Business Act, 2010 (“SIBA”) in the BVI, which came into force on 17 May 2010, the regulation of the BVI’s financial services industry has undergone a number of significant changes which will be relevant to users of BVI vehicles as investment managers of funds or other structures.

The BVI Financial Services Commission (“FSC”) recently concluded public consultation on the draft Public Funds Code, 2010 (the “Code”). As the name suggests it will, when brought into force, apply to all public funds registered under the Securities and Investment Business Act, 2010 (“SIBA”). As with SIBA itself, the Code is intended to adapt the BVI’s regulatory and supervisory environment to be attuned to the new standards called for by the likes of the G20, IMF and IOSCO.

The British Virgin Islands’ statutory merger regime is straightforward, well established and effective. It has been used on a number of high profile, public transactions including, for example, Apax Partners’ $1.6 billion buyout of Tommy Hilfiger Corporation, and most recently by Essilor International SA for its recommended US$565 million takeover of NASDAQ listed FGX International Holdings Limited.

Following the completion of an industry consultation, the British Virgin Islands (‘BVI”) has enacted the Securities and Investment Business Act, 2010 (“SIBA”). The enactment of SIBA represents an extremely important step for the continued development of the financial services sector within the BVI, providing the jurisdiction with a further modern and user friendly statute, in tune with the current regulatory environment, which will complement the BVI Business Companies Act, 2004 and the Insolvency Act, 2003.

British Virgin Islands (“BVI”) companies are well known for their flexibility and ease of use in international transactions. With an ever changing global economy, partnerships and joint venture arrangements between parties in different countries, continents and time zones have become the norm. In these situations, it is always important that the joint venture company used to carry out the joint venture project is able to be tailored to suit the needs and protect the interests of all the parties involved.