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BVI Proposes Enhancements to its Corporate Legislation

August 2011 - Corporate & Commercial. Legal Developments by Ogier .

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A draft Bill proposing amendments to the BVI Business Companies Act, 2004 (“BCA”) has been circulated for industry consultation.

Background

The BCA has proven to be a very successful and user friendly piece of legislation which forms the foundation of the BVI’s dominant position as a global corporate domicile.

Why Amend?

The BVI Financial Services Commission (“FSC”) is committed to ensuring that the BCA remains up-to-date and attractive.  The proposed amendments are designed to enhance a number of provisions in the BCA.

Consultative Documents

The FSC has circulated copies of the following documents for industry comments:

• Draft BVI Business Companies (Amendment) Act, 2011 (“Amendment Act”)

• Draft BVI Business Companies Regulations, 2011 (“Regulations”)

• Explanatory Notes

The documents are available at the FSC’s website:  www.bvifsc.vg

Consultation Period and Law Review

The industry wide consultation period closes in mid - July.  A review of the BCA by the FSC, working closely with the Company Law Review Advisory Committee, has already taken place. The Committee’s review had substantial private sector participation.   Ogier were involved in this process.

Key Points

The overriding features of the BCA remain the same. 

The main proposals put forward under the Amendment Act and the Regulations are as follows:

• Types of Company

Not-for-profit companies have been introduced to give further flexibility as well as further transparency to their use in line with the FATF Special Recommendations.  A not-for-profit company must carry out its activities principally within the BVI.

• Listed Companies

As many BVI companies are listed on international stock exchanges throughout the world,  the Amendment Act provides for the introduction of the Listed Company Regulations which are intended, inter alia, to enhance the flexibility of the BCA to dovetail with the rules and trading systems of international exchanges.

• Foreign Character Names

The BCA provided the mechanism for foreign character names to be used.  The Amendment Act provides a detailed framework to bring this into every day practice.  This will be of particular interest to clients operating in the Asian, Middle Eastern and Eastern European markets.

• Re-Use of Company Names

A number of provisions are included to provide for the re-use of former company names.

• Directors Written Resolutions

The position regarding directors written resolutions is made more certain than was the case under the BCA.

• Alternates

The law on alternate directors and their powers and role is clarified and enhanced in the Amendment Act.

• Registration of Charges

Provisions are included to refine those persons who have standing to file charges on behalf of chargors and chargees.  The amendments are designed to reduce inaccurate filings and improve the overall efficiency of the registration system whilst ensuring that the jurisdiction remains a secured-creditor friendly domicile.

• Share Charge Remedies

Improvements to the default and enforcement provisions for BVI law governed share charges are proposed.  These will add greater clarity and flexibility.

• Voluntary Liquidations

The Amendment Act provides for the commencement of a voluntary liquidation to begin when the notice of the appointment of the liquidator is filed with the Registry of Corporate Affairs, rather than when the resolution approving the appointment is passed,  which is the current position.  This will provide a clearer and more certain commencement date.

• Directors cannot act as Voluntary Liquidators

Restrictions on the ability of directors and former directors to act as liquidators in a voluntary (solvent) liquidation are introduced.

• Dissolution and Strike Off

Companies that have been stuck off the Register of Companies will now be dissolved after 7 years, rather than 10 years.

Important Note

The Amendment Act and the Regulations are still in draft form and the above provisions could change or be amended.  A number of other amendments are proposed which are not covered in this note.

Questions or Comments

Should you have any questions or comments please contact your usual Ogier contact or Ray Wearmouth (ray.wearmouth@ogier.com) or Gareth Thomas (gareth.thomas@ogier.com).


For more information please visit www.ogier.com

 

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