Shareholders Agreements, M&As and the Potential for Conflict

Contracting parties embark upon joint ventures and enter into shareholders agreements in many instances without fully understanding the consequences of their contractual arrangements. Part of the problem is that the interplay between a company's Memorandum and Articles of Association on the one hand and a shareholders agreement on the other is sometimes a bit unclear. In some jurisdictions this interplay is more or less cumbersome than in others. The purpose of this article is to examine that dynamic in the context of a British Virgin Islands ("BVI") company and to shed some light on what contracting parties need to do and why they need to do it, when using a BVI vehicle and a non-BVI law shareholders agreement for a joint venture.