A security document does not need to be filed or recorded with any governmental or regulatory authority, agency or court in the British Virgin Islands in order to ensure the legality, validity or enforceability of such security document creating the security interest.
However, to ensure the preservation of the priority of such security interest, particulars of such security interest should be registered in the public Register of Registered Charges of the BVI company granting such security interest, by submitting an application in the approved form to the Registrar of Corporate Affairs in the British Virgin Islands pursuant to section 163 of the BVI Business Companies Act 2004 (BCA). The effect of such a section 163 filing is to create priority of that security interest over any subsequently registered or unregistered security interest.
It should be said that charges created prior to 1 January 2005 continue to rank in the order in which they ranked prior to the BCA coming into force and may accordingly take priority over a charge created on or after 1 January 2005. This is relevant in the case of a BVI company that was originally incorporated under the International Business Companies Act (Cap 291).
In addition, the BVI company granting such security interest is also required to enter the particulars on an internal register of relevant charges pursuant to section 162 of the BCA and to keep a copy of that register at its registered office or the office of its registered agent.
Where security is created over shares in a BVI company, the BVI company whose shares are being charged may voluntarily make a notation of the security interest in its register of members. Although the notation has no statutory effect per se, it could potentially give notice to any party reviewing the register of members of the security interest. It is also possible for the BVI company, whose shares are being charged, to voluntarily file a copy of its annotated register of members with the Registrar of Corporate Affairs in the British Virgin Islands. Although a filed annotated register of members in itself has no statutory effect for priority purposes, it could potentially give notice of the security interest to any party carrying out a search against such BVI company.
For further information on this topic please contact Christian Burns-Di Lauro at Ogier by telephone (+44 1534 514000) or email ([email protected]). The Ogier website can be accessed at www.ogier.com.