A British Virgin Islands (“BVI”) company may merge with a foreign company pursuant to Sections 169 to 174 of the BVI Business Companies Act, 2004 (the “Act”).

Under Section 169 of the Act, a merger is defined as the merging of two or more constituent companies into one of the constituent companies. Section 174 of the Act specifically permits the merger of one or more BVI companies with one or more companies incorporated under the laws of jurisdictions outside the BVI if the merger is also permitted by the laws of the jurisdictions in which the companies incorporated outside the BVI are incorporated.

The BVI company or companies to the merger must comply with the provisions of the Act in respect of mergers as summarised below. The foreign companies to the merger must comply with the laws of the respective jurisdictions under which they are incorporated. Where the surviving company to the merger is to be incorporated under the laws of a jurisdiction outside of the BVI additional filings as described below have to be made.

Merger process

The directors of each constituent company that proposes to participate in a merger must approve a written Plan of Merger (the "Plan of Merger"). The Plan of Merger must contain the following information:

  1. the name of each constituent company and the name of the surviving company;
  2. with respect to each constituent company:
    1. the designation and number of outstanding shares of each class of shares, specifying each such class entitled to vote on the merger; and
    2. a specification of each such class, if any, entitled to vote as a class;
  3. the terms and conditions of the proposed merger, including the manner and basis of cancelling, reclassifying, or converting shares in each constituent company into shares, debt obligations or other securities in the surviving company, or money or other assets, or a combination thereof; and
  4. a statement of any amendment to the memorandum or articles of the surviving company to be brought about by the merger.

It must be noted that some or all shares of the same class of shares in each constituent company may be converted into a particular or mixed kind of assets and other shares of the class, or all shares of other classes of shares, may be converted into other assets.

After the Plan of Merger has been approved by the directors it must be authorised by a resolution of members and the outstanding shares of every class of shares that are entitled to vote on the merger as a class if the memorandum or articles so provide or if the Plan of Merger contains any provisions that, if contained in a proposed amendment to the memorandum or articles, would entitle the class to vote on the proposed amendment as a class.

If a meeting of members is to be held to approve the Plan of Merger, notice of the meeting, accompanied by a copy of the Plan of Merger, is to be given to each member, whether or not entitled to vote on the merger.

If it is proposed to obtain the written consent of members to approve the Plan of Merger, a copy of the Plan is to be given to each member whether or not entitled to consent to the Plan of Merger.  

It should also be noted that a parent company may merge with one or more subsidiary in a manner similar to that described above, with small differences including the fact that only the directors of the parent company need to approve the Plan of Merger and the members of the constituent company need not approve the Plan of Merger.

Filings required

After approval of the Plan of Merger by the directors and members of each constituent company, Articles of Merger (the "Articles of Merger") must be executed by each constituent company.

The Articles of Merger must contain:

  1. the Plan of Merger;
  2. the date on which the memorandum and articles of each constituent company were registered by the Registrar; and
  3. the manner in which the merger was authorised with respect to each constituent company.

The Articles of Merger and any resolution to amend the constitutional documents of the surviving company must then be filed with the Registrar.

Upon satisfying himself that the Act has been complied with, the Registrar will register the Articles of Merger.

Additional filings where the foreign company is the surviving company

If the surviving company is a BVI company, the merger is effective on the date of registration of the Articles of merger (or some other date, not later than 30 days thereafter, as may be stated in the Articles of Merger). The position is different, however, if the surviving company is a foreign company. In that case, the merger is effective as provided by the laws of that other jurisdiction.

Where the surviving company to the merger is incorporated under the laws of a jurisdiction outside the BVI it must also file with the Registrar, the following:  

  1. an agreement that a service of process may be effected on it in the BVI in respect of proceedings for the enforcement of any claim, debt, liability or obligation of a constituent company that is a BVI company, or in respect of proceedings, against the surviving company, for the enforcement of the rights of a dissenting member of a constituent company that is a BVI company;
  2. 2. an irrevocable appointment of its registered agent as its agent to accept service of process in proceedings referred to in 1 above;
  3. an agreement that it will promptly pay to the dissenting members of a constituent company that is a BVI company, the amount, if any, to which they are entitled under the Act with respect to the rights of dissenting members; and
  4. a certificate of merger issued by the appropriate authority of the foreign jurisdiction where the surviving company to the merger is incorporated, or, if no such certificate is issued, such other evidence of the merger as the Registrar considers acceptable.

Effect of merger

As soon as the merger becomes effective, the Act provides for several effects that flow from the merger. These include:

  1. the surviving company in so far as is consistent with its constitutional documents, as amended or established by the Articles of Merger, has all rights, privileges, immunities, powers, objects and purposes of each of the constituent companies;
  2. assets of every description, including choses in action and the business of each of the constituent companies, immediately vests in the surviving company;
  3. the surviving company is liable for all claims, debts, liabilities and obligations of each of the constituent companies; and
  4. in the case of a merger where the surviving company is a foreign company, the effects of the merger under the Act are applicable except in so far as the laws of the jurisdiction under which that foreign company is incorporated otherwise provide.

It should also be noted that where a merger occurs,

  1. no conviction, judgement, ruling, order, claim, debt, liability or obligation due or to become due, and no cause existing, against a constituent company or against any member, director, officer or agent thereof, is released or impaired by the merger; and
  2. no proceedings, whether civil or criminal, pending at the time of a merger by or against a constituent company, or against any member, director, officer or agent thereof, are abated or discontinued by the merger, but
    1. the proceedings may be enforced, prosecuted, settled or compromised by or against the surviving company or against the member, director, officer or agent thereof; as the case may be, or
    2. the surviving company may be substituted in the proceedings for a constituent company.