The government recently gazetted the BVI Business Companies (Amendment) Act 2015. If passed into law as expected, it will be the 13th amendment to the successful BVI Business Companies Act 2004. Most of the proposed changes set out in the amending act came from a private sector committee which initially focused on fine-tuning modifications, rather than making wholesale changes.
A number of the changes will dovetail with the recently announced new premium service function at the Companies Registry to facilitate time-sensitive, complex and special transactions, such as continuations to facilitate more difficult commercial transactions. Generally speaking, most of the refinements should be warmly welcomed by the business community. The only provisions which may provoke controversy are the obligations regarding registers of directors. These did not form part of the private sector's recommendations, but were part of the government's international commitments to assist foreign law enforcement authorities, and replicate similar changes in the Cayman Islands and other British overseas territories. Assuming the bill passes its third reading as expected, the amending act will come into force on a date proclaimed by the governor.
The BVI Business Companies Act will be amended to codify the common law rule in Hickman v Kent permitting companies to include arbitration clauses in their articles of association.
Where a company's shares are listed on a recognised stock exchange, the mandatory obligation to maintain a share register will become an optional power and the rules relating to transfers of shares will be relaxed regarding the requirement for a written instrument of transfer.
Bonus shares will be deemed to be fully paid for on issue.
Surrender of shares
Companies will be empowered to accept a surrender of shares by a shareholder for no consideration where the surrender is made in writing. This will not constitute a distribution.
In accordance with past practice, fines for bearer share-related offences have been incrementally increased across the board. The Financial Services Commission will also now be able to revoke the status of recognised custodian in appropriate cases, closing off a potential lacuna.
The power of the court to order meetings of members will be expanded to include where directors act in breach of their duties, closing the gap identified in the 2014 Commercial Court decision in Chang v Winbless.
New provisions will require that the registered agent of a company act on a valid resolution of the board of directors of a company (irrespective of the wishes of the registered agent's client of record).
New provisions will resolve existing mechanical issues relating to law firms filing notice of change of registered agent (usually where the existing registered agent refuses to cooperate with the change).
Existing financial record-keeping obligations have been tightened to comply with the most recent Organisation for Economic Cooperation and Development requirements.
The amending act will clarify the proper mode of execution of BVI law documents by foreign corporations and abrogate the perceived effect of the English High Court decision in Mercury Tax Group Limited v HMRC relating to annexing pre-executed pages to subsequently agreed documents.
All companies will now be required to file their register of directors with the Companies Registry, but (unless the company elects otherwise) the register will not be available for public inspection. However, access may be granted by either a court order or application by a competent authority (ie, law enforcement or financial regulator). Existing companies will have a grace period until December 31 2016 to comply.
A company will be required to update its private register of charges (ie, not the public register of registered charges) within 14 days of any change. Previously, there was no time limit.
The existing practice of the registrar in relation to relying on a certificate signed by a director of a foreign company confirming that it complies with the BVI statutory requirements in relation to good standing will be codified, except that an approved form for such certificates will be required and the certificate will have to be notarised or otherwise duly legalised.
Before continuing out, companies will be required to:
- release any charges registered against them in the public register of registered charges;
- confirm that they have obtained the consent of the chargee for the continuation; or
- satisfy the registrar that the security interest will not be compromised.
If a company is subject to a contractual restriction on continuing out under a registered security document, then it may not continue out at all. Companies will also be required to file notice of continuance with the BVI Registry.
The amending act will clarify that (contrary to the registrar's previous practice), a company may go into voluntary liquidation regardless of whether it has a security interest registered against it. It will be the duty of the liquidator to apply the company's assets to the registered charge in accordance with the applicable law.
The registrar will have power to strike off regulated companies which have their licences cancelled or revoked. In addition, where a company is struck off and subsequently restored, the registrar will now issue a certificate of restoration.
For further information on this topic please contact Jacqueline Daley-Aspinall, Philip Graham or Colin Riegels at Harney Westwood & Riegels by telephone (+1 284 494 2233) or email ([email protected], [email protected] or [email protected]). The Harney Westwood & Riegels website can be accessed at www.harneys.com.
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