Many BVI companies have individual shareholders, and often, a single shareholder. Where the owner of a BVI company dies, his or her interest in shares in a BVI company cannot be validly transmitted to his or her heirs until the appropriate grant (of probate, letters of administration or re-sealing) has been obtained from the BVI court. Prior to the required grant being obtained, the shares are effectively frozen, as they cannot be transferred, voted on or sold, nor can any dividends paid on those shares be distributed.
The BVI Court is generally very efficient and grant applications are handled promptly, however, the whole process typically takes several months. Where a foreign will requires to be translated, or there is no will at all, the process of obtaining the required grant may take significantly longer, and in some cases, cannot commence until probate or equivalent has been obtained in the deceased's home jurisdiction. Applying to the BVI Court for the required grant does not automatically make the will a public document, but anyone who can show that they have a `legitimate interest' can obtain access to it. Further, because of the public nature of the Court process, there is a high risk of details of the ownership of the shares, who will ultimately inherit them and their value, entering the public domain.
Similar issues arise in the event that the shareholder loses the capacity to manage his or her affairs. In such an event, in the absence of a Power of Attorney, the shares are similarly effectively frozen until an appropriate Court order can be obtained. Harneys can assist in taking appropriate steps to mitigate these issues.
Where there's a will there's a way
As a minimum, we recommend that all individual shareholders in BVI companies put in place a BVI will. Putting a BVI will in place will simplify the process of obtaining probate to the shares, and reduce the time delay, as the process can run concurrently with any application for probate or equivalent in the deceased's home jurisdiction. However, a will will not cover the situation where the shareholder loses capacity, nor does it provide any asset protection benefits. In particular, the shares could be subject to forced heirship claims in terms of the law of the deceased's home jurisdiction, and as such may not be able to pass under the terms of the will in accordance with the deceased's wishes.
In trusts we trust
The more comprehensive solution is to put the shares in trust. A trust is a flexible structure and can be structured in such terms as best meet the requirements of the creator of the trust (known as the settlor). BVI trust law provides various mechanisms by which a settlor can continue to benefit from and exercise control over assets put in trust during his or her lifetime. A trust deed is an entirely confidential document; there is no register of trusts in the BVI. There is no need to obtain probate where shares are held in trust. A trust structure also provides additional asset protection benefits. Any shares held are protected from the forced heirship claims which might otherwise arise on the death of a shareholder if the shares were held outright, meaning that the shares can be held in accordance with the settlor's long term succession plans. A trust structure can also protect the shares from claims on divorce and from creditors.