Redomiciliations into the British Virgin Islands

The British Virgin Islands (“BVI”) continues to be one of the most popular offshore jurisdictions, currently with over 350,000 business companies in existence. Whilst BVI companies are cost competitive and have therefore proven to be highly popular as asset holding vehicles, the other benefits of the jurisdiction, including a reliable legal system, tax neutrality and a high level of confidentiality, have also rendered BVI structures a market leader for initial public offerings, cross-border investments, corporate lending, and more.

In this article, we consider the mechanism by which a foreign company (“Foreign Company”) may continue to the BVI, thereby taking advantage of the benefits conferred on business companies under the BVI Business Companies Act, 2004 (As Revised) (the “BC Act”). It is worth noting that other redomiciliation options, such as statutory mergers and share exchanges, also exist to migrate a company to the BVI. BVI counsel will be able to advise in relation to the most appropriate redomiciliation option in each case, which will take into account the specific circumstances of the Foreign Company.

Conditions for continuation

A Foreign Company may continue as a company incorporated under the BC Act if the laws of the jurisdiction in which it is registered permit it to do so, and: (i) it is not in liquidation (or subject to equivalent insolvency proceedings), (ii) a receiver or manager has not been appointed in relation to any of its assets, (iii) it has not entered into any unconcluded arrangements with its creditors, and (iv) it is not subject to any liquidation proceedings (or any equivalent insolvency proceedings) before a court in any jurisdiction (together, the “Disqualification Criteria”).

Effect of continuation

Where a Foreign Company is continued under the BC Act: (i) it is treated as if it were originally incorporated under the BC Act, (ii) it is capable of exercising all the powers of a company incorporated under the BC Act, (iii) it is no longer to be treated as incorporated under the laws of its former jurisdiction, and (iv) the memorandum and articles of association (the M&A) of the Foreign Company filed with the Registrar of Corporate Affairs (the “Registrar”) (see below) become the M&A of the company.

The continuation of a Foreign Company under the BC Act does not affect the continuity of the company as a legal entity, or the assets, rights, obligations or liabilities of the company. Specifically: (i) no Page 1 of 2 conviction, judgement, ruling, order, claim, debt, liability or obligation due or to become due, and no cause existing, against it or against any of its members, directors, officers or agents, is released or impaired by the continuation, (ii) no proceedings, whether civil or criminal, pending by or against it, or against any of its members, directors, officers or agents, are abated or discontinued by the continuation, and the proceedings may be enforced, prosecuted, settled or compromised by or against it or against the relevant member, director, officer or agent, and (iii) all shares in issue before the continuation are deemed to have been issued in conformity with the BC Act.

Application to continue under the BC Act

An application by a Foreign Company to continue under the BC Act is made by its appointed registered agent reserving a company name and filing: (i) an application form, (ii) a certified copy of its certificate of incorporation (or equivalent), (iii) the M&A, which must comply with the BC Act, contain certain prescribed particulars, and be signed by the persons who have approved it, (iv) evidence satisfactory to the Registrar that the application to continue and the proposed M&A have been approved in accordance with applicable law, and (v) evidence satisfactory to the Registrar that the Foreign Company is not disqualified from continuing to the BVI pursuant to the Disqualification Criteria, which usually takes the form of a certificate issued by a director of the Foreign Company in the approved form.

Approval of continuation

If the Registrar is satisfied that the requirements of the BC Act in respect of the continuation have been complied with, then (i) the continuation documents filed by the Foreign Company’s registered agent will be registered, (ii) a unique number will be allotted to the company, and (iii) a certificate of continuance will be issued. A certificate of continuance issued by the Registrar is conclusive evidence that all of the requirements of the BC Act as to continuation have been complied with, and the Foreign Company will become a BVI company incorporated under the BC