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MarburyClientandFriendMemo2November2016

BritishVirginIslands

WhydobusinessintheBVITheadvantagesofferedbytheuseofBVIcompaniesandthepositiveimpactoftheseondealcosts,andtheexpenseandeaseofongoingmaintenanceandgovernance

BritishVirginIslands(BVI)companiesprovidecost-effectivesolutionsforinvestmentandcrossbordertransactions.Inthevast

majorityofcasestheyareusednottoavoidtaxconsequences,butratherbecausetheydonotaddextralayersoftaxationto

thetaxesinvestorsalreadypayintheirhomecountry,creatingalevelplayingfieldforinvestorsfromalljurisdictions.

FeaturesoftheBVIasaplacetostructureandcompletedeals:

• BVIcompanystructuresfacilitatecapitalflowsintodevelopedandemergingeconomiesbyofferingaplatformforraisingfinance,andactingasefficientportalsforcollectiveinvestments.

• BVIcommonlawlegalprinciples,administrativesimplicityandtheabilitytoring-fenceliabilitiesareacknowledgedandenjoywidespreadlegitimacy.

• BVIsecuritieslawsarerecognisedbyregulatorsworldwide,enablinginvestorstoexitthroughaprivatesaleoralistingonamajorstockexchange.

• BVIcompaniescanlisttheirsharesonstockexchangesworldwide,includingtheLSE,theAIMexchange,theNYSE,NASDAQ,theInternationalSecuritiesExchange,theTSE,theSGXandtheHKSE.

• TheBVIdoesnotimposeadoublelayerofregulation(thereisnoBVItakeovercodeorBVIpublicfilingrequirementapplicabletoalistedcompany).BVIstatutecontainscertainprovisionssupportiveofthelistingprocess.

• Ultimately,aBVIbusinesscompanywillbehighlyflexibleinoperation,particularlyifthecompanyneedstoraiseequityfinanceforworkingcapitalpurposes.

SomekeybenefitsofusingBVIcompanies:

simplicity,costandstandards noadditionallayeroftaxandregulationmeansincorporationandongoingcostsofusinga

BVIcompanyarelow,eventhoughstandardsaremaintainedasrequiredbythe

InternationalOrganisationofSecuritiesCommissions(IOSCO),ofwhichtheBVIisa

member.

WhydobusinessintheBVI

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corporategovernance BVIcompanylawishighlyflexible.TheBVIimposesveryfewmandatorycorporate

requirements,socompaniescangenerallymodelcorporategovernancetosuitbusiness

needs.Generallytheboardcanoperateandmanagethecompanywithoutmember

involvement.

JVsandgroups adirectorofajointventurecompanymayactinthebestinterestsoftheJVpartythat

appointedhim,andadirectorofawhollyownedsubsidiarymayactinthebestinterestsof

theparentcompany,evenwheretheactionisnotnecessarilyinthebestinterestsofthe

jointventurecompanyorsubsidiary.

norestrictiononfinancial

assistance

aBVIcompanymaygiveassistancetoathirdpartytoacquireitsshares,andmaygive

securityonbehalfofarelatedorunrelatedthirdparty.

nosharecapital thereisnoconceptofsharecapital.Acompanyisauthorisedtoissueaspecifiedoreven

anunlimitednumberofshares.Thisallowsgreaterflexibilitywhenacompanyproposesto

declaredistributions,carryoutreversesharesplits,changetheparvalueofitsshares

and/oreffectredemptions.

dividends(distributions) distributionscanbemadewithoutmemberapprovalbytheboardsubjectonlytoabasic

solvencytest(thecompany'sassetsexceeditsliabilitiesandthatthecompanywillcontinue

tobeabletopayitsdebtsastheyfalldueimmediatelyafterthedistribution).

purchaseofownshares aBVIcompanymayacquirethesharesofamember,subjecttothesamebasicsolvency

test,andwiththeconsentofthemember,whichmaybeobtainedinadvance.

votingmajorities BVIlawdoesnotimposeprescribedstatutorymajorities(otherthanforverylimited

matters),butratherpermitsstructuringarrangementstosuitdealorbusinessneeds.

members'remedies BVIlawhascodifiedthetraditionalEnglishcommonlawbasisformembers'remedies.BVI

companylawgoesfurtherandprovidesstatutorydissentandappraisalrightsformembers

whoobjecttocertaincorporateactions,suchasamerger,compulsoryacquisition,or

dispositionofmajorassets.Thisenablesamembertoexitthecompanyatfairvalue

withouthaltingordelayingthetransaction(intheabsenceofwrongdoing).

squeeze-outprovisions theholdersofmorethan90%ofthesharesmaycausethecompanytoredeemthe

minoritysharesforfairvalue.Thereisastatutoryprocessfortheindependentappraisalof

fairvaluewithoutapplicationtocourt.

memberprotectionprovisions tailoredarticlesofassociationcanreflectthedesiredmember’sprotections(egdisclosure

ofdirectorinterests,authorityforissuanceofshares,independentvaluationforissuanceof

sharesfornon-cashconsiderationandretirementofthedirectorsbyrotation).

WhydobusinessintheBVI

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continuation/migration aBVIcompanymaymigratetoorfromanyotherjurisdictionthatpermitscorporate

redomiciliation.

statutorymergers/

consolidation

aBVIcompanycanmergewithoneormoreBVIcompanies,orforeigncompanies,andthe

survivingcompanymaybeinaforeignjurisdiction.Thisabilityprovidesgreatflexibilityfor

structuringmergersandacquisitions.

schemesandplansof

arrangement

awidevarietyoftransactionsmaybecarriedoutbywayofacourtapprovedschemeor

planofarrangement,whichisbindingonallmembersandcreditorsoncedulyadopted.

ForcreditorslendingtoortakingsecurityfromaBVIobligor,thejurisdictionoffersthefollowingadvantages:

• nocorporaterescuestatute:noUSstyleChapter11orUKadministrationprovisionsinforce.Theappointmentofaliquidatordoesnotpreventenforcementofsecuritybyasecuredcreditor

• statutoryrulesallowliquidatorstochallengetransactionsatanundervalue,unfairpreferences,andvoidablefloatingcharges

• limitedcategoriesofstatutorilypreferredcreditorsoninsolvency

• securitymayberegisteredpubliclyintheBVIprovidingstatutorypriority

• contractualsubordinationagreementsmayvarythestatutoryprioritywaterfall

• theenforceabilityofnettingandsetoffprovisionsisrecognisedbystatute

• sharesecurityisstatutoryandmaybegovernedbyforeignlaw,permitting,forexample,anEnglishlawgovernedchargeoversharesinaBVIcompanytoincludethe'self-help'remedyofappropriation

• theBVIhasamodern,purpose-builtdedicatedcommercialcourtwithanexperiencedjudge,excellentavailabilityandafastandcosteffectiveprocess.

FormoreinformationonanyaspectofthisbriefingpleasecontactanymemberoftheMarburyteam.