Claims of passing off are rare in the British Virgin Islands and a recent attempt to bring a BVI action in relation to goodwill held outside the jurisdiction has failed. The court examined the law and relevant English authorities on the tort of passing off. It opined that goodwill is governed by territoriality and that in order to succeed, the claimant must prove that it has goodwill in the form of customers in the jurisdiction in which the suit is undertaken.
The recent changes that have been made to the anti-money laundering regime will bring the Cayman Islands into line with international best practice and are a welcome update to the territory's financial services landscape. In reality, the changes will not affect the majority of investment funds using the jurisdiction, but updates to documentation and procedures may be required.
The Cayman Islands has amended the beneficial ownership register regime for Cayman companies and limited liability companies, meaning that some previously out-of-scope companies are now in scope and must maintain a register. In addition, all out-of-scope companies must now file a written confirmation of the basis for their exemption with their corporate services provider, and these providers must regularly file the received beneficial ownership information with the competent authority.
A recent Court of Appeal ruling provided guidance on directors' powers after considering whether a fresh issuance of shares by directors which altered the balance of voting power between the shareholders was done for a proper purpose. The court held that directors should not issue shares in a manner that could affect the balance of power between groups of shareholders or create new majorities, irrespective of whether the old or new majority have a proprietary interest in the fund.
Interest in the setting up and distribution of initial coin offerings (ICOs) in the British Virgin Islands and other offshore locations has increased rapidly during 2017, and this is expected to continue. No ICO or blockchain-specific rules or guidelines have yet been issued by the government or regulator; however, there are several important issues for parties in the British Virgin Islands to consider, including the key laws and regulations surrounding the issue.
The government recently adopted updated Anti-money Laundering Regulations. The regulations demonstrate the Cayman Islands' ongoing commitment to comply with the highest international standards on combating money laundering and terrorist financing and aim to ensure consistency with the Financial Action Task Force 2012 recommendations. The move is part of an overall update of the territory's anti-money laundering regime.
It seems that 2017 will be remembered as the year of the initial coin offering (ICO). The Cayman Islands is witnessing an upsurge in ICO-related business and structuring an ICO through the territory remains an attractive proposition. However, ICO-specific guidance is yet to be issued by the government or the regulator, and a number of legal uncertainties remain. Existing statutory and regulatory regimes must therefore be considered when structuring an ICO.
The ability to continue a foreign company as a BVI company or to continue a BVI company as a company under the laws of another jurisdiction quickly and seamlessly is just one example of the many flexible features of the Business Companies Act 2004. This is particularly useful in the context of corporate reorganisations, and counsel should be aware of the process and requirements for continuations and discontinuations.
Under the Cayman Islands beneficial ownership legislation, certain Cayman companies are required to maintain details of their beneficial owners and relevant legal entities on a beneficial ownership register. Companies should determine whether they are within the scope of the legislation and familiarise themselves with the obligations for in-scope companies and those who hold interests in them.
The government recently enacted the Labour Code (Work Permit Exemption) Order 2017, which excludes certain categories of people from the need to obtain work permits. In particular, the exemption for directors visiting the British Virgin Islands for board meetings supports the territory's position as the leading corporate domicile in the global economy.
The Trademarks Law 2016, the Patents and Trademarks (Amendment) Law 2016 and the Design Rights Registration Law 2016 recently came into force, introducing a new IP regime in the Cayman Islands. The legislation establishes a standalone trademark registration system, prohibits the assertion of patent infringement in bad faith and allows existing UK and EU-registered design rights to be extended to the Cayman Islands, among other things.
'Forum shopping' is the practice of choosing the most favourable jurisdiction in which to bring a claim. In principle, there is nothing wrong in seeking to have a case heard in the forum which is most favourable to the client. However, it can lead to some fierce jurisdictional battles, particularly in insolvency, where the choice between debtor and creditor-friendly procedures can be stark. The Commercial Court has been wrestling with this situation over the past 10 months.
As the world's leading incorporation vehicles, BVI companies are listed on exchanges and conduct business around the world and may therefore expect to be occasionally involved in activist campaigns or other challenges from shareholders. However, many investors and their advisers may be less familiar with BVI company law than their domestic legislation.
The government recently enacted two measures regarding the cruising permit fees that each charter boat must pay while carrying paying passengers in the British Virgin Islands. Under the Cruising Permit (Amendment) Act, boats will now be classified as either home-based or foreign-based charter boats, with set fees for each classification. The Statutory Rates, Fees and Charges (Amendment of Schedule) Order 2017 confirms these fees for internal government purposes.
The government recently enacted a measure regarding the fees payable for work permits in the British Virgin Islands. The amendment order replaces the employee flat fee system with an incremental calculation based on salary bands, which now generally assume a higher gross salary. It also replaces most exceptions to the previous scheme, keeping only those for domestic workers.
The British Virgin Islands has enacted legislation to implement a networked database of beneficial ownership interests in companies incorporated or domiciled in the jurisdiction. The Beneficial Ownership Secure Search System aims to ensure that the British Virgin Islands can comply with its obligations under the UK Exchange of Notes Agreement, which modernises the way in which BVI competent authorities may gain access to beneficial ownership information of BVI companies.
The British Virgin Islands is expected to undergo its fourth round of mutual evaluation by the Caribbean Financial Action Task Force in 2018, based on the Financial Action Task Force's International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation. In preparation, the Financial Services Commission has commenced a preliminary exercise to ensure that relevant persons have complied with the international standards requirements.
The BVI Financial Services Commission recently signed a multilateral memorandum of understanding between members of the Group of International Financial Centre Supervisors. The objective of the memorandum is to ensure clarity and effective regulatory cooperation between the authorities responsible for supervising the banking sector in signatory jurisdictions.
The British Virgin Islands recently adopted new guidelines for communication and cooperation between courts in cross-border insolvency matters. The guidelines are designed primarily to enhance communication between courts, insolvency representatives and other parties in the context of global restructurings and insolvency. As a result of the increased efficiency, it is hoped that stakeholders will see a reduction in delays and costs.
Following lengthy discussions with the UK authorities, the government recently approved new legislation to introduce beneficial ownership registers for certain Cayman companies and limited liability companies. Companies which are subject to direct or indirect regulatory oversight are likely to be exempt from the requirements. All Cayman companies should now review whether they will be required to maintain a beneficial ownership register.