In two recent BVI Court of Appeal decisions, disabled bearer shareholders were found to have a constitutional right not to be deprived of their property without compensation. It is now abundantly clear that even where BVI disabled bearer share companies are still without functionaries (ie, directors) to facilitate the traditional redemption of those shares, the court has flexible jurisdiction to appoint receivers to redeem those disabled shares, thereby ultimately restoring the companies to a functional state.
The Court of Appeal judgment in Antow Holdings Limited v Best Nation Investments Limited continues the development of the law regarding BVI directors' duties following the Independent Asset Management appeal, which established – for the first time in the British Virgin Islands – clear guidance regarding the proper purpose test. The decision is arguably at the extreme end of the spectrum, with the court describing the motives of the Best Nation directors as self-serving.
The BVI courts have again stepped in to ensure that proper thought and process is applied to requests made by foreign governmental bodies. In the first case of its kind to successfully challenge the exercise of the attorney general's powers under the Criminal Justice (International Cooperation) Act, the BVI High Court held that the attorney general is required to do more than rubber stamp the requests received under the act.
A BVI court has appointed Grant Thornton as a receiver over a BVI company under Section 43 of the Arbitration Act 2013 in order to preserve the value of the company pending the determination of foreign arbitration proceedings. The decision illustrates the effectiveness of the interim relief provided under the Arbitration Act to preserve assets against which an arbitration award will be enforced.
In a recent case, the BVI Court of Appeal addressed standing in the context of applications under Section 273 of the Insolvency Act 2003, whereby an aggrieved person can ask the courts to reverse or vary a liquidator's decision. The court held that, as a shareholder of a company in liquidation, the appellant was an outsider to the liquidation who had no legitimate interest that entitled him to standing under Section 273.
In Fairfield Sentry Limited (In Liquidation) v Farnum Place LLC the BVI Court of Appeal varied a costs order based on a material change of circumstances – namely, a decision of the US Court of Appeals for the Second Circuit. The BVI court held that the US decision was a "material change of circumstances" which allowed it to vary the costs award by disallowing the costs of Farnum's expert.
The Court of Appeal recently considered the test for appointing liquidators to a company following an alleged loss of substratum. The case provides insight on the principles of loss of substratum, particularly in a case where a company's object is not prescribed by its memorandum and articles of association.
In separate but related proceedings, the BVI courts have permitted an applicant to inspect documentation relating to the liquidation of certain BVI companies. The decisions solidify the open justice policy and highlight the importance of allowing beneficiaries to oversee trustees' activities in order to ensure that the trust property is properly managed and that trustees can be held to account accordingly.
The Singapore Court of Appeal recently ruled to reinstate and expand a Mareva injunction against fraudster defendants in a conspiracy claim, providing strong support for an earlier decision of the BVI Commercial Court in related proceedings. The decision demonstrates the importance of consistency between courts in multiple jurisdictions in complex cross-border cases.
The BVI Court of Appeal recently dismissed an appeal against the liquidators of BVI company Pioneer Freight Futures Company Limited and reaffirmed the established law regarding reversing findings of fact. The court held that it will intervene only in rare cases, such as when there is no evidence to support the conclusion, the conclusion was based on a misunderstanding of the evidence or the conclusion was one that no reasonable judge could have reached.
A recent BVI decision highlights the need for trustees to think carefully and, if in doubt, take advice before refusing an information request from a beneficiary. The consequences of getting this wrong (not least in potential personal cost exposure for the trustee) can be severe.
The British Virgin Islands is a pro-arbitration jurisdiction. Under the Arbitration Act, with regard to both New York Convention awards and non-New York Convention awards, the party against which the award has been made can make representation to the court regarding a refusal to enforce. An example of the British Virgin Islands' pro-enforcement approach can be seen in Belport Development Limited v Chimichanga Corporation.
The BVI Commercial Court has provided helpful guidance as to the threshold for a good arguable case, dismissing an application to discharge a worldwide freezing injunction obtained by a claimant. The court held that where there is a good arguable case that a defendant has acted fraudulently or dishonestly, or with "unacceptable low standards of morality giving rise to a feeling of uneasiness about the defendant", further evidence is often unnecessary to justify a freezing injunction.
International litigation and asset recovery require the pursuit of defendants and their assets across borders; therefore, it is a routine aspect of BVI litigation for claimants to serve legal documents abroad. Two recent decisions should significantly decrease the delay in effecting service abroad and pave the way for a more efficient approach to service out in the future.
In the latest judgment regarding the DPH liquidation, the BVI Court of Appeal upheld the appointment of BVI provisional liquidators in respect of a Swiss company and clarified that evidence of dissipation of assets (in the Mareva sense) may not be a pre-condition to the appointment of provisional liquidators.
A recent Court of Appeal decision serves as a useful reminder to keep an eye on the clock when seeking the appointment of liquidators to a company in the British Virgin Islands. The decision makes clear that any extension must be expressly granted and legal practitioners must therefore keep an eye on the clock to avoid a deemed dismissal under Section 168 of the Insolvency Act.
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.
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 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.