Entering into security financing transactions with BVI Business Companies (BCs) is a familiar part of the global financial services landscape given the use and presences of BCs. The ease of use of BCs in these types of transactions is facilitated to a large extent by the flexibility of the BVI Business Companies Act, 2004 (the BCA). As it is common for BCs to maintain their assets outside of the British Virgin Islands (BVI), the focus of this note will be on what should be done under the BCA in relation to the creation and registration by a BC of security over its foreign assets which is governed by a foreign law. Given constraints of this note, security interest is created over specific types of assets such as security over shares in a BC, registered ships and aircraft, or land within the BVI, all of which have separate asset based security registration regimes, would require their own discussion at a later time or may be found elsewhere on our website.
Creation of security -
Subject to its memorandum and articles of the association, section 161(1) of the BCA allows a BC to create a charge over its property by an instrument in writing. A charge, being any form of security interest over property, where ever situated and an instrument in writing is the security document dealing with the asset. The BCA does not prescribe the form of the security document or what provisions must be included, so longs as it conforms to the requirements of the foreign law. This is particularly useful given the global use of BCs, as it allows the governing law of a charge to be a jurisdiction agreed between the BC and the secured party and following on from this the security document will be binding on the BC based on the requirements of agreed governing law. The statutory frame work of the BCA in relation to the choice of law allows for a degree of certainty in these types of arrangements that common law could not provide.
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