British Virgin Island (“BVI”) and Cayman Islands companies have been a popular choice of investment vehicle for Hong Kong and Chinese companies and individuals. This article explores the key tools available to members of BVI and Cayman companies in order to protect their investments, which Hong Kong lawyers and their clients should be aware of.

Offshore companies are typically used as holding companies for Hong Kong and PRC companies, which ultimately own immovable assets. These investment structures often involve both multi-national investors and lenders, reflecting the increasing trend of cross-border mergers, acquisitions, partnerships and joint ventures.

During the pre-global financial crisis, such arrangements were often concluded quicker than parties may have liked in order to take full advantage of a particular opportunity or at a time when joint venture parties enjoyed a healthy working relationship. We are now, unfortunately, seeing the end of the honeymoon period in respect of many investments and are witnessing a break down in the relationship between joint venture partners, in some case by reason of fraud committed by one of the parties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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