Some of the many attractions of the British Virgin Islands (the BVI) for both corporates and lenders are the relatively sophisticated legal system, low operating costs and creditor friendly insolvency regime. In recent times the BVI, along with other offshore jurisdictions, has come under criticism for lack of transparency of ownership of companies. At June 2013’s G8 summit, the United Kingdom government announced plans for the United Kingdom and its overseas territories and crown dependencies to establish mandatory registers of beneficial ownership. It has since been indicated that such registers will be publicly available. In response the BVI government issued a consultation paper on the subject in October 2013, with a consultation period running until the end of January 2014.
Whilst it is unclear if a publicly available register of beneficial ownership will be introduced in the BVI, if a mandatory register of beneficial ownership (either privately or publicly available) was established, it is worth considering what would be the impact on taking security over shares issued by a BVI company which are owned by separate legal and beneficial owners? Billions of dollars of debt finance have been advanced upon the strength of such security and remain outstanding. (For the purposes of this article, only registered shares issued by companies registered under the BVI Business Companies Act 2004 (the BVIBCA) are considered).
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