US VIRGIN ISLANDS Law and Practice Contributed by: George H.T. Dudley, G. Hunter Logan, Kurt Petri and Anna Vlasova, Dudley Newman Feuerzeig LLP
Board of directors and shareholder resolutions are standard documentation as to any acquisition financ- ing. Other than as mentioned with respect to real estate collateral, neither the underlying collateral documents nor the private corporate resolution documents on which the financings are based and authorised are publicly filed or available except to the parties to the acquisition. Public reference to any underlying acquisi- tion financing is usually limited to UCC-1 filings made under the Uniform Commercial Code (UCC) adopted throughout the USA and in the USVI. UCC-1 filings typically have terse references to personal property collateral being pledged by the debtor/borrower to the secured party/lender as collateral for the financing. There are some exceptions to security interests being covered by UCC-1 filings. As an example, the USVI is a Certificate of Title jurisdiction for motor vehicles so perfection of a security interest in a motor vehicle is not covered by a UCC-1 filing, but is documented by There are not any recent legal or commercial develop- ments in the USVI that have required material changes to our legal documentation. 3.10 Usury Laws The USVI has a usury statute, but it has many excep- tions. For example, the usury limitations on the inter- est rate a lender may charge do not apply to: • loans to entities other than natural persons, includ- ing but not limited to corporations, partnerships, limited partnerships, limited liability companies, and other legal entities; • loans to any entity or person for business or com- mercial purpose; and • adjustable rate mortgage loans secured by real property located in the USVI. 3.11 Disclosure Requirements United States federal laws, such as the Truth in Lend- ing Act, apply. a filing with the Bureau of Motor Vehicles. 3.9 Recent Legal and Commercial Developments
USVI law requires consumer financial contracts to be written in “clear, simple, understandable and readable language”.
4. Tax 4.1 Withholding Tax
Interest payments to foreign lenders may be sub- ject to withholding; however, most are exempt under the Internal Revenue Code as mirrored in the Virgin Islands. Where applicable, income tax withholding is reduced to 10% under Virgin Islands statute, and income received from loans secured by a mortgage of real estate in the Virgin Islands is wholly exempt from withholding. 4.2 Other Taxes, Duties, Charges or Tax Considerations Certain lenders who are “doing business” in the Virgin Islands may be subject to a 5% gross receipts tax. Entities classified as banks are exempt. The definition of “doing business” is not well defined, so the facts and circumstances must be reviewed to ensure the lender is not subject to the tax. 4.3 Foreign Lenders or Non-Money Centre Bank Lenders There are no tax concerns for borrowers. Real property is frequently taken as collateral to secure loans. A lien on real property is granted by the owner(s) of the property signing and delivering a written mort- gage to the lender. The mortgage is recorded in the applicable Office of the Recorder of Deeds, within the Office of the Lieutenant Governor. To provide notice of the mortgage and be enforceable against third par- ties, the mortgage must be recorded in the Office of the Recorder of Deeds. Priority is determined by the order of recording. USVI law has requirements for the valid execution of the mortgage, and the requirements differ slightly depending on whether the mortgage is signed within or outside of the USVI. 5. Guarantees and Security 5.1 Assets and Forms of Security Real Property
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