BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Matthew Cowman, Alex Drysdale, Rosalind Nicholson and Omonike Robinson-Pickering, Walkers
approvals will inevitably include that of the sharehold - ers of the company. As with Schemes, there have been very few Plans attempted under BVI law. Although it is possible to propose lower approval thresholds than those required by a Scheme, and dissent rights are at the discretion of the court, given the lack of a body of BVI precedent Plans, the possibility or likelihood that a court would require similar approval requirements to that of a Scheme and/or would enable dissent rights to apply has reduced their popularity. Takeover Offers A Takeover Offer is a contractual rather than statutory transaction under which an offer is made to share - holders of the target to acquire their shares. Since the BVI does not have a takeover code, there is little restriction as a matter of BVI law on the terms of such an offer and how it is made. As such, it is generally the law, regulations or market practice of the jurisdic - tion where the BVI company’s shares are listed that are followed (subject to the company’s Memorandum and Articles of Association). Advantages of a Takeover Offer include speed (it can sometimes be the quickest route to 50%+ ownership) and its availability in a hostile bid, subject to defences in the company’s Memorandum and Articles of Asso - ciation. The main disadvantage is that it is invariably necessary to take a second step to obtain 100% con - trol – either through a squeeze-out if 90% accept - ances are reached, or through a second-stage Merger. 2.2 Primary Regulators There are no regulations specifically regulating M&A activity in the British Virgin Islands, which does not have an equivalent to the UK Takeover Panel oversee - ing the Takeover Code. The Financial Services Com - mission is the sole financial services regulator in the BVI and is responsible for regulating businesses in the banking, insurance, digital assets, trust, investment funds, investment business and corporate services sectors. In circumstances where the target is operating in the regulated spaces specified, the Financial Services Commission may be involved in a transaction because
a change of control application may need to be sub - mitted under the applicable regulatory act as part of the M&A transaction. 2.3 Restrictions on Foreign Investments BVI companies are designed for use in international transactions, and there are no foreign exchange con - trols or foreign exchange regulations under BVI law. There are generally no restrictions on a foreign buyer acquiring an interest in a BVI company. However, a foreign buyer acquiring real estate in the BVI or engag - ing in business in the BVI would have to obtain the There are no specific antitrust regulations that apply to business combinations in the BVI. However, a change in the shareholder controller of any target that is regu - lated by the Financial Services Commission would be subject to regulatory scrutiny, which may include a consideration of the impact of the transaction on the BVI market. 2.5 Labour Law Regulations appropriate local licences. 2.4 Antitrust Regulations It is rare for there to be employees physically based in the BVI in an international M&A transaction involving a BVI company, but where that is the case, the Labour Code, 2010 (as amended) may apply in respect of such employees. 2.6 National Security Review There are no national security reviews of acquisitions in the BVI. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments Two significant cases concerning the dissent and appraisal process prescribed by Section 179 of the Act have had an impact on the BVI M&A landscape in the last two years. Widely used to effect acquisi - tions and corporate restructurings, and in contrast to the regime in place elsewhere, the BVI process takes effect entirely out of court and is designed as a swift and effective means to determine the fair value of the dissenters’ shares, to achieve payment in accord -
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