BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Matthew Cowman, Alex Drysdale, Rosalind Nicholson and Omonike Robinson-Pickering, Walkers
8. Duties of Directors 8.1 Principal Directors’ Duties
disapplied in the BVI company’s Memorandum and Articles of Association. Short-form mergers are available in the BVI but apply only between a parent company and its subsidiary company. A subsidiary company for this purpose is a company where at least 90% of the outstanding shares of each class of shares is owned by the parent and, as such, the mechanism would not be particu - larly useful as a squeeze-out tool over and above the Irrevocable voting undertakings are often required in transactions where there is a shareholder who holds a significant portion of the total issued share capital of the target. Where there are significant sharehold - ers involved, discussions will often start early on in the transaction, to ensure they are supportive of the deal. Such commitments are typically irrevocable and the terms would be subject to negotiation (and may include a right to terminate if a superior proposal is received). dedicated squeeze-out provisions. 6.11 Irrevocable Commitments There is no legal requirement to make a bid public under BVI law; this will be driven by the rules of the applicable stock exchange. 7.2 Type of Disclosure Required BVI law does not prescribe any disclosure require - ments with respect to the issuance of shares. 7.3 Producing Financial Statements There is no requirement under BVI law to produce financial statements (pro forma or otherwise), nor for such statements to be prepared in a required form. 7.4 Transaction Documents There is no legal requirement under BVI law to dis - close any transaction documents; this will be driven by the rules of the applicable stock exchange. 7. Disclosure 7.1 Making a Bid Public
Directors of BVI companies are subject to directors’ duties under the Act and at common law and in equity. The principal duties of a director of a BVI company include: • to act honestly, in good faith and in what the direc - tor believes to be the best interests of the com - pany; and • to exercise his or her powers as a director for a proper purpose. The Act allows a company’s constitutional documents to modify these duties to permit a director to act in the best interests of the company’s parent or a share - holder in some circumstances, including where it is a wholly owned subsidiary and where it is carrying out a joint venture. 8.2 Special or Ad Hoc Committees Pursuant to the Act and subject to the Memorandum and Articles of Association of a BVI company, a direc - tor of a company who is interested in a transaction may: • vote on a matter relating to the transaction; • attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purposes of a quorum; and • sign a document on behalf of a company, or do any other thing in his or her capacity as a director that relates to the transaction. However, notwithstanding the above, this does not derogate from the fiduciary duty of the director to act in the best interests of the company and to exercise his or her powers for a proper purpose. While disclo - sure of the relevant conflict is generally deemed to be sufficient to mitigate any risk of the conflict affecting the decision-making process, subject to the nature of the underlying conflict, a committee of non-conflicted directors may be formed in some cases, to consider certain matters relating to the business combination. However, pursuant to the Act there are certain matters the directors do not have the power to delegate to a
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