BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Matthew Cowman, Alex Drysdale, Rosalind Nicholson and Omonike Robinson-Pickering, Walkers
10. Litigation 10.1 Frequency of Litigation
11. Activism 11.1 Shareholder Activism
In common with other jurisdictions, BVI legislation provides remedies to members of the company dis - senting from a merger. Those remedies operate entire - ly without the court and involve the appointment of a panel of appraisers to determine fair value. Litigation otherwise in connection with M&A deals is rare, not least because many deals will include provi - sions for arbitration for disputes arising out of or in connection with the deal. 10.2 Stage of Deal Where disputes do arise, they are more likely to arose post- rather than pre-deal, not least because any action by way of litigation directed at preventing a deal from proceeding is likely to require the applicant to accept liability for any damage the prohibitive action may cause, should the action ultimately turn out not to have been justified. 10.3 “Broken-Deal” Disputes In the absence of BVI statute or local precedent, BVI law will ordinarily follow and be guided by English law – for example, on whether the doctrine of frustration applies to relieve a party from its contractual obliga - tions in circumstances such as those that occurred in the COVID-19 pandemic. Under English law, the relevant test would require the party seeking to be relieved to show that the obligation is incapable of being performed, rather than being merely difficult or burdensome. That being the case, parties may include an express clause in their deals, going forward, which deals with the eventuality of another pandemic and the consequences they agree are to flow from such an event.
BVI companies are typically held by foreign inves - tors and, as such, are subject to activism forces in those countries. When shareholders disapprove of the actions of directors, they may seek to change the composition of the board. Shareholder activism has become more frequent, especially with listed compa - nies. Under Section 82 of the Act, subject to a provi - sion in the Memorandum and Articles of Association for a lesser percentage, shareholders who hold not less than 30% of the voting rights in respect of the matter for which the meeting is requested can requisi - tion a shareholder meeting to pass resolutions, which may include a resolution to remove a director or direc - tors from the board. This is a powerful tool that may be used by activists. 11.2 Aims of Activists Generally speaking, shareholder activists can work to effect social, governance and environmental change in the management of a company. A change in leader - ship can result in increased shareholder returns and an improvement in the overall performance of the company. 11.3 Interference With Completion It is always possible that activists may seek to inter - fere with the completion of announced transactions, and it is common to advise on such risks.
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