BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Michael Gagie, Andrew Wood, Ruairi Bourke and Joanna Russell, Maples Group
Maples Group Ritter House PO Box 173 Road Town Tortola VG1110 British Virgin Islands 6th Floor, DUO 280 Bishopsgate London EC2M 4RB United Kingdom Tel: +1 284 852 3000 +44 20 7466 1600 Email: info@maples.com Web: www.maples.com
1. Transaction Activity 1.1 Private Equity Transactions and M&A Deals in General The British Virgin Islands (BVI) has long been a favoured jurisdiction for asset holding and transac - tion structuring among private equity sponsors, with clients benefitting from the jurisdiction’s tax neutrality, robust legal system and ease of use and entity set- up. As long as these attractions remain, the authors expect the jurisdiction’s popularity to continue and for BVI entities to retain a significant presence in M&A activity around the world. 1.2 Market Activity and Impact of Macro- Economic Factors While other jurisdictions, including the Cayman Islands, have been dominant in the world of offshore investment funds, the BVI continues to increase in popularity in the closed-end sector of the industry. Increasingly, single-investor funds, single-investment funds and “club deals” are being structured through the BVI, in addition to co-investment vehicles set up to hold a single investment for one or more investors within the framework of an existing closed-end fund structure.
2. Private Equity Developments 2.1 Impact of Legal Developments on Funds and Transactions The rise in BVI investment fund activity has been driv - en in part by certain differences in the regulation of closed-end funds between the Cayman Islands and the BVI, which are discussed in the following. Limited Partnership Act (As Revised) (the “LP Act”) In addition to such regulatory arbitrage, the introduc - tion in the BVI in 2017 of refreshed partnership leg - islation in the form of the LP Act has also attracted new users to the jurisdiction. The LP Act replaced the somewhat under-utilised international limited partner - ship regime and offers managers an extremely flexible and modern tool for structuring closed-end invest - ment funds. The LP Act draws significantly from the limited part - nership regimes of other jurisdictions. BVI limited part - nerships now share many of the features of those of other offerings, including broad freedom of contract and the ability to limit the liability of passive investors. BVI limited partnership general partners are also sub - ject to substantially the same unlimited liability for lim - ited partnership debts and liabilities, as well as statu - tory duties to always act in good faith and (subject to
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