BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Michael Gagie, Andrew Wood, Ruairi Bourke and Joanna Russell, Maples Group
5.3 Funding Structure of Private Equity Transactions There is no overarching norm for the financing of transactions undertaken by BVI funds – nor need there be as a matter of BVI law, given the inherent flexibility that BVI investment structures can offer. The choice of financing methodology will therefore usually be driven more by commercial (and cultural) considerations at the sponsor, fund and portfolio company level. 5.4 Multiple Investors Club deal arrangements and co-investment vehicles are more and more frequently being structured via the BVI, where they can avoid the need for private invest - ment fund registration because they are established either for a single investment or a single investor. Club deals will typically comprise a consortium of investors who will come together through a BVI aggregator vehicle to invest collectively, and who will have management and economic rights apportioned between them as agreed contractually. Classic co-investment structures (where they involve multiple investors), however, will usually have inves - tors take passive stakes as limited partners, with the vehicles then investing alongside the main private equity funds in which the co-investment vehicle lim - ited partners are also separately invested. 6. Terms of Acquisition Documentation 6.1 Types of Consideration Mechanism There is generally no restriction on the type of consid - eration that can be offered on a private treaty sale or negotiated offer. Consideration can therefore include, among other things, cash, loan notes and shares. The structuring of the consideration will be driven and agreed by the parties. 6.2 Locked-Box Consideration Structures There is no common practice in the BVI; this will be driven and agreed by the parties in each transaction.
6.3 Dispute Resolution for Consideration Structures There is no common practice in the BVI; this will be driven and agreed by the parties in each transaction. 6.4 Conditionality in Acquisition Documentation There is no common practice in the BVI; this will be driven and agreed by the parties in each transaction. 6.5 “Hell or High Water” Undertakings There is no common practice in the BVI; this will be driven and agreed by the parties in each transaction. 6.6 Break Fees There is no common practice in the BVI; this will be driven and agreed by the parties in each transaction. 6.7 Termination Rights in Acquisition Documentation There is no common practice in the BVI; this will be driven and agreed by the parties in each transaction. 6.8 Allocation of Risk There is no common practice in the BVI; this will be driven and agreed by the parties in each transaction. 6.9 Warranty and Indemnity Protection Warranty coverage in transactions in the BVI is gener - ally limited to the title of target shares or assets, the capacity and authorisation to enter into the transac - tion, solvency and accuracy, and the completeness of the information provided to the buyer. 6.10 Other Protections in Acquisition Documentation There is no common practice in the BVI; this will be driven and agreed by the parties in each transaction. 6.11 Commonly Litigated Provisions Litigation of private equity transactions is rare in the BVI. The most likely reason for litigation would be the exercise of a dissenter’s rights in the context of a statutory merger.
61 CHAMBERS.COM
Powered by FlippingBook