BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Michael Gagie, Andrew Wood, Ruairi Bourke and Joanna Russell, Maples Group
7. Takeovers 7.1 Public-to-Private
7.6 Acquiring Less Than 100% There are no restrictions under BVI law in respect of governance rights for a shareholder holding less than 100% of the issued shares of a company. In the absence of any provisions that state otherwise or class rights in the constitutional documents, a share - holder acquiring a majority of shares in a BVI company can amend the memorandum and articles of associa - tion, approve a statutory merger (subject also to board approval) and put the company into voluntary solvent liquidation. There are two statutory mechanisms to squeeze out minority shareholders under BVI law. Members of a company holding 90% of the votes of the outstand - ing shares entitled to vote may give written instruc - tions to the company directing it to redeem the shares held by the remaining shareholders. A squeeze-out will give rise to the right of the minority shareholder to dissent and receive payment for the “fair value” of their shares. In addition, an alternate option is to squeeze out the minority by way of a statutory merger, as BVI law pro - vides that a parent company (meaning a company that owns at least 90% of the outstanding shares of each class of shares in another company) may merge with its subsidiary without the need for shareholder approval. While it is unclear if, in the context of a par - ent-subsidiary merger, dissent rights are available to a minority shareholder, it would be prudent to make such right available to avoid any implication that the statutory merger route was used (as opposed to the statutory squeeze-out) to deny the minority sharehold - ers the opportunity to dissent. There are no specific thresholds or mechanisms under BVI law in connection with a “debt push-down”; any consents required would be subject to the usual cor - porate approvals depending on how the arrangement was structured. 7.7 Irrevocable Commitments Where an offer is recommended by the board of direc - tors of the target, obtaining irrevocable undertakings or commitments from the main shareholder(s) is com - mon. There is no common practice in the BVI as to the timing or nature of the undertakings, which will be
The market for take-private transactions involving BVI companies continues to be active, and these often involve private equity parties. There have been a num - ber of take-privates in Asia involving Chinese ListCos, and in the UK involving companies listed on the Lon - don Stock Exchange. There is no common practice in the BVI in respect of “relationship agreements”, “transaction agree - ments” or other similar arrangements; any agreements between the parties will be determined by the parties in each transaction. 7.2 Material Shareholding Thresholds and Disclosure in Tender Offers There are no material shareholding or disclosure thresholds relevant under BVI law. Where the found - ers (and others) are leading a listed take-private trans - action, disclosure around shareholdings in a target would usually be included in the offer documents for the transaction. 7.3 Mandatory Offer Thresholds There are no material offer thresholds relevant under BVI law. 7.4 Consideration Both cash and shares are commonly used in the BVI; there are no minimum price rules applying to tender offers in the BVI. 7.5 Conditions in Takeovers Any conditions to an offer will be determined by the jurisdiction in which the business operates and rel - evant market considerations rather than by any BVI- specific factors. There are no restrictions, as a matter of BVI law, as to what deal-security measures a bid - der can seek; break fees, match rights, force-the-vote provisions and non-solicitation provisions would all be permitted. However, it should be noted that, in agreeing any such provisions, the directors of a BVI company must act in accordance with their fiduciary duties (ie, their duties to act honestly, in good faith and in the best interests of the company).
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