BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Michael Gagie, Andrew Wood, Ruairi Bourke and Joanna Russell, Maples Group
determined and agreed by the parties in each trans - action.
Under BVI common law, the circumstances where a BVI court will allow the corporate veil to be “pierced” or “lifted”, so as to hold a member of a company liable for the company’s acts, are rare and limited. Such cir - cumstances include, for instance, where a company is misused as a device or façade to conceal wrongdoing, or is used for an illegal or immoral purpose.
8. Management Incentives 8.1 Equity Incentivisation and Ownership There is no common practice in the BVI; any terms will be determined and agreed by the parties in each transaction. 8.2 Management Participation See 8.1 Equity Incentivisation and Ownership . 8.3 Vesting/Leaver Provisions See 8.1 Equity Incentivisation and Ownership . 8.4 Restrictions on Manager Shareholders See 8.1 Equity Incentivisation and Ownership . 8.5 Minority Protection for Manager Shareholders See 8.1 Equity Incentivisation and Ownership . 9. Portfolio Company Oversight 9.1 Shareholder Control and Information Rights The extent and scope of control and governance rights enjoyed by BVI closed-end funds at the portfo - lio company level will often be driven by the relative size of the stake acquired, as well as by the market norms where the portfolio company is situated. This will therefore not usually be a question driven by BVI- specific matters. 9.2 Shareholder Liability The “corporate veil” effectively separates the legal person who owns a company from the company itself. A duly incorporated BVI company is a legal entity separate from those who incorporate it, with rights, liabilities and property of its own. This is also the position within a group of companies where the fundamental principle is that each company in a group is a separate legal entity possessed of separate legal rights and liabilities.
10. Exits 10.1 Types of Exit
There is no typical practice in the BVI, with private equity funds being established with a wide variety of exit terms. “Dual-track” and “triple-track” exits are uncommon. 10.2 Drag and Tag Rights It is common to see the inclusion of drag rights in the constitutional documents of BVI companies. There are no typical terms in the BVI; these will be determined and agreed by the commercial parties in each transac - tion rather than by any BVI-specific factors. As with drag rights, the use of tag rights is common in the BVI. Again, there are no typical terms in the BVI; these will be determined and agreed by the parties in each transaction rather than by any BVI-specific fac - tors, legal or otherwise. 10.3 IPO The use of BVI entities to effect IPOs on a variety of international exchanges is a well-trodden path. How - ever, the terms of any lock-up arrangements or ongo - ing relationships will be determined by reference to the relevant exchange and jurisdiction rather than by any BVI-specific factors.
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