BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Matthew Cowman, Alex Drysdale, Rosalind Nicholson and Omonike Robinson-Pickering, Walkers
However, notwithstanding the above, this does not derogate from the fiduciary duty of the direc - tor to act in the best interests of the company and to exercise his or her powers for a proper purpose. While disclosure of the relevant conflict is generally deemed to be sufficient to mitigate any risk of the conflict affecting the decision- making process, subject to the nature of the underlying conflict in some cases a committee of non-conflicted directors may be formed to consider certain matters relating to the business combination. However, pursuant to the Act there are certain matters the directors do not have the power to delegate to a committee of directors, such as approving a plan of merger, consolida - tion or arrangement. 8.3 Business Judgement Rule The board of directors of a BVI company ben - efits from the “business judgement rule” , which reflects the position that the BVI courts will only interfere with the decision of the board of direc - tors of a company if it is determined that no reasonable board could have concluded that such decision was in the best interests of the company and/or that it could not reasonably be concluded that the decision was taken for a proper purpose. Indeed, as long as a decision of the directors is made in good faith and for a proper purpose, the BVI courts will not concern themselves with the merits of the decision from a commercial perspective. 8.4 Independent Outside Advice The board of directors of a BVI company will typically take advice from legal counsel on a transaction, and from financial, accountancy and tax advisers. The board may also seek a fairness opinion to be compiled by a qualified investment banker, which will evaluate the fairness of the price offered with respect to the acquisition. To the extent there are any members who seek to
dissent from the merger and exercise their statu - tory dissent right, a company may also need to engage a valuation or appraisal firm to seek to agree on the fair value for the shares. 8.5 Conflicts of Interest Allegations of conflicts of interest made against directors often arise in the context of share - holder disputes. However, there are no judicial decisions focusing on this aspect of a director’s duties, as far as is known. Whilst hostile tender offers are permitted, it is much more common to see recommended offers for the acquisition of publicly listed BVI companies. Indeed, the opportunities to effect a hostile acquisition of a BVI company are limited and, of the structures available, only a tender offer is generally practicable for a hostile bid, as each of the other mechanisms would require a board recommendation, including the BVI statu - tory merger, the scheme or arrangement and the plan of arrangement. The Act contains squeeze- out provisions, but these apply only where the hostile party holds 90% of the votes of the out - standing shares entitled to vote and 90% of the votes of each class of share entitled to vote as a class. The squeeze-out provisions may also be restricted or disapplied in the company’s Memo - 9. Defensive Measures 9.1 Hostile Tender Offers
randum and Articles of Association. 9.2 Directors’ Use of Defensive Measures
BVI law allows for the use of defensive measures by directors, subject to the directors complying with their fiduciary duties.
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