Original Publisher: Loeb Smith Attorneys
Author: Peter Vas, Partner - Loeb Smith Attorneys, Hong Kong
Date: 18 January 2021
Coronavirus (“Covid-19”) is continuing its spread across the world, with more than 85 million confirmed cases in 220 countries and more than 1.8 million deaths. In response, governments worldwide have implemented far ranging containment measures, such as travel restrictions, mandatory quarantine and social distancing. Many of our clients have additionally activated their business continuity and contingency plans and put in place alternate workplace arrangements and/or heightened measures to ensure the health and safety of their employees. These policies have disrupted “business as usual” and our clients with British Virgin Islands (“BVI”) companies have faced a number of challenges accordingly.
In this brief guide, we address certain of the most frequently asked BVI law questions that our clients have posed in connection with the difficulties that Covid-19 presents in the context of corporate and finance transactions. We also offer some practical guidance and considerations with respect these issues.
Subject to a company’s memorandum and articles of association (“M&A”), BVI law does not impose any restrictions on where a meeting of the board of directors and/or shareholders can be held. That being said, the board of directors should always take into account any tax and economic substance implications when determining the location of a meeting.
In the event it is not possible to hold a face-to-face meeting of the board of directors and/or the shareholders, BVI law does offer the following alternative options subject to the M&A of the relevant company permitting such options:
i. A meeting of the board of directors and/or the shareholders may be held by telephone or by other electronic means so long as those persons participating can hear each other. “Electronic means” typically includes video conferencing facilities, Skype, Zoom, Teams and any similar electronic service. As a practical matter, it is important to ensure that the notice of the relevant meeting includes all information that is necessary for the participants to attend via the chosen electronic platform.
ii. The board of directors and/or shareholders (as appropriate) may pass resolutions unanimously in writing. BVI law also permits written resolutions to be passed by a simple majority provided that is expressly permitted by the M&A. Any written resolutions may be executed in counterpart. If the relevant directors or shareholders (as applicable) are located in different time zones and timing is not critical, passing resolutions in writing may be appropriate.
The following additional options should also be kept in mind for the purposes of facilitating a meeting with the required quorum:
i. A shareholder of a BVI company may appoint a proxy who may speak and vote on behalf of that shareholder at a meeting. The instrument appointing the proxy should be in writing and comply with any requirements of the relevant company’s M&A.
ii. If permitted by the relevant Company’s M&A, a director of a BVI company may appoint an alternate to exercise all of the powers and perform all of the responsibilities of that director. The instrument appointing the alternate should be in writing and comply with any requirements of the relevant company’s M&A.
In part II of this guide, we will briefly consider the impact of Covid-19 on demonstrating economic substance in the BVI, as well as the impact of Covid-19 on the execution of documents and practical workarounds to some of the challenges that our clients have encountered. Stay tuned.
(This publication is not intended to be a substitute for specific legal advice or a legal opinion. For specific advice, please contact: Peter Vas Partner, Loeb Smith Attorneys, Hong Kong, T: +852 5225 4920 E: firstname.lastname@example.org www.loebsmith.com)
Loeb Smith Attorneys is an offshore law firm which delivers high quality Partner-led professional legal services at competitive rates. We are Cayman Islands Law and BVI Law specialists on international corporate, investment and finance transactions. We have an excellent track record of advising investment fund managers, in-house counsels, financial institutions, onshore counsels, banks, companies, and private clients to find successful outcomes and solutions to their day-to-day issues and complex, strategic matters.