Basic Due Diligence: BVI Company

Originally published by Mourant Group, written by Katherine Zeng

Introduction

Prior to a BVI company entering into a corporate or finance transaction (a Transaction) it is important to determine whether that company has the standing, capacity and authority to enter into the Transaction; whether it is required to comply with any particular execution formalities or whether there any other material corporate impediments to proceeding with the Transaction.

This brief note sets out what documentation is typically required to undertake such a due diligence exercise, where it may be obtained and some important points to consider.

Corporate Documents

To undertake basic due diligence on a BVI company the following documents will be required:

• Certificate of Incorporation*;
• Memorandum and Articles of Association* (M&A);
• Register of Directors;
• Register of Members;
• Register of Charges (and Register of Registered Charges*);
• Certificate of Good Standing*; and
• Certificate of Incumbency.

Those documents with an * can be obtained by BVI law counsel from the BVI Registry of Corporate Affairs by paying the appropriate fees. The remaining documents are not publicly available. These must be obtained directly from the BVI company, its counsel or its registered agent.

What to look for

in reviewing the corporate documents particular attention should be given to:

• dates: are the documents current or they out-of-date?
• status: is the BVI company in good standing? Has it paid its annual fee? Has it made all necessary filings?
• capacity: does the BVI company have the power under its M&A to enter into the transaction? Are there any restrictions on its powers or capacity?
• authority: are there any restrictions on the power of the directors to bind the BVI company? Are there any reserved powers in respect of the shareholders or that require unanimity of the board?
• execution: are the company signatories subject to specific execution requirements under the M&A - e.g. in respect of execution of deeds or in affixing the BVI company’s seal?
• directors: are the individuals listed on the register of directors correct?
• shares: if relevant, is there a notation on the register of members which encumbers the shares? Are the shares subject to restrictions on transfer or encumbrance under the M&A?
• security: has the BVI company secured any of its assets and, if so, is that security relevant to the current Transaction?