Cayman Islands: The British Virgin Islands And Commercial Law

Last Updated: 31 August 2016
Article by Rosalind Nicholson

Most Read Contributor in Cayman Islands, November 2017

Beginning our short focus on Commercial Law, through the eyes of a Thought Leader, is Rosalind Nicholson on the topic of Commercial Law, and heard about her work in the British Virgin Islands, with a particular focus on shareholder disputes.

There are more than 450,000 active business companies in the BVI. What is it that attracts companies to establish business operations in the BVI?

There are a number of factors which combine to make the British Virgin Islands (BVI) the leading offshore incorporation domicile.

First, as a British Overseas Territory, the BVI offers a stable political environment, with a democratically elected House of Assembly. The official language is English and it is on the Organisation for Economic Cooperation and Development's (OECD) 'White List'.

Second, the Business Companies Act, which governs international business companies is tailor-made for the BVI and draws on legislative precedents from England and Wales, Canada, Delaware and elsewhere, selecting from the strengths of each with innovations unique to the BVI. The result is user-friendly, flexible and efficient statutory framework designed to facilitate the carrying on of corporate business world-wide.

Third, the BVI provides a neutral tax jurisdiction for business companies: there is no corporation tax, capital gains tax, wealth tax, income tax or any other tax applicable to a business company. A BVI business company is exempt from the payment of stamp duty on any instruments or deeds relating to the business of the business company, including the transfer of all property to or by it and transactions in respect of its securities. This means that businesses which choose to structure their operations through the BVI do not thereby include an additional layer of tax at that level. Instead, tax is payable on the business operations where they are carried on, profits at holding company level do not attract additional tax.

Fourth, the BVI is a common law jurisdiction whose laws are, broadly speaking, drawn from English law. It therefore draws on English law to a large extent for precedent, whilst continuing to develop a local jurisprudence of its own. The BVI has an internationally renowned modern, specialist commercial court, which deals exclusively with corporate and commercial matters. The Commercial Court is staffed by specialist Judges experienced in dealing with the sorts of matters which the Court sees, many of whom are senior QCs drawn from the London Chancery and Commercial Bar. The ultimate court of appeal is to the Privy Council in London.

These four factors make the BVI attractive to a variety of businesses, from those wishing to structure their affairs under a tax-neutral holding company to joint ventures, often between parties from different jurisdictions from one another, wanting to ensure that their mutual participation is governed by a system of law neutral as between them but nevertheless robust, commercial, tried and tested and to be relied upon.

As a professional whose primary focus is on corporate litigation, what are the most common disputes that you see?

Although our practice covers all areas in which issues of company law arise, we do see a lot of disputes which arise out of tensions in the relationship between shareholders in a BVI company. These disputes can take a variety of forms, from disputes about the entitlement of an individual to have his name entered in the company's register of members as the holder of a particular percentage of the company's shares, to challenges to Board Appointments or to the exercise by directors of their powers. Frequently, the dispute has been triggered because of the displacement of one of the investors in a joint venture facing the de facto takeover of the company's business by his fellow investor or investors, sometimes achieved through the exercise of rights attached to investments structured in the form of company debt. There has also been a recent, interesting, line of work arising in connection with the exercise of their statutory rights of dissent by shareholders to mergers, redemptions and plans of arrangement.

Having said that, much of my work involves advising companies and their boards as to how to avoid disputes developing: in other words, alerting them to the potential consequences of a particular course or courses of action and in particular any litigation risk associated with it so as to assist them in avoiding, mitigating or managing that risk.

Which are the most common triggers for disputes that might arise between shareholders?

Experience suggests that, whilst there is no apparent limit to the reasons why shareholders fall out, there are two regular sets of circumstances which appear again and again as the backdrop to disputes between shareholders.

One is the point of generational changeover in a family business: for example, where the time comes for a child or children working in a family business to takeover from their parents who founded and built the business. Sometimes the dispute is between the two generations but often between members of the succeeding generation: between one child or family group and another.

Another typical situation in which disputes of this type are triggered is where the founder of a business has engaged with external investors in order to develop the business: this relationship carries with it an inherent tension which often results in disputes. However, whatever the particular trigger or the particular context in which the dispute arises, of its nature, the association between the shareholders in the company the subject of the dispute is often one which has evolved out of a relationship of partnership, or familial connection. As a consequence, these sorts of disputes tend to bring with them rather more than a commercially driven wish to maximise a return on an investment in a business.

What is the best way to resolve shareholder disputes when they do arise?

In terms of resolving shareholder disputes, litigation is of course a blunt tool and one to be used with care. However, sometimes a negotiated settlement, even through a formal mediation, is just not possible outside the framework of an issued claim, particularly where the dispute at its core involves a struggle for power between people who have at one time been close associates, friends or family members.

So far as litigation is concerned, the BVI Business Companies Act supplies a suite of remedies to an aggrieved shareholder. These include a remedy for oppression or unfair prejudice or discrimination, similar to the provisions in the English Companies Act and a derivative action also similar to the English equivalent. However, the BVI statute goes further providing for a Compliance Order similar to that found in the Canada Business Corporations Act. This remedy allows a Member to invoke the jurisdiction of the Court to enforce compliance with the Business Companies Act or the Memorandum or Articles. For example, if a company refused to recognise a proxy validly appointed by a shareholder to attend a meeting on his behalf, the aggrieved shareholder could ask the Court to require that the Directors recognise the appointment. The Business Companies Act also allows the Court to order a meeting of members to be held and conducted in such manners as the Court thinks fit if it is impracticable to call or conduct a meeting in the manner specified by the Act or the company's Memorandum and Articles of Association.

If none of the Business Companies Act remedies quite fits the bill, then the BVI Insolvency Act 2003 allows the Court to appoint a liquidator of a company on just and equitable grounds. The approach of the BVI Court to just and equitable winding up is broadly similar to the approach which the UK Courts have adopted since the decision of the House of Lords in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360.

So, in a case where a negotiated settlement is not possible or where ADR has failed, a shareholder in a BVI company will find he has a number of options to assist him in achieving a resolution to his claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions