With the recent increasing trend of Chinese banks and companies being directly involved in providing financing, more legal documents are being drafted in the Chinese language by local onshore counsel, although many of the companies involved in these transactions may not be incorporated in the Peoples Republic of China. Not only are the primary loan documents being drafted in Chinese, but also the associated financing documents, such as guarantees, charges, debentures, subordination agreements and corporate resolutions.
The respective companies laws of Bermuda, the BVI and Cayman do not expressly deal with the circumstances where security documents creating charges over the assets of offshore entities are drafted in languages other than English. In this regard, we are often asked how to deal with registering foreign language charges in these offshore jurisdictions. Set out below are our conclusions based on discussions with the various offshore companies registries and ongoing best practice.
Bermuda
Public filing: To register a foreign language security document with the Bermuda Registrar of Companies (the "Bermuda Registrar") pursuant to Part V of the Bermuda Companies Act 1981 (as amended), a certified copy of the English translation of such security document is required to be filed with the Bermuda Registrar along with the relevant registration form (in English).
The English translation of the foreign language security document should be certified as a "true and correct translation of the original charging document" by the translator who performs the translation. There is no requirement that the translator be qualified by a professional translating body and the onshore counsel preparing the security document would be an appropriate person to provide the certified English translation.
Offshore counsel, such as Appleby, would then prepare the registration form to be filed with the Bermuda Registrar (in English, and using the certified copy of the English translation of the security document). The onshore counsel may then review and confirm the accuracy of the registration form before it is filed.
BVI
Public Filing: To register a charge by a BVI company pursuant to section 163 of the BVI Business Company Act 2004 (as amended) (the "BVIBCA"), the BVI Registrar of Corporate Affairs (the "BVI Registrar") requires only the filing of a registration form. The underlying security document is not required to be filed with the BVI Registrar. As is the case with Bermuda, the BVI registration form must be in English.
In circumstances where a foreign language security document is concerned (for example in Chinese), offshore counsel possessing Chinese language capability, like Appleby would prepare the registration form and the onshore counsel that drafted the security document would then review and confirm the accuracy of the English translation prior to the registration form being filed.
Private Filing: Registration of a charge by a BVI company pursuant to section 162 of the BVIBCA requires the recording of the particulars of the security document on the register of charges maintained at the registered office of the BVI company or at the office of its registered agent.
The particulars on the register of charges must also be in English. Appleby can translate the relevant information in respect of the security documents and insert the information on the register of charges. The onshore counsel may then confirm the accuracy of the particulars inserted.
Cayman Islands
Private Filing: Section 54 of the Cayman Islands Companies Law (2011 Revision) requires a recording of the short description of the property mortgaged or charged and other related particulars on a register of mortgages and charges maintained at the Cayman company's registered office.
Similarly to the BVI private filing approach, the particulars on the register of mortgages and charges must be in English. Appleby can translate the relevant information in respect of the security documents and insert the information on the register of charges. The onshore counsel may then confirm the accuracy of the particulars inserted.
While the registration of security documents will not affect the validity of a charge, registration may affect priority. As the various companies laws of Bermuda, BVI and the Cayman Islands do not deal with foreign language issues, following our suggestions should ensure foreign language security documents are properly registered in these jurisdictions.
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.