Most Read Contributor in British Virgin Islands, January 2017
The BVI is well known as a jurisdiction of choice for company
law due to its corporate flexibility, transactional certainty and
protection for third parties dealing with BVI business
But for one BVI corporate vehicle, the Restricted Purposes
Company (RPC), these principles are
reversed: transactions can be set aside for lack of authority,
capacity or power and owners and managers can be restricted in the
transactions they carry out. Also, an RPC's annual licence fee
of US$5,000 is far higher than a standard BVI company's annual
licence fee of US$350.
So who would want to use an RPC – and what were the
draftsmen of the BVI Business Companies Act trying to achieve in
this seeming deviation from their much admired (and emulated)
approach to corporate legislation?
The answer lies in structured finance, which the BVI is a
popular jurisdiction for. Structured finance has a need for
insolvency or bankruptcy remote companies that can only enter into
a specific transaction. The RPC was created to cater to this
sophisticated market, and has been the vehicle of choice for high
profile transactions including
Danone SA's US$613 million notes issue, CEMEX's US$1.5
billion financing, and Dong Feng's US$359 million
This article outlines the main features and uses of RPCs.
Click here to read more.
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.
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