Most Read Contributor in British Virgin Islands, February 2017
Many BVI companies have individual shareholders, and often, a
single shareholder. Where the owner of a BVI company dies, his or
her interest in shares in a BVI company cannot be validly
transmitted to his or her heirs until the appropriate grant (of
probate, letters of administration or re-sealing) has been obtained
from the BVI court. Prior to the required grant being obtained, the
shares are effectively frozen, as they cannot be transferred, voted
on or sold, nor can any dividends paid on those shares be
The BVI Court is generally very efficient and grant applications
are handled promptly, however, the whole process typically takes
several months. Where a foreign will requires to be translated, or
there is no will at all, the process of obtaining the required
grant may take significantly longer, and in some cases, cannot
commence until probate or equivalent has been obtained in the
deceased's home jurisdiction. Applying to the BVI Court for the
required grant does not automatically make the will a public
document, but anyone who can show that they have a 'legitimate
interest' can obtain access to it. Further, because of the
public nature of the Court process, there is a high risk of details
of the ownership of the shares, who will ultimately inherit them
and their value, entering the public domain.
Similar issues arise in the event that the shareholder loses the
capacity to manage his or her affairs. In such an event, in the
absence of a Power of Attorney, the shares are similarly
effectively frozen until an appropriate Court order can be
obtained. Harneys can assist in taking appropriate steps to
mitigate these issues.
Where there's a will there's a way
As a minimum, we recommend that all individual shareholders in
BVI companies put in place a BVI will. Putting a BVI will in place
will simplify the process of obtaining probate to the shares, and
reduce the time delay, as the process can run concurrently with any
application for probate or equivalent in the deceased's home
jurisdiction. However, a will will not cover the situation where
the shareholder loses capacity, nor does it provide any asset
protection benefits. In particular, the shares could be subject to
forced heirship claims in terms of the law of the deceased's
home jurisdiction, and as such may not be able to pass under the
terms of the will in accordance with the deceased's wishes.
In trusts we trust
The more comprehensive solution is to put the shares in trust. A
trust is a flexible structure and can be structured in such terms
as best meet the requirements of the creator of the trust (known as
the settlor). BVI trust law provides various mechanisms by which a
settlor can continue to benefit from and exercise control over
assets put in trust during his or her lifetime. A trust deed is an
entirely confidential document; there is no register of trusts in
the BVI. There is no need to obtain probate where shares are held
in trust. A trust structure also provides additional asset
protection benefits. Any shares held are protected from the forced
heirship claims which might otherwise arise on the death of a
shareholder if the shares were held outright, meaning that the
shares can be held in accordance with the settlor's long term
succession plans. A trust structure can also protect the shares
from claims on divorce and from creditors.
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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