British Virgin Islands: Mergers & Acquisitions Guide 2017: BVI

1 Relevant Authorities and Legislation

1.1 What regulates M&A?

The primary sources of regulation of M&A in the British Virgin Islands are the Business Companies Act, 2004 (the "Companies Act") and common law.

Part IX of the Companies Act facilitates mergers and consolidations between one or more companies, provided that at least one constituent company is a British Virgin Islands company.

In addition:

  • mergers and reconstructions by way of a plan of arrangement or a scheme of arrangement approved by the requisite majorities of shareholders and/or creditors and by an order of the British Virgin Islands court under section 177 or section 179A, respectively, of the Companies Act are available for complex mergers; and
  • section 176 of the Companies Act provides a limited minority squeeze-out procedure.

The British Virgin Islands does not have a prescriptive set of legal principles specifically relevant to "going private" and other acquisition transactions (unlike other jurisdictions such as, for example, Delaware). Rather, broad common law and fiduciary principles will apply.

1.2 Are there different rules for different types of company?

There are no specific statutes or government regulation concerning the conduct of M&A transactions. Whilst the British Virgin Islands does not have a Stock Exchange, the shares or other securities of many British Virgin Islands companies are listed on the major international Stock Exchanges, and the rules of the relevant Exchange will need to be considered. The usual requirement under the Companies Act for shares to be transferred by way of a written instrument is disapplied (subject to the company's memorandum and articles of association) for shares listed on a recognised Exchange, if the transfer is carried out in accordance with the laws, rules, procedures and other requirements applicable to shares registered on the Exchange.

1.3 Are there special rules for foreign buyers?

There are no foreign investment restrictions or exchange control legislation in the British Virgin Islands; however, any company with an established physical presence in the British Virgin Islands must be structured and licensed in accordance with local laws, including with respect to ownership. Any company engaging in business locally (i.e. in the British Virgin Islands) is required to be licensed under the Business Professions & Trade Licenses Act, 1990 or the applicable financial services legislation. However, foreign investment, if considered beneficial to the British Virgin Islands' economy, is generally encouraged, and the British Virgin Islands government is considering introducing further incentives, including a special economic zone.

1.4 Are there any special sector-related rules?

There are change-of-control rules applicable to entities regulated by the British Virgin Islands Financial Services Commission under the relevant financial services legislation, including for example the Banks and Trust Companies Act, 1990 as amended and the Insurance Act, 2008 as amended.

1.5 What are the principal sources of liability?

Pursuant to section 120 of the Companies Act, a director of a British Virgin Islands must act honestly, in good faith and in what the director believes to be in the best interests of the company. In addition, at common law, the directors of British Virgin Islands companies owe fiduciary duties (generally described as being those of loyalty, honesty and good faith) to the company. Whilst it is common for directors of British Virgin Islands companies to be indemnified for certain breaches of this duty, pursuant to section 132 of the Companies Act, a company may not indemnify a director unless they have acted honestly, in good faith and in what they believed to be in the best interests of the company, and in the case of criminal proceedings, they had no reasonable cause to believe their conduct was unlawful.

To the extent that consent to a merger or acquisition is procured via an information memorandum or proxy statement, civil liability in tort may arise for negligent misstatement or fraudulent misrepresentation. Part II of the Securities and Investment Business Act, 2010 as amended ("Part II") will provide for rights to compensation for false or misleading advertisements of prospectuses; however, Part II is not in force.

The Insolvency Act, 2003 as amended provides a liquidator with the ability to challenge certain defined voidable transactions, including transactions at an undervalue or made with the effect of preferring a creditor.

2 Mechanics of Acquisition

2.1 What alternative means of acquisition are there?

The statutory merger regime is a longstanding feature of British Virgin Islands company law, and statutory merger is by far the most common method of structuring a complex acquisition or business combination. In certain cases, however, the statutory merger regime may not be suitable, and the traditional options, such as contractual equity or asset acquisition, remain. The threshold for a statutory merger (subject to the relevant constitutional documents of the company) requires only board approval and a shareholder resolution passed in accordance with the articles of association (typically, a simple majority of those shareholders attending and voting at the relevant meeting or by way of written resolution passed by shareholders with a majority of the voting rights). Dissenters to a merger have the right to be paid in cash the fair value of their shares as agreed with the company or, if agreement cannot be reached within the statutory timeframe, as appraised by independent appraisers pursuant to section 179 of the Companies Act. This can be a factor where the offer involves a share-for-share swap as opposed to a cash buy-out, or where the bidder anticipates issues with minority shareholders.

Plans of arrangement under section 177 of the Companies Act and schemes of arrangement under section 179A of the Companies Act are appropriate in certain circumstances. A scheme or plan of arrangement transaction will involve the production of a circular, typically a detailed disclosure document which must provide stakeholders with all information required to make an informed decision on the merits of the proposed arrangement. The principal benefit of a scheme is that if all the necessary majorities are obtained, hurdles are cleared and the court approves the scheme, then the terms of the scheme become binding on all members of the relevant class(es) of shareholders or creditors, whether or not they (a) received notice of the scheme, (b) voted at the meeting, (c) voted for or against the scheme, and (d) changed their minds afterwards. The consents for approval of a plan of arrangement under section 177 may be determined by the court and are therefore less rigid than the prescribed majorities required for a scheme of arrangement under section 179A. However, it should be noted that the court may order that dissenters' rights apply to a plan of arrangement but not to a scheme of arrangement.

In a tender offer, private contractual acquisition or public takeover, where control of the majority of the voting equity is required, the statutory squeeze-out remains available where the relevant statutory thresholds are met. Where a bidder has acquired 90% or more of the voting shares in a British Virgin Islands company, it can direct the company to acquire the shares of the remaining minority shareholders and thereby become the sole shareholder. Such a "squeeze-out" requires the acceptance of the offer by holders of no less than 90% of the voting shares in the company (including the holders of no less than 90% of the shares in each class entitled to vote as a class). Dissenters have the right to object to the acquisition and to receive the agreed or appraised fair value of their shares. Contractual asset acquisitions, where the target ceases doing business and is liquidated after the consummation of the sale, are uncommon given the flexibility and ease of use of the statutory merger regime, but remain a useful option.

2.2 What advisers do the parties need?

Parties should engage British Virgin Islands counsel alongside their usual legal advisers. Generally, auditors, tax and financial advisers are also involved in deal structuring.

2.3 How long does it take?

Depending on the complexity of the transaction, the structure and regulatory status of the target and the method employed, it can take anywhere from a matter of weeks to a number of months. For example, straightforward mergers of British Virgin Islands companies, where the shareholder base is relatively limited and there is no applicable public listing, may be accomplished in a few weeks. Where the target company is listed or the merger is a crossborder transaction, a longer deal time is required. Schemes of arrangements can run for many months depending on their complexity and given the requirements for court approval, as can complex take-private transactions.

2.4 What are the main hurdles?

A statutory merger, the disposal by a company of a majority of its assets, a squeeze-out transaction and (if ordered by the court) a plan of arrangement can provide for certain dissenters' rights which, in each case, essentially provide for dissenting shareholders to be paid in cash the fair value for their shares as agreed with the company or, if agreement cannot be reached in the statutory timeframe, as independently appraised.

For schemes of arrangement, no dissenters' rights apply; however, the key challenge is achieving the high approval majorities required of each class of shareholder.

2.5 How much flexibility is there over deal terms and price?

Parties are generally free to contract as they wish as to terms and price, subject to the directors of a British Virgin Islands company discharging their statutory and fiduciary duties, including the duty to act bona fide in the best interests of the company.

2.6 What differences are there between offering cash and other consideration?

Again, parties are generally free to contract as they wish as to terms and price. However, in the context of a statutory merger, where dissenters have the right to be paid in cash the fair value of their shares, a share-for-share deal may add complexity.

2.7 Do the same terms have to be offered to all shareholders?

Where an acquisition is structured by way of a statutory merger or scheme of arrangement, differing consideration can be paid to shareholders. For tender offers utilising a statutory squeeze-out, the same "offer" must be made to all shareholders.

2.8 Are there obligations to purchase other classes of target securities?

There are no statutory or common law obligations to purchase other classes of target securities.

2.9 Are there any limits on agreeing terms with employees?

There are no such limits applicable under British Virgin Islands law, save in the context of a business acquisition, to which the Labour Code, 2010 as amended may apply with regard to employees in the British Virgin Islands.

2.10 What role do employees, pension trustees and other stakeholders play?

Aside from a general consideration with respect to the relevant employment contracts, there are no employee or pension-specific provisions applicable to a statutory merger, save that where the surviving company is a British Virgin Islands company, it shall be liable for and subject to, in the same manner as the constituent companies, all contracts, obligations, claims, debts and liabilities of each of the constituent companies, including any employment liabilities.

For a scheme of arrangement, there are no specific employee or pension-specific provisions applicable, but where the rights of creditors are to be affected, the consent of the requisite majority will be required.

Employee, pension or creditor consideration will not be relevant to a tender offer or statutory squeeze-out or to an asset acquisition, save to the extent there are employees in the British Virgin Islands.

2.11 What documentation is needed?

Whilst not strictly prescribed by the Companies Act, any complex merger will require some form of disclosure statement, whether or not required by applicable listing rules or regulation in the jurisdiction in which the company operates or has a listing. The Companies Act requires each constituent company to enter into a written plan of merger, setting out certain prescribed information. For more complex transactions, this is usually accompanied by a long-form merger or framework agreement.

For schemes or plans of arrangement, alongside the applicable court documents, the scheme or plan circular must be provided to the scheme or plan participants, including sufficient information in order to allow them to make an informed decision in relation to the merits of the proposed arrangement.

For a tender offer, there is no British Virgin Islands prescribed documentation, but again relevant jurisdictional listing rules or regulation may be applicable. For a statutory squeeze-out, the Companies Act requires notice be given to dissenting shareholders. For an asset acquisition, there are no specific documentation requirements, and the parties are free to contract as they see fit.

2.12 Are there any special disclosure requirements?

For schemes or plans of arrangement, the scheme or plan circular must be provided to the scheme or plan participants and must include sufficient information in order to allow them to make an informed decision in relation to the merits of the proposed arrangement. For statutory mergers, the plan of merger must contain certain limited prescribed information and be approved by the board and a resolution of the shareholders of each British Virgin Islands constituent company.

2.13 What are the key costs?

The key costs will be service provider fees. Government filing fees will generally be minimal, and no stamp duty is payable on documents entered into by a British Virgin Islands company, provided that it does not hold an interest in land in the British Virgin Islands.

2.14 What consents are needed?

Other than as set out at question 1.4 above and absent any contractual consents required, there are generally no authorisations, consents, approvals, licences, validations or exemptions that are required by law from any governmental authorities or agencies or other official bodies in the British Virgin Islands in connection with merger and acquisition transactions.

The substantive merger documents are required to be filed with the Registrar of Corporate Affairs and, upon the satisfaction of the statutory requirements, the plan of merger shall be registered. A scheme of arrangement is subject to the sanction of the court, although the court's principal role in the scheme is to ensure procedural fairness and not to assess the commercial benefits of the proposal. Any shareholders or creditors who object to the scheme are entitled to attend the relevant court hearing to object – however, an objection solely on the grounds that it is a "bad deal" commercially is usually unlikely to succeed if the scheme has the support of the requisite majorities.

The court will determine the appropriate consents (if any) required to a plan of arrangement.

2.15 What levels of approval or acceptance are needed?

Absent any special thresholds or consent required by the constitutional documents of a British Virgin Islands company, or by contract, and the consents discussed at question 1.4 above, for a statutory merger, both board approval and shareholder approval (generally a simple majority of those attending and voting at the relevant meeting) are required.

A scheme of arrangement will require the requisite approval of each of the relevant class(es) of shareholders or creditors whose rights are to be subject to the scheme (namely, a majority in number representing 75% in value of the creditors or class of creditors, or shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting). The court will determine the appropriate consents (if any) required to a plan of arrangement.

2.16 When does cash consideration need to be committed and available?

There are no British Virgin Islands legal considerations relevant to determining when cash consideration needs to be committed and available.

To view the original article please click here.

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.

Matthew Gilbert
In association with
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.