British Virgin Islands: SPAC-Tacular Deals Ahead! The Top 3 Advantages Of An Offshore SPAC In A Global Buyers Market

Whether fuelled by low oil, gas and commodity prices or propelled by the huge potential of the Trump administration's promises of regulatory and tax reform, the Dow hit new record highs in October 2017 putting the cherry on the cake of a globally bullish stock market and boldly reaffirming that investor confidence is on an incredibly heady high. It is no surprise then that interest in SPACs or special purpose acquisition companies is surging yet again.

SPACs go by many names – they are also referred to as "Blank Check" companies in the US and "Cash Shells" in the UK. At their root they are simply companies created specifically to raise capital through a stock market listing of their securities, which then go on to use the cash raised to make strategic acquisitions. At the date of its initial public offering (IPO), the SPAC has no business operations and no tangible assets. Instead, investors put their funds and faith in the hands of an experienced management team whose sole purpose is to identify a target company or group which will be purchased outright or which will be merged with the SPAC. Often, the target is an unlisted company, and part of the deal consideration will be shares in the SPAC, which means that the target company's shareholders end up being investors in an enlarged, publicly listed company with a top tier management team.

A SPAC typically has 18-24 months to lock in on a target. Under US regulations, during that period the funds raised are required to be held on trust. If the SPAC fails to find a worthy investment option then the IPO proceeds are released from trust and returned to investors.

SPAC Stats

Despite general volatility in the IPO market internationally, in recent years, SPACs are seeking and capitalising on business combination opportunities.

Dealogic quantified SPACs' share of the global IPO volume at 3.1 per cent in 2016, which is the highest since 2008. SPAC IPOs in 2016 included the US$450 million listing of Silver Run Acquisition Corporation with its focus on the undervalued oil and gas sector emerging as one of the biggest IPOs for the first quarter, the US$690 million listing of CF Corp in May and the US$552 million listing of GTY Technology Holdings in October.

The last two years also saw SPACs making serious strides in the Canadian market. Acasta Enterprises Inc raised US$404.5 million in its IPO in July 2015 and then went on to identify not a single target but instead multiple targets to allow for acquisition of three companies with an aggregate enterprise value of US$1.2 billon. In Q1 in 2017 Acosta reported quarterly revenues amounting to C$92.97 million versus the previous year's C$457,000.

But Bloomberg observed that SPACs are "poised for their biggest year ever" in 2017, pointing to the Silver Run Acquisition Corp. II's US offering which raised US$1.035 billion in March. The article also identified the biggest jewel in the SPAC resurgence crown - J2 Acquisition Ltd - a BVI registered company, which raised a whopping US$1.25 billion via its London Stock Exchange IPO in September 2017.

SPACs, it seems, are back, so it's definitely time for management teams and investors to consider the benefits of using an offshore vehicle.

The Offshore Advantage

The advantages of a BVI incorporated SPAC are generally the same as for any other offshore listed vehicle but the top three advantages are:


One of the best features offered by BVI companies is their flexibility. BVI law provides that companies need not set out their specific purpose(s) in their constitutional documents but may instead engage in any act or activity.

This flexibility is critical, as although a SPAC may identify a sector within which to hunt for an investment opportunity, at the time of the IPO, the management team may not have identified the target or indeed the manner in which the acquisition is to be structured.

In keeping with the focus on flexibility, BVI law allows the constitutional documents of a company to be specifically tailored so that they reflect the requirements of the relevant stock exchange and the demands or concerns of investors. The documents may be crafted so that to the fullest extent possible they closely resemble those of an onshore listed company (if that is what is required). Alternatively, there can be a much gentler approach to with minimal changes being made to standard incorporation documents.

BVI companies may offer an unlimited number of shares of different classes and different types of securities. If different classes of shares are to be offered by a company, each class and their respective rights must be reflected in the company's constitutional documents but there is no requirement to reference any other types of securities to be issued, so a BVI SPAC has the ability to freely offer units comprised of the shares and warrant combinations which are a standard feature of SPACs.

Corporate Governance Requirements – Options to gear up or gear down

BVI companies are not required to provide shareholders with pre-emptive rights, have no prohibition against financial assistance and have flexibility with respect to share dealings with related parties. Standard asset acquisitions are typically approved by the directors only with no general need for shareholder consent – although this may be required under applicable listing rules (eg where the transaction is a reverse takeover).

If the intention is to list on the Alternative Investment Market (AIM) or by way of a Standard Listing on the London Stock Exchange then it is worthy to note that BVI companies are not automatically subject to corporate governance codes such as the UK City Code on Takeovers and Mergers. Further there is no equivalent BVI takeover code and the BVI securities legislation applicable to listed companies is not yet in effect. BVI companies may however elect to adhere to the onshore codes.

If the SPAC is looking to list on a US stock exchange then the United States Securities and Exchange Commission (the SEC) makes several concessions for companies registered offshore and which qualify as a Foreign Private Issuer (FPI). FPIs notably, unlike domestic US issuers are not required to file quarterly reports. In addition, they have the flexibility to choose the reporting currency to be presented in their financial statements. They are exempt from US proxy rules and therefore may send proxy materials to investors without the SEC's approval. They are, in certain instances, permitted to submit draft registration statements to the SEC on a confidential basis so that any issues may be resolved before the documents are in the public domain with the additional benefit that registration fees need not be paid until a final statement has been approved and filed on EDGAR. There are other noteworthy exemptions and SPACs may therefore choose to take advantage of a slew of more relaxed disclosure requirements or they may choose to make filings and report in the same manner as their US domestic counterparts. The thing is... offshore SPACs have options.

To maintain FPI status, it is suggested that the SPAC hold escrow funds in an offshore account, have a board with a majority of foreign directors and seek a non-US company as its acquisition target.

User-Friendly Merger Rules

Since 1984, BVI company law has allowed a BVI company to merge with another company (or companies) with a single entity emerging as the survivor entity vested, by operation of law, with the assets and liabilities of the constituent companies to the merger.

A BVI company is permitted to merge not only with another BVI company but also with a company registered in any other jurisdiction where the laws allow for cross border mergers. This clearly facilitates the acquisition of the target company wherever it has been incorporated.

The BVI's merger regime is modelled on Delaware law so US counsel will be familiar with the ease of the process and its general popularity means is also well known to UK and Canadian counsel as well.

Essentially a plan of merger setting out the terms of the merger, including how securities issued by the merging companies are to be treated or converted after the merger takes effect, must be approved by directors and shareholders of the merging companies. Helpfully, BVI law demands only majority shareholder consent for a merger unless the BVI company's constitution sets a higher threshold.

There is no requirement under BVI law for any other consents or pre-approvals from regulatory or other authorities so once the directors and shareholders approve the plan of merger, articles of merger may be signed and filed with the BVI Registry of Corporate Affairs (the BVI Registry) to bring the merger into effect.

We understand that the SEC doesn't review proxy statements for mergers by FPIs, which may reduce the time needed for effecting a merger by as much as three to four months. A reduced time frame, needless to say, has obvious advantages especially since SPACs are literally on the clock where it comes to closing a deal.

If the BVI company is to be the surviving company to the merger, then the effective date of the merger is the date the articles of merger are filed with the BVI Registry or a date no later than 30 days after the filing date.

If the acquisition of the target company is to be effected by a means other than a merger then shareholder consent for the acquisition may not be required in many instances unless special provisions in the BVI company's constitution demands it.

Deal or No Deal

Other benefits for using a BVI registered company as a SPAC include the reasonable costs of its incorporation and maintenance and the ease with which a BVI company may effect redemptions or a liquidation, if no acceptable target is found by the SPAC within the time frame allocated post listing.

BVI companies are undoubtedly a prominent feature on the international transactional stage and have been (and are currently) listed on recognised stock exchanges around the world including NASDAQ, AIM, the Hong Kong Stock Exchange, the Toronto Stock Exchange and the London Stock Exchange.

They have successfully been used as SPACs in the past, with J2 Acquisition Ltd's US$1.25 billion IPO being the most recent success story, but also quite notable is Justice Holdings Limited (JHL), which closed a business combination with Burger King Worldwide Holding Inc, leading to shareholders of the world's second largest fast food chain receiving US$1.4 billion in cash and JHL's shareholders leaving the table with 29 per cent of the resulting combined publicly traded company.

Falling prices in certain sectors have created a treasure chest of target companies hungry for a cash injection or the allure of becoming a listed company. All these factors combine to create a global buyer's market with a BVI vehicle as a spectacular option for a SPAC.

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.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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