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 companies.
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 securitisations.
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.
