An important part of the assessment of an applicant for a SIBA licence is to consider the fit and proper status of the persons who ultimately own and exercise control of the licensee. Section 11 of SIBA has always required that the prior written approval of the British Virgin Islands Financial Services Commission (the "Commission") be obtained prior to the disposal or acquisition of a "significant interest" in a licensee.
"Significant interest" is, broadly speaking, an interest in the licensee or any parent of the licensee which gives the holder (acting alone or in concert with other persons) either (a) a 10% or greater control of the voting rights or (b) a 10% or greater interest in the distribution of surplus assets or (c) a right to appoint or remove one or more directors.
Section 11 of SIBA has recently been amended and seeks to address the fact that prior to the amendments being made it was possible for a significant interest in a licensee to be transferred without the licensee acquiescing. While the transferor and transferee would have breached section 11 in many cases both parties were outside of the BVI. Section 11 now provides that the licensee will be deemed to have caused, permitted or acquiesced in the sale, transfer etc. of a significant interest in the licensee in breach of section 11.
Licensees could as a result of the amendments be in breach of section 11 (and subject to enforcement action) in respect of changes in significant interests even if the licensee has not acquiesced in any way. This could apply not only to transfers of shares in the licensee itself but to changes at the parent company level and potentially higher levels of the ownership structure.
Applications for approval of a change in a significant interest can in many cases be simple and straightforward. If a new shareholder is to acquire a significant interest it will usually be necessary for that shareholder to complete a Form A application so that the Commission can assess the shareholder against the fit and proper criteria prescribed. An application and approval fees is charged by the Commission for these applications.
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.
