British Virgin Islands This briefing examines the key aspects of distributions, share purchases and redemptions under the BVI Business Companies Act 2004 (the Act). Distributions A company’s articles of association will contain provisions dealing with the payment of distributions. The Act imposes additional obligations relating to the payment of distributions. What is a distribution? Under the Act, a distribution is any transfer by a company of any of its assets (other than its shares), or the incurring by it of a debt, to or for the benefit of, a shareholder, whether made by: the purchase of any asset; the purchase, redemption or other acquisition of any of its shares; the transfer of any debt; or any other means. A distribution includes a dividend but not an issue of bonus shares. No maintenance of capital rules There are no maintenance of capital rules under the Act so it is relatively simple for a company to make payments to its shareholders. Any asset of a company (including the consideration paid for its shares) can be distributed to its shareholders as long as its directors apply the solvency tests (see below). Directors’ duties The directors of a company should only make a distribution or purchase or redeem shares at the option of the company if they believe that it is in the best interests, and for a proper purpose, of the company to do so. Otherwise they will be in breach of their statutory and common law duties to the company. Solvency tests The Act only allows the directors of a company to authorise a distribution if they are satisfied on reasonable grounds that the company will, immediately after the distribution is made, … Discover More
The Bermuda Government has recently amended its company law affecting all companies both local and exempted. The amended Companies Act 1981 now requires a Register of Directors in respect of Bermuda registered companies to be kept by the Registrar of Companies. Every company registered in Bermuda will be required to file at the Registrar a list of its directors and their addresses.
The Cayman Islands will set up a central platform of beneficial owners that will allow designated Cayman Islands officials to directly obtain details of beneficial ownership of companies incorporated in Cayman. Upon formal request, this information will be shared with law enforcement authorities in the UK. Commitment has been given to have the system in place by June 2017.
United Kingdom – A director of a company incorporated in the United Kingdom, has been disqualified from acting as a director for 5 years for breaching his duty to act in the best interests of the company by causing or allowing payments totalling £314,588 to be made to third parties.
British Virgin Islands – The BVI Business Companies (Amendment) Act, 2015 (the Amendment Act), which includes new requirements for the filing of director information with the Registry of Corporate Affairs was published on 31 December 2015, and came into force on 15 January 2016. Sections 27 and 28 of the Amendment Act in relation to the provisions/filing of the Register of Directors will come into force on 1 April 2016.