One of the key roles of BVI vehicles in international finance transactions is the provision of security (either BVI entities granting security over their own assets or security being granted over the shares of a BVI company). The process for granting and registering security in the BVI is straightforward and will not negatively impact the timeframe of a proposed transaction. In this article we address some of the key issues and processes regarding security over the assets of a BVI company.
Form of Security Interests
Where security is granted over the assets of a BVI company, this may take the form of a fixed or floating charge. The form and documentation for such security will typically be determined by the law of the jurisdiction in which the assets are located.
BVI law governed charges over assets are relatively rare as BVI companies rarely have assets in the BVI itself and it is often preferable for the security to be governed by the law of the jurisdiction in which the assets are located. There are, however, no issues or restrictions on BVI law governed charges over assets being entered into where appropriate.
Typically security documents include a negative pledge whereby the chargor is restricted from creating or permitting to subsist any security interests over the secured assets other than the security pursuant to the finance documents. While such a negative pledge will give a contractual remedy for breach, where the chargor is a BVI company such pledge may also be publicly registered in the BVI (see “registration of security” below) which will serve to give actual notice of the negative pledge to any person who views the register of charges of the BVI company.
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Granting and Enforcing Security over Assets of British Virgin Islands Companies