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Key Issues when Structuring a BVI Joint Venture

March 2022 Nicholas Kuria

The British Virgin Islands (BVI) is a particularly popular jurisdiction for incorporating joint venture vehicles. The principal statute governing the formation and operation of a BVI business company is the Business Companies Act 2004 (the BC Act). The BC Act is a modern and flexible companies statute.

Key Documentation

The principal corporate documents are the joint venture agreement (JVA) and the memorandum and articles of association of the BVI company (M&A). There are particular provisions of the JVA that must be in the M&A under BVI law. These provisions relate to: (i) the rights attaching to the authorised shares of the company; (ii) provisions in respect of company procedures such as notice and quorum requirements for shareholder meetings; (iii) the election of directors; and (iv) restrictions on the powers of the directors to carry on the business of the company (being items requiring super majority director approval or shareholder approval).

The M&A are a public document registered with the Registrar of Corporate Affairs of the British Virgin Islands. Sometimes shareholders’ agreements are incorporated by reference into the M&A. While the position is not free from doubt, the view exists that this reference is not effective and that the shareholders’ agreement would not be incorporated in the M&A as a consequence of such reference. Rather, to the extent that the shareholders’ agreement deals with matters that are governed by the M&A, then the provisions need to be expressly set out in the M&A.

It is important to avoid inconsistencies between the JVA and the M&A. Further, a JVA only binds the parties to the agreement, whereas the M&A binds all relevant parties.

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Nicholas Kuria
Counsel

British Virgin Islands   +1 284 852 1129


This article was originally published by Legal Business.

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