Oct 2026
BVI companies are a common feature in international finance, both as borrowers and guarantors/security providers, often acting as holding companies for operating companies further down the structure. A charge over the shares of a BVI company is therefore frequently taken as security in cross-border lending. The BVI security regime is flexible and lender-friendly, and granting and registering security is straightforward and should not delay a transaction timetable.
Type of Security
Security over shares of BVI companies typically takes the form of an equitable mortgage or charge. Legal title stays with the shareholder, so the lender avoids being entered on the register of members as owner while the security is in place, unless and until the security is enforced following the occurrence of an event of default.
Minimal Required Formalities
The security must be in writing and signed by or on behalf of the shareholder. It must also clearly show an intention to create security and state the amount secured or how that amount is calculated. BVI law governed share charges are common and documentation is relatively standardised across the BVI market.
No notarisation or apostille is required when entering into BVI security documents and no BVI stamp duty is payable on creation or enforcement, unless the borrower group holds land in the BVI.
Governing Law
The BVI Business Companies Act, 2004 (as amended, the “Act”) allows share security to be governed by BVI law or by a foreign law. We generally recommend that security over the shares of a BVI company is governed by BVI law to avoid potential conflict of law issues.
There are, however, occasionally good reasons to use foreign law-governed security. The clearest example is where the lender wants, as a final remedy on the occurrence of an event of default, to take outright ownership of the shares for its own benefit in full or partial satisfaction of the secured liabilities. BVI law-governed security does not provide this remedy, other than through a court order for foreclosure, which is rarely sought because lenders generally prefer quicker and less costly out-of-court options. On enforcement, the lender is therefore ultimately entitled only to the proceeds of the charged shares. By contrast, appropriation under English law (through the Financial Collateral Arrangements (No. 2) Regulations 2003) is an out-of-court, self-help remedy. It allows the lender to take title to the shares, with their value determined under the security document and any surplus paid to the shareholder who granted the security.
Due Diligence
Before entering into charges over shares of BVI companies, lenders, through their BVI counsel, should carry out the following standard due diligence checks:
- inspect the register of members to confirm the ownership of the charged shares, whether they are fully paid and whether they are already encumbered;
- review the memorandum and articles for transfer restrictions, pre-emption rights, liens or directors’ discretion to refuse transfers, and amend them where needed. Any amended memorandum or articles must be registered with the BVI Registrar of Corporate Affairs (the “Registrar”);
- search the company’s public records at the Registrar; and
- confirm whether the company is regulated, for example a fund, bank or insurer. If it is, approval from the BVI Financial Services Commission may be needed.
Deliverables Package
At signing, lenders should obtain the following deliverables, which can be used to enforce the security on the occurrence of an event of default:
- undated share transfer forms signed in blank, and original share certificates if any have been issued (BVI companies are not required to issue share certificates, with the register of members being prima facie evidence of legal title to the shares);
- an irrevocable proxy and power of attorney;
- undated resignation letters from the directors, with letters authorising the lender to date them on the occurrence of an event of default;
- an undertaking from the company to register transfers on enforcement, or the company joining the security document as a party; and
- a letter of instruction to the company’s registered agent to register transfers once it is informed that the security is enforceable.
Registration of Security
There is no concept of perfection in the BVI, and failure to register a charge does not invalidate or prevent enforcement of the security. Even so, registration matters in practice, and a properly advised lender will require the following to put third parties on notice of the security interests and protect the priority of the charge:
1. Register of members notation. The BVI company should note on its register of members that the shares are charged, the name of the chargee and the date the entry was made. While BVI companies must file their register of members with the Registrar, the filed register is not public by default. Lenders therefore usually require the company to elect to make its annotated register publicly accessible, which puts third parties on notice.
2. Register of charges. If the shareholder granting the security is itself a BVI company, it must record the charge in its private register of charges and particulars of the charge(s) should be filed publicly with the Registrar. Priority between competing security interests is decided by the date and time of the public filing making this an important protection for lenders.
Enforcement
Unless the security document provides otherwise, a default must continue for at least 30 days before the statutory remedies can be used. The security document should therefore allow enforcement immediately on an event of default.
Under BVI law-governed security, the Act gives lenders two out-of-court remedies 1 :
1. Power of sale. The lender may sell the charged shares. Typically, this is done by the chargee taking possession by registering itself as legal holder of the shares, after which it can exercise its power of sale and other shareholder rights. A lender exercising its power of sale must obtain the best price reasonably obtainable but does not have to use a particular sale method or follow a fixed timetable. Where a challenge is likely, the lender can seek court approval of the sale, which protects it against claims that the sale was not genuine or undervalued. Sales to connected parties call for particular care. The security document should also set out how enforcement proceeds are applied; if it does not, the default order in the Act applies.
2. The right to appoint a receiver. A receiver can vote the shares, receive dividends and sell the shares. A receiver relying on the statutory power must be appointed by court order, whereas a contractual appointment can be made in writing without one, so receivership under the security document is usually the preferred route. The receiver must notify the Registrar of the appointment. Where the BVI company holds subsidiaries, a receiver will commonly vote the charged shares to take control of the wider group.
In practice, most enforcements rely on the “self-help” deliverables collected at signing. Once the security is enforceable, the lender or its receiver will:
- notify the company and its registered agent that the security has become enforceable;
- date the directors’ resignation letters and appoint new directors using the security document and proxy;
- vote the shares under the proxy or through the receiver;
- date and complete the share transfer form in favour of the lender, its nominee or a buyer; and
- instruct the registered agent to update the register of members, the final step in securing control. If a registered agent fails to update the register after enforcement, the court can order the register to be rectified.
Where the security is governed by foreign law, enforcement follows that law and the security document, but any share transfer and exercise of shareholder rights must still comply with BVI law and the company’s constitution. In either case, BVI advice should be taken before any enforcement step.
Additional Protective Tools
While not common practice outside of distressed or contentious situations, a lender can apply to the BVI Court, without a hearing, for a stop notice to be granted over the shares of a BVI company. A stop notice requires the lender to be given 14 days’ notice before any transfer of the shares can take effect.
We Are Here to Help
Every transaction is different, and tailored advice should be sought. Please contact your usual Conyers contacts with any questions on granting or enforcing security by or over BVI companies.
1 Foreclosure is also available but, as noted above, only through the court, and it is rarely used.