H O M E

A B O U T

EVENTS

BVI GLOBAL IMPACT

CAREY OLSEN/KPMG ACT IN LANDMARK RULING FOR THE APPROVAL OF THIRD PARTY LITIGATION FUNDING IN THE BVI

Carey Olsen has secured the first reasoned written judgment in which the Commercial Court in the British Virgin Islands (BVI) has approved third-party funding for litigation and other liquidation fees and expenses as permissible as a matter of BVI law.

The decision relates to Exential Investments Inc., which formed part of a group of companies (the Exential Group) that operated a Ponzi scheme between 2011 and 2016. The Exential group collapsed in 2016, leaving thousands of individual investors out of pocket.

In order to make recoveries for creditors, the Joint Liquidators (Russell Crumpler and David Standish of KPMG), appointed on application by Carey Olsen, will need to undertake investigations and recovery actions in a number of jurisdictions. Given the large number of relatively small creditors and the lack of available funding in the estate, the Liquidators turned to the commercial third-party funding market.

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ECONOMIC SUBSTANCE IN THE BVI - SEEKING COMPLIANCE AND EMBRACING NEW OPPORTUNITIES

“BVI bringing certainty,” was highlighted as part of BVI’s good business reputation during discussions on the Territory’s response to the EU’s Economic Substance requirements, on the most recent episode of BVI Business Insight.

The third episode of BVI Business Insight features engaging discussions with guests Charlotte Bailey, Managing Director, TMF Group and Chairperson of the Association of Registered Agents (ARA) in the BVI; along with Gareth Thomas, Managing Director of Ocorian and Founding Chairman of the British Institute of Chartered Secretaries and Administrators (ICSA) BVI Branch.

Economic substance was a major part of the discussions, with both Ms. Bailey and Mr. Thomas commenting on the huge effort extended by industry practitioners in moving quickly to classify and report entities by the end of year deadline.

“The last 12 months has been very tough for the industry, in spending so much time just classifying [400,000] entities, now coming up to reporting, from now to the end of year...this has been the really hard, nitty-gritty part,” said Mr. Thomas.

Mr. Thomas also spoke about the BVI being able to meet the “very aggressive deadlines” and said a considerable amount of time was spent demystifying economic substance for clients around the world.

The managing director also made note of the positives, stating: “The enjoyment part of substance of what it can bring, is from now on…where we will be providing substance for clients, for those who require boots on the ground like director services, accounting and the like - those solutions are what agents will be focusing on right now...the fun stuff.”

The Government of the Virgin Islands passed the Economic Substance (Companies and Limited Partnerships) Act, 2018 on December 28, 2018, and it entered into force on January 1, 2019, which sets out rules on what companies must have “adequate presence and/or carry on economic activities in the jurisdiction in which they are tax resident”.

Both Mr. Thomas and Ms. Bailey served in some capacity on the eight working groups that correspond to the “eight relevant activities” of economic substance, including Banking, Insurance, Fund Management, Finance and Leasing, Headquarters, Shipping, Holding company, and Intellectual property.

On the importance of the working groups, Mr. Thomas highlighted how the industry stakeholders worked together to “draw out the thorny issues”, adding that both the ICSA and ARA held training sessions with the Financial Services Institute (FSI) to help members be on the same page.

“The good thing about the BVI is that we are all different teams, but we’re all very good at rowing together for the BVI,” he said.

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SUBSTANCE FILING DEADLINE APPROACHES FOR BVI COMPANIES AND PARTNERSHIPS

Following the economic substance reforms that took effect in the BVI from the start of 2019, most BVI companies have until the end of December 2020 to submit their first economic substance report. The report covers the 12 month period ending 29 June 2020. The deadline is relevant not only to directors of such companies – many of which are administered from financial centres outside of the BVI, such as Jersey and Guernsey – but also to those who manage BVI limited partnerships with legal personality which must also submit a report. Failure to make the filing or comply with the requirements may result in penalties.

It is particularly relevant to note that the filing must be made in respect of each such company and such partnership regardless of whether the company or partnership has conducted any activities that fall within the scope of the BVI economic substance regime. This short note summarises the background, the reporting requirements, and the necessary steps ahead of the filing deadline applicable to those companies and partnerships that were incorporated prior to 1 January 2019.

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DIGITAL OFFSHORE BANKING: HOW IT MIGHT WORK FOR THE CFO

Lorna Smith OBE, Vice Chairman of Bank of Asia talks about how CFOs could benefit from digital offshore banking.

Future CFO: How would digital offshore help the finance function and the CFO during and post-pandemic?

Lorna Smith (LS): The Covid-19 pandemic has presented challenges for businesses around the world. Amid market volatility and disruptions in supply and demand, companies are increasingly looking for alternative structures to hedge their investment risks and support expansion. 

Offering such advantages as tax neutrality, corporate flexibility and efficiency, political stability and privacy, international finance centers (IFCs) like the British Virgin Islands (BVI) have long been used by large corporations to create centralized hubs for business investments. 

To the CFOs of these corporations, there are tremendous savings on the cost of capital for investment coupled with a level of efficiency and flexibility in setting up funding structures. 

Offshore banks play a key role in supporting companies engaged with IFCs as well as facilitating cross-border transactions and investment in international assets for corporate investors and high-net-worth individuals globally. 

Offshore banking services are particularly crucial to offshore companies these days as it has become more difficult for them to open accounts with traditional banks. 

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BVI NOTIFICATION OF CONVERSION

As of 1 October 2020, the BVI partnership known as Appleby, BVI has converted to a company limited by shares and will now be known as Appleby (BVI) Limited. This has no impact on the way we do business. This is just about how we conduct our affairs and manage risk as a group.

We very much look forward to continuing to serve our valued clients. If you do have any queries about this change, please contact Jeffrey Kirk or your usual Appleby contact.

TAX OFFENCES AND AML IN THE BRITISH VIRGIN ISLANDS

Tax crimes are predicates for money laundering in the British Virgin Islands. Mirza Manraj and Marina Stavrou explain the regime in this article which first appeared in Money Laundering Bulletin.

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PRESSING THE RESET BUTTON: INNOVATION IN THE BVI

INNOVATION IN FUNDS - A HIVE OF ACTIVITY

JOB POSTINGS:

IMPLEMENTATION COORDINATOR

Role Summary

The successful applicant will serve as a technical for the AML/CFT Implementation unit with responsibility for ensuring progress at each phase of implementation and review of the recommendations emanating from the Virgin Islands’ National Risk Assessement (NRA) in preparation for the 2018 Caribbean Financial Action Task Force’s Mutual Evaluation.

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COMPLIANCE OFFICER/MLRO

The role requires candidate with a minimum experience of 5 years, additional qualification will be considered as well, with well-rounded knowledge in AML Code of Practice, AML Regulations and all other relevant legislations, since he/she will interact with Compliance Committee at a Board level, as well as other persons at managerial level in the organization.  Responsible also to liaise with Financial Services Commission, the International Tax Authority and the Financial Investigation Agency.

Belonger status is preferred, excellent verbal and written communication skills in English. Please note this is a  position subject to the approval of the BVI Financial. CV can be sent to the following email: mhibbert@pmalawyers.com

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Carey Olsen makes offshore shortlist at HFM Asia Services Awards 2020

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