Lending And Taking Security In The British Virgin Islands: Overview

OVERVIEW OF THE LENDING MARKET

1. What have been the main trends and important developments in the lending market in your jurisdiction in the last 12 months?

   The British Virgin Islands (BVI) is one of the world's leading international financial centres. The BVI continues to be a jurisdiction of choice for companies entering into secured and unsecured finance transactions. In the last 12 months, revised, modernised and consolidated editions of the jurisdiction's financial services legislation have been enacted. Other significant recent developments include amendments to the key corporate legislation, the BVI Business Companies Act 2004 (2013 Revision) (Companies Act), which have enhanced the public filing system for the registration of security interests. The creation of security over shares in BVI companies remains popular. Following the amendments to the Companies Act, a chargee can now enforce a BVI law governed share charge immediately on default (the amendments removed mandatory grace/notice periods). For an English law governed charge over shares in a BVI company that provides for appropriation of the shares, the Privy Council has provided further guidance on the rights of the parties, including the application of equitable relief in Cukurova Finance International Limited and Cukurova Holdings A.S (Appellants) v Alfa Telecom Turkey Ltd (Respondent) [2013] UKPC 20. FORMS OF SECURITY OVER ASSETS

   FORMS OF SECURITY OVER ASSETS

   Real estate

2. What is considered real estate in your jurisdiction? What are the most common forms of security granted over it? How are they created and perfected (that is, made valid and enforceable)?

   Real estate

   The BVI is a leading jurisdiction for the incorporation of investment holding companies and BVI companies hold real estate located across the world. A BVI company can create and perfect security over interests in real estate in the manner permitted/required in the jurisdiction where the real estate is located. The holding of an interest in real estate in the BVI itself requires, with certain exceptions, a Non Belongers Land Holding Licence. Application for this licence must be submitted together with the requisite supporting documentation to the BVI Ministry for Natural Resources and Labour, and the prescribed process followed.

   Common forms of security

   A legal mortgage over land is the most common security over real estate. However, security can be created in any form appropriate to the relevant jurisdiction.

   Formalities

   Formalities depend on the laws of the jurisdiction where the real estate investment is located.

   Companies can enter into contracts that (Section 103(1), Companies Act):

   By or on behalf of the company are in writing under the common seal of the company, if that contract could be entered into by an individual and would be required by law to be in writing and under seal. These contracts can be varied or discharged in the same manner. By or on behalf of the company are in writing and signed by a person acting under the express or implied authority of the company, if that contract could be entered into by an individual and would be required by law to be in writing and signed. These contracts can be varied or discharged in the same manner. An instrument is validly executed as a deed or an instrument under seal if it is either (Section 103(4), Companies Act):

   Sealed with the common seal of the company and the application of the seal is witnessed by a director or such other person who is authorised by the company's memorandum and articles of association to witness the application of the company's seal. Expressed to be, or is expressed to be executed as, or otherwise makes it clear on its face that it is intended to be, a deed and it is signed by a company director or a person acting under the express or implied authority of the company. There are no perfection requirements necessary under BVI law to recognise the validity or enforceability of security created by BVI companies. However, the following steps can be taken to protect a lender's security and ensure the lender is conferred with priority against unsecured creditors and subsequent secured creditors:

   Particulars of a "relevant charge" created by a BVI company under section 163 of the Companies Act, including a mortgage, can be filed with the Registry of Corporate Affairs of the British Virgin Islands (Registry) for a fee of US$100. The particulars of the charge are then placed on the BVI company's corporate records at the Registry to put third parties on constructive notice of the existence of the security interest. The filing also acts as a priority determinant vis-à-vis subsequent filed security for the secured asset and the claims of unsecured creditors. A company must keep a register of all relevant charges created by the company, either at the company's registered office, or at the company's registered agent's office (Companies Act). Tangible movable property

3. What is considered tangible movable property in your jurisdiction? What are the most common forms of security granted over it...