Answer ... (a) Commercial/corporate
Buyers should conduct the usual diligence of the target’s:
- constitutional documents, including its memorandum and articles of association and statutory registers, and any shareholders’ agreements; and
- commercial contracts entered into by the target to check for any change of control provisions.
One point which buyers should be aware of is that the register of members of BVI companies is prima facie evidence of the matters set out therein (ie, the register of members will raise a presumption of fact on the matters set out therein unless rebutted), and a shareholder registered in the register of members shall be deemed, as a matter of BVI law, to have legal title to the shares as set against its name in the register of members. The register of members is not publicly available for a BVI company and will need to be provided by the target as part of the due diligence process, which would be highly unlikely to be provided on a hostile bid.
(b) Financial
There are no BVI-specific points relating to financial due diligence and buyers should conduct the usual checks in this regard.
(c) Litigation
Searches of the BVI courts are routinely carried out as part of the due diligence exercise to determine whether the BVI target has been involved in any local litigation (past or ongoing cases).
(d) Tax
The British Virgin Islands currently has no income, corporate or capital gains tax, and no estate duty, inheritance tax or gift tax. Other than stamp duty, there is no registration, documentary or any similar taxes or duties of any kind payable in the British Virgin Islands in connection with the signature, performance or enforcement by legal proceedings of any BVI law-governed documents.
(e) Employment
The Labour Code 2010 is the key law governing the terms and conditions of employment in the British Virgin Islands and employment contracts for any local employees must comply with minimum levels of protections provided under this law.
(f) Intellectual property and IT
The Trade Marks Act establishes a BVI Register of Trade Marks and the Patents Act provides for a BVI Registry of Patents.
(g) Data protection
There is no formal legislation regulating data protection in the British Virgin Islands. The BVI government has pledged that comprehensive data protection legislation based on internationally recognised standards will be enacted in the near future. Draft legislation is currently in circulation. BVI courts recognise and subscribe to the common law duties of confidentiality and privacy, and English common law is persuasive, although not binding, in the British Virgin Islands. As a result, while there is no overriding personal data protection legislation in the British Virgin Islands, all entities that manage and maintain personal data will be subject to the common law duty of confidentiality described above.
(h) Cybersecurity
The Computer Misuse and Cybercrime Act, 2014 prohibits, among other things, the unauthorised access and use of data held on a computer or any computer service, and the knowing disclosure of passwords or other means of access to a computer, with a view to causing loss or gain, or for any unlawful purposes. Neither this legislation nor any other legislation in the British Virgin Islands contains any mechanism or requirement to report data security breaches. However, notification is recommended where there is a risk of harm to the data subject as a result of the breach, not least from a relationship management perspective.
(i) Real estate
Title to real estate is evidenced by registration at the BVI Land Registry, which is open to public inspection and is the primary source of information on any real estate due diligence in the British Virgin Islands.