The BVI Commercial Court (Justice Gerard Farara QC (Ag.)) has
confirmed that the Register of Members of a BVI company may be
corrected only by the Court, and not by the Directors or the
One of the questions which fell to be considered by the BVI Court in the recent case of Sempacher Foundation –V- Lark Service Inc. & Others1 ("Sempacher") was the validity of certain alterations which had been made to the Register of Members of the BVI company the subject of the dispute by its Directors. The Court held that the amendments so made were invalid.
Section 41(1) of the BVI Business Companies Act 2004 (the "BCA") requires that a BVI company keep a Register of Members, whether in paper, magnetic, electronic or other data storage form2, containing certain specified information, including the name of members and their shareholding in the company and the total number of each class and series of shares held. By section 42 of the BCA, the entry of the name of a person in the Register of Members as a holder of a share in a company is prima facie evidence that legal title in the share vests in that person. The Register of Members is therefore a critical document so far as a BVI company and its members are concerned.
Consequently, the BCA provides for recourse to the Court on the part of "a member of the company, or any person who is aggrieved" by an omission or inaccuracy in the company's register of members, or by any delay in entering information on the Register of Members. Section 43 of the BCA allows for an application to be made to the Court in such event for an order that the register be rectified.
In relation to the power to make changes to the register of members, section 41(4) of the BCA enables regulations to be made under section 240 of the Act which "may provide for the circumstances in which information relating to persons who are no longer members of a company, and to bearer shares that have been cancelled, may be deleted from the register of members." No such regulations have been promulgated.
There is no express power conferred by the BCA upon a BVI company or its directors which would permit them unilaterally to 'correct' any entry in the register of members.
The Court held, decisively, that the legislative scheme prescribed by the BCA contemplates that a company's register of members may be validly altered only (i) to reflect a change in the company's shareholding, by allotment, transfer, transmission or redemption; or (ii) pursuant to an order of the Court directing rectification of the Register pursuant to section 43 of the BCA3.
Accordingly, save in the ordinary course of allotments, transfers, redemptions, any alterations to the Register of Members can only be made by the Court, upon an application for rectification made by a member or person legitimately aggrieved. This is particularly so where, as it did in Sempacher, the "correction" involves deleting the name of a person whose name has been entered in the register as a member of the company. Farara J considered that this would be tantamount to taking away a person's proprietary interest or depriving them of their property without due process, something which he held cannot be done other than by way of the statutory power of the court to order rectification, and with all the safeguards provided by that process.
Footnotes1. BVIHC (COM) 2018/0027
2. BCA s. 41(2)
3. English caselaw, which is persuasive in the BVI, suggests that the register may also be amended by mutual agreement between the member and the company on the grounds of mistake or fraud: Reese River Silver Mining Co v Smith (1869) LR 4 HL 64 at 74, 39 LJ Ch 849, 17 WR 1042 ; Re Poole Firebrick and Blue Clay Co, Hartley's Case (1875) 10 Ch App 157, 44 LJ Ch 240, 23 WR 203. Farara J suggested in Sempacher (obiter) that it might be possible generally to amend the register by agreement between the company and all of its members sed quaere.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.