COVID-19 has had an impact on diverse areas of our lives, affecting businesses and the way they perform and operate globally. The rapidly evolving situation brought to the fore the need for business to be able to adapt swiftly to changing circumstances and for directors and staff at all levels, and their advisers and service providers, to be able to operate effectively at a distance from one another. Businesses have never seen more clearly a return on the investment made in digital technologies and communication platforms.
For a business that operates investments and entities across borders, the choice of investment structure and jurisdiction have also never been more significant. Jurisdictions like the British Virgin Islands ("BVI"), the Cayman Islands, Ireland, Jersey and Luxembourg have themselves invested heavily in developing legal innovations and technological solutions that enable business to be carried out effectively through their investment holding structures and SPVs during times of global disruption.
These jurisdictions continue to offer strong economic and political stability with a robust legal framework based on established law with the ultimate court of appeal for the BVI, the Cayman Islands and Jersey being the Judicial Committee of the Privy Council in London, and the Supreme Court and the Cour de Cassation being the ultimate court of appeal in Ireland and Luxembourg respectively. They provide a neutral forum with commercial and legal infrastructures offering innovative solutions for structuring and running international transactions.
The advantages of using international financial centres, such as the BVI, the Cayman Islands, Ireland, Jersey or Luxembourg for a cross-border transaction are well recognised by investors and regulators. These jurisdictions have creditorfriendly and innovative legislation adaptable to the needs of their international clients while remaining fully compliant with international regulations and policies.
This article highlights some areas in which the BVI, the Cayman Islands, Ireland, Jersey and Luxembourg have enabled business, transactions and entities to be managed effectively during COVID-19 and beyond, from digital incorporation and KYC regimes to virtual meetings and electronic closings.
Focus and Flexibility
The BVI, the Cayman Islands, Ireland, Jersey and Luxembourg are all leading international finance centres, which means they are focused on providing a streamlined and effective platform for international business. The government and regulatory authorities in these jurisdictions are commercially-minded and have demonstrated an ability to consult and legislate quickly, and adapt well to a changing environment, most recently granting extensions of the various regulatory and filing deadlines in recognition of the realities of operating during a lockdown.
The jurisdictions continue to consult on and develop new legal structures to respond to international demand. Depending upon the jurisdiction, a range of limited and unlimited liability corporate vehicles, limited partnerships, LLCs, foundations and trusts are available to meet the commercial requirements of the transaction. The formation / incorporation and registration of a BVI, Cayman Islands or Jersey vehicle can be completed on a same day basis and the jurisdictions have developed robust regimes for obtaining and verifying know your client (KYC) and Anti-Money Laundering (AML) information from international clients without the need for clients to courier 'wet ink' or notarised original documents (due to this either not being a requirement, or COVID-19 related dispensations being in place in certain circumstances).
Service providers such as the Maples Group have invested in developing state-of-the-art entity maintenance platforms that enable clients directly to access (and – in some jurisdictions – maintain) statutory registers, underlying records and transactional data for entities registered in any jurisdiction globally from wherever they are working. These platforms facilitate access to entity information in real time to meet the demands of the business, as well as auditors, investment managers and regulators. Access is often cloud-based, using bank level security.
Directors and Decision Making
We understand that at the best of times, it can be difficult to convene physical board meetings. Directors can be based apart and travel regularly. For the longest time, the BVI, the Cayman Islands, Ireland, Jersey and Luxembourg have adopted a pragmatic approach and embraced the latest technology, seeing directors joining meetings by telephone or videoconference or passing written resolutions in lieu of a meeting. Written resolutions can typically be signed electronically and in counterparts (assuming the company's articles of association / constitution permit this – always check the constitutional documents and we can assist in updating articles / constitutions wherever required).
The advent of platforms such as Zoom and Teams has enabled the sharing of board packs, and have expanded the nature of the business that can meaningfully be conducted via remote electronic (non-physical) meetings.
While there may be additional requirements prescribed by relevant economic substance laws in certain cases, the tax authorities have been realistic during COVID-19 and decision-making by directors has, in our experience, continued on the basis of the methods outlined above. Where an entity is subject to economic substance requirements as a result of its business model, advice should be sought.
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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.