Private equity (transactions)—British Virgin Islands—Q&A guide

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Private equity (transactions)—British Virgin Islands—Q&A guide
  • 1. What different types of private equity transactions occur in your jurisdiction? What structures are commonly used in private equity investments and acquisitions?
  • 2. What are the implications of corporate governance rules for private equity transactions? Are there any advantages to going private in leveraged buyout or similar transactions? What are the effects of corporate governance rules on companies that, following a private equity transaction, remain or later become public companies?
  • 3. What are some of the issues facing boards of directors of public companies considering entering into a going-private or other private equity transaction? What procedural safeguards, if any, may boards of directors of public companies use when considering such a transaction? What is the role of a special committee in such a transaction where senior management, members of the board or significant shareholders are participating or have an interest in the transaction?
  • 4. Are there heightened disclosure issues in connection with going-private transactions or other private equity transactions?
  • 5. What are the timing considerations for negotiating and completing a going-private or other private equity transaction?
  • 6. What rights do shareholders of a target have to dissent or object to a going-private transaction? How do acquirers address the risks associated with shareholder dissent?
  • 7. What notable purchase agreement provisions are specific to private equity transactions?
  • 8. How can management of the target company participate in a going-private transaction? What are the principal executive compensation issues? Are there timing considerations for when a private equity acquirer should discuss management participation following the completion of a going-private transaction?
  • 9. What are some of the basic tax issues involved in private equity transactions? Give details regarding the tax status of a target, deductibility of interest based on the form of financing and tax issues related to executive compensation. Can share acquisitions be classified as asset acquisitions for tax purposes?
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Private equity (transactions)—British Virgin Islands—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to private equity (transactions) in British Virgin Islands published as part of the Lexology Getting the Deal Through series by Law Business Research (published: December 2020).

Authors: Appleby—Andrew Jowett; Rebecca Jack

1. What different types of private equity transactions occur in your jurisdiction? What structures are commonly used in private equity investments and acquisitions?

The non-prescriptive corporate legislation, tax-neutral status and stable regulatory environment have made the British Virgin Islands (BVI) a popular jurisdiction for the incorporation of holding companies in a wide range of industries. As a consequence, the BVI sees a wide range of private equity transactions, including management and leveraged buyouts, venture capital, growth capital and public-to-private transactions.

Both BVI target companies and special purpose companies set up to acquire such targets will be incorporated within the BVI as 'business companies', being companies limited by shares. Though less utilised in the BVI than other jurisdictions, there is an increasing number of BVI-registered limited partnerships, with or without legal personality, pursuant to revised legislation for the same.

2. What are the implications of corporate governance rules for private equity transactions? Are there any advantages to going private in leveraged buyout or similar transactions? What are the effects of corporate governance rules on companies that, following a private equity transaction, remain or later become public

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