Walkers' BVI Office Celebrates its 20 Year Anniversary

Walkers is celebrating 20 years of operating in the British Virgin Islands.

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Guernsey Climbs Legal 500 Rankings

Walkers' Guernsey office is now ranked by Legal 500 as Tier 1 for legal advisers in five of its core practice areas.

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10 Walkers' Lawyers Recognised in Asia Business Law Journal's Top 50 Offshore Lawyers 2022

10 lawyers across Walkers' Bermuda, Cayman, Hong Kong and Singapore offices have been recognised in the Asia Business Law Journal’s A-List of top offshore lawyers.

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Walkers is a leading international law firm. We advise on the laws of Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey.
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At Walkers we are committed to building a diverse and inclusive workplace where everyone can feel comfortable, happy and confident in an inclusive environment.

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Winding Up and Arbitration Clauses: A timely reminder that he who hesitates is lost

In Sian Participation Corp. (In Liquidation) –v- Halimeda International Limited BVIHCMAP2021/0017 (“Sian”), the Eastern Caribbean Court of Appeal again had occasion to consider (amongst a number of other things) the interrelationship between an arbitration clause in a loan agreement and the Court’s jurisdiction to appoint liquidators to a company under the Insolvency Act 2003. The judgment, in which the Court of Appeal upheld the Order of Wallbank J appointing liquidators, serves as a useful reminder that a party wishing to invoke an arbitration clause as a basis for a stay of winding up proceedings against it, must act promptly in inviting the Court to refer the dispute to arbitration or risk losing the opportunity.

Background
The creditor, Halimeda International Limited (the “Creditor”) applied for the winding up of Sian Participation Corp. (the “Company”), on the grounds of insolvency. The debt arose under a loan agreement made between the Creditor and the Company on 7th December 2012 (the “Loan Agreement”). The Loan Agreement contained an arbitration clause (the “Arbitration Clause”) which required any dispute arising from the Loan Agreement to be resolved through arbitration. The loan fell due for repayment by 31st December 2018 but the Company did not repay the debt. The Creditor filed its application on 29th September 2020. On 27th November 2020, the Company filed a Notice of Opposition denying that the debt was currently due and payable. That Notice of Opposition was amended on 19th and 23rd March 2021, but, as originally filed, made no reference to the Arbitration Clause or any reference to arbitration. On 30th January 2021, the company filed an application to strike out the winding up application. It was in this application that arbitration was first advanced as an issue. Neither party made a formal request to the Court that it refer the matter to arbitration.

 

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BVI Beneficial Ownership - Economic Substance Reporting Regime

The Beneficial Ownership Secure Search System (Amendment) (No.2) Act, 2021 (“Amendment Act”) was gazetted in the BVI on 31 December 2021 and came into force on 1 January 2022. The Amendment Act amends the BVI’s Beneficial Ownership Secure Search System Act 2017 (“BOSS Act”).

The BOSS Act is the BVI’s key legislation relating to the confidential reporting of beneficial ownership (“BO”) information to regulators. Since the BOSS Act’s implementation in 2017, it has also come to include economic substance (“ES”) information reporting in connection with the Economic Substance (Companies and Limited Partnerships) Act 2018 (the “ESA”). The BOSS Act also covers the circumstances in which BO and ES information may also be spontaneously exchanged with overseas competent authorities under the OECD substantial activities standard and related guidance (“OECD Guidance”).

 

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Bermuda Economic Substance Update - October 2022

The European Council has removed Bermuda from Annex II of its list of non-cooperative jurisdictions for tax purposes (sometimes referred to as the EU Tax Grey List).

While Annex I (the so-called EU Black List) is a list of countries that have failed to meet the EU's criteria, Annex II is a list of jurisdictions that have made sufficient commitments to reform their tax policies but remain subject to close monitoring while they are executing on their commitments.

The European Council said in a statement: “The commitment of Bermuda with regard to the Organisation for Economic Co-operation and Development’s Forum on Harmful Tax Practices' recommendations on the effective implementation of substance requirements was deemed fulfilled, resulting in the deletion of the reference to this jurisdiction in the state of play document.”

Walkers Professional Services is available assist entities to file economic substance declarations where required under the applicable legislation. In addition, Walkers' dedicated Regulatory & Risk Advisory Group can advise on the applicable relevant activity classifications and can assist entities to determine how to meet any applicable economic substance requirements.

BVI ITA and Ministry of Finance requires entities to establish and maintain adequate systems and controls including a compliance manual

The following BVI legislative supplements to the Mutual Legal Assistance (Tax Matters) Act (“MLA Act”) and the International Tax Authority Act (“ITA Act”) were gazetted on 13 June 2022:

  • The Mutual Legal Assistance (Tax Matters) (Amendment) Act, 2022 (the “MLA Amendment”); and
  • The International Tax Authority (Amendment) Act, 2022 (the “ITA Amendment”).

In a BVI Government press release dated 26 July 2022, the International Tax Authority (“ITA”) and the BVI Ministry of Finance confirmed that all persons subject to the provisions of the MLA and ITA Amendments were required to take action to ensure that they are in compliance with the amendments further detailed below.

On 4 August 2022, the International Tax Authority (Administrative Penalties) Regulations 2022 (the “ITA Regulations”) were gazetted, and are deemed to have come into force on 14 June 2022.

On 8 September 2022, the International Tax Authority issued a notice reminding all BVI Financial Institutions of the Obligation to register on the BVI Financial Account Reporting System. Each VIFI is required to register with the Competent Authority. The VIFI may appoint a third party to carry out the duties and obligations however, as a Secondary User. The responsibility to ensure all obligations have are met, is with the VIFI.

 

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SEAR and the Individual Accountability Landscape: The Central Bank (Individual Accountability Framework) Bill 2022

The Central Bank (Individual Accountability Framework) Bill 2022 (the “IAF Bill“) was published on 28 July 2022 by the Department of Finance, following the publication of the General Scheme of the IAF Bill (“General Scheme”) in July 2021. Once enacted, which might be as soon as Q4 2022, the IAF Bill will introduce significant changes to the regulation and supervision of regulated financial service providers (“RSFP”) and persons performing controlled functions (“CF”) and pre-approval controlled functions (“PCF“), through, inter alia, the introduction of the Senior Executive Accountability Regime (“SEAR”), business and conduct standards, and an enhanced fitness and probity (“F&P“) regime.

In our latest advisory, the Walkers' IAF team comprising members of our Regulatory, Funds and Employments groups, provides an overview of the Bill including timing and key actions for in-scope regulated financial services providers and holding companies. 

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