Matthew Cowman
Managing Partner
British Virgin Islands
Drawing on their market-leading expertise, Partners Matthew Cowman, Alex Drysdale, Rosalind Nicholson and Omonike Robinson-Pickering have provided guidance on the latest trends, legal developments and strategic considerations in M&A in the BVI.
Strategic acquisitions take the lead
The global M&A market in the last year has been characterised by greater deal size, albeit coming from a lower volume of transactions and this is reflected in the BVI market. The market is being characterised by:
- Deal flow is increasingly concentrated into select industries, including tech and life sciences. In particular a greater number of traditional Wall Street players are targeting exposure to digital assets.
- Longer lead times on take private transaction and lower conversion rates.
- An increase in distressed M&A, including sales out of liquidation and Chapter 11 US bankruptcy proceedings, as a function of the higher interest rate environment.
- A shift away from private equity dominance on the buyers' side, as corporates leverage their balance sheets to pursue strategic acquisitions.
Key court decisions continuing to shape M&A
The rights of dissenting shareholders and the duties of directors are two issues that remain in the spotlight after recent court judgements:
- Dissenting shareholders’ rights: The Nettar Group Inc v Hannover Holdings SA (December 2021) case affirms that dissent rights apply only to shares held at the time of notice, helping companies and investors manage risk in mergers.
- Directors’ duties under scrutiny: Cases like Nam Tai Property Inc v West Ridge Investment Company Limited (March 2021 and, on appeal, October 2021) and Ace Lead Profits Ltd v Hollysys Automation Technologies Ltd (September 2021) have clarified that directors must act for a proper purpose, especially when responding to takeovers.
Deal based litigation
Generally, disputes are relatively uncommon not least because many deals will include provisions for arbitration for disputes arising out of or in connection with the deal. However, where disputes do arise, they are more likely to arise post-deal, rather than pre-deal. We’re seeing more cases involving:
- Distressed M&A, particularly where assets are sold out of insolvency or bankruptcy.
- “Broken deal” claims, where parties try to walk away from a deal due to unexpected global events.
In the absence of specific BVI case law, courts here often look to English law. For example, the doctrine of frustration requires proof that the obligation can’t be performed at all.
Enhanced scope of due diligence
Due diligence is a standard requirement on every transaction and will be conducted in the same way as in many other onshore jurisdictions. However, as of 2 January 2025, BVI companies are now required to file their register of members on a private basis with the Registrar of Corporate Affairs.
While beneficial ownership information currently remains private, there are proposals under consideration to give those with a "legitimate interest" access to beneficial ownership information. Some other jurisdictions are considering allowing public access to those with legitimate interest, and it's expected that the BVI will follow international practice when considering this for the purpose of BVI law.
You can read the full chapter drafted by the team on the Chambers and Partners website.
