BVI Company Law Series - Mergers

The frequent use of BVI companies in corporate and private wealth structures is in part down to the flexibility and simplicity of the company law regime.

This series of practical advisories on the uses of BVI companies explores all stages of the company life-cycle – starting with the modern, simple and flexible merger regime for BVI companies under The BVI Business Companies Act, 2004.

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The BVI Business Companies Act, 2004 (as amended) (the “Act”) provides a modern, simple and flexible merger regime for BVI companies, whilst also protecting shareholder and creditor interests.

Put simply, a merger results in two or more entities combining to become a single surviving entity, with all the assets and liabilities of the merging entities becoming the assets and liabilities of the surviving entity on completion.

Mergers can be an attractive option when structuring deals and are by far the most common method for effecting a takeover of a publicly listed BVI company.

In particular, unlike with a scheme of arrangement, a statutory merger is not subject to court or regulatory sanction and instead is effected pursuant to an agreement between the parties to the merger. This, together with its lower approval thresholds, means mergers are commonly used as a fast-track alternative to a scheme of arrangement.

They can also be useful in other often circumstances, whether as an alternative to a conventional acquisition, or can be particularly effective in group reorganisations as a quick and cost efficient means of removing unwanted entities from structures or to effectively transfer a company from the BVI to another jurisdiction or vice versa.

A BVI company can merge with a foreign company where the merger is permitted by the foreign jurisdiction, and in such cases advice should be obtained as to the procedures and effect of the merger in both the BVI and the foreign jurisdiction.

The surviving entity

A merger results in a single remaining entity, where one entity survives the merger and continues in existence but with all the assets and liabilities of each constituent entity on completion. It is also possible to structure the transaction as a consolidation, which results in all the constituent entities ceasing to exist and their assets and liabilities consolidating into a new entity on completion. The consolidation process is similar to that of a merger.

Mergers can involve any number of constituent entities greater than two, and can involve any combination of BVI companies and foreign companies (if equally permitted under the relevant foreign law).


The BVI merger process is straightforward and at its most basic level (often appropriate for internal reorganisations) requires:

  • a plan of merger - this typically contains only limited information required by the Act, and is a short form document; the most important information it contains is as to the terms of the merger and treatment of shares, discussed below;
  • articles of merger (again, this typically contains only limited information required by the Act, and is a short form document);
  • director approval - the plan of merger must be approved by the directors of each constituent entity (save in the case of a parent / subsidiary merger);
  • shareholder approval – the plan of merger must be approved by the shareholders of each constituent entity;
  • Registry filings - once the above approvals have been obtained, the articles of merger are signed on behalf of each constituent entity and the plan and articles of merger are filed electronically with the Registrar of Corporate Affairs (the “Registrar”) in the British Virgin Islands.

Shareholder approval requirements

For the shareholder approval:

  • the requisite majority is typically the holders of a simple majority of the shares present and voting on the resolution at a quorate meeting of shareholders, or a written shareholder resolution approved in accordance with the constitutional documents;
  • notice of the meeting of shareholders (or the resolutions in writing) together with the plan of merger must be sent to all shareholders of the company, whether or not entitled to vote.
  • where multiple classes of share are entitled to vote on the merger and the constitutional documents so provide, each must approve the plan of merger; and
  • shareholder approval is not required in the context of a parent / subsidiary merger.

Given the shareholder approval thresholds, for a minority shareholder of a BVI company, it is worth considering a specific approval or veto right in relation to a merger, if it can be commercially negotiated, to avoid a situation where the minority shareholder may be squeezed out as a result of a merger. Walkers can advise as to suitable minority protections in this regard.

Flexibility as to terms

One of the most attractive features of a merger under the Act is the flexibility afforded as to its terms. The plan of merger sets out the manner and basis of cancelling, reclassifying or converting shares in each constituent company into any combination of cash, assets or shares, debt obligations or other securities in the surviving company. It is also possible for shares of the same class to treated differently — allowing, for example, for certain shareholders to rollover into shares in the surviving entity, while other shareholders may be cashed out.

Regulatory considerations

For BVI companies which are not regulated entities, there are no particular regulatory formalities or consents required other than the filings outlined above in relation to the process. Where more than one BVI company is merging and the companies have different registered agents in the BVI, then in addition to the above documents, consent to the merger from the registered agent of any BVI company which will not survive the merger must also be filed.

There is no court involvement in a merger of a BVI company and, while shareholders may dissent and claim fair value for their shares, the dissent process and determination of fair value is an out of court appraisal process which the Act provides should be completed within 30 days. In practice, although rarely used, the dissent process can be more involved and specialist advice should be sought if relevant.

Completion and effect of merger

On completion of a merger, as a matter of BVI law:

  • the merging entities are merged and continue as one surviving entity;
  • any merging BVI company which is not the surviving entity is struck off the Register of Companies.
  • all assets and liabilities of each constituent entity become the assets and liabilities of the surviving entity;
  • the certificate of merger issued by the Registrar is conclusive evidence of compliance with • the requirements of the Act in respect of the merger; and
  • the merger does not affect or reduce any liabilities (criminal or otherwise) of any constituent entity, and all proceedings pending by or against any of the constituent entities can be continued in the name of or against the surviving entity.

Where a foreign company is the surviving entity of the merger, the Registrar does not issue a certificate of merger and the merger is effective as provided by the laws of the jurisdiction of the surviving entity.


The documents and process for a BVI merger can be very straightforward, and so may be prepared on short notice. The filing is submitted electronically and is effective on filing (subject to it being approved by the Registrar). Typically the Registrar will approve the filing within a business day or two (and often on a same day basis) but for urgent situations it is possible to use a premium filing service which can be expected to secure approval within four hours of filing. An additional Registry fee of $500 applies to the premium service.

Jack BoldarinManaging PartnerT +44 (0)20 7220
Sara HallPartnerT +44 (0)20 7220
Neil McDonaldPartnerT +44 (0)20 7220
Patrick OrmondPartnerT +44 (0)20 7220