Introduction

The Stamps (Amendment) Act 2023 (the Act) is now in force, having been granted assent by the Governor on 20 March 2023 and extends the stamp duty exemption available to Belongers who are first time property owners until 20 March 2024.

Download a PDF of our Legal Guide – Stamp Duty in the BVI – The Stamps (Amendment) Act 2023

The exemption

Stamp duty is a documentary tax that is levied in connection with certain specified legal documents. The primary legislation governing the assessment of stamp duty in the BVI is the Stamp Act. The Act further amends the Schedule to the Stamp Act by exempting certain Instruments effecting the sale or transfer of BVI property from the obligation to pay stamp duty.

The exemption applies only in respect of the sale or transfer of BVI property:

• to a Belonger who is a first-time property owner; and
• for a period of one year from the coming into force of the Act.

The exemption under the Act is expressed to apply to Instruments effecting both the sale and the transfer of BVI property to Belongers. The exemption under the Act therefore captures transfers of property in consideration of natural love and affection, notwithstanding only nominal stamp duty is typically payable in connection with such transfers.

In the context of BVI property transactions, stamp duty is typically paid by the purchaser.

Belongers and Non-Belongers

In broad terms, Belonger status is a legal classification that is associated with a number of British Overseas Territories, though the requirements to attain this status and the rights that such status confers, vary from territory to territory.

As far as the BVI is concerned, a Belonger is a person deemed to belong to the BVI according to the Virgin Islands Constitution Order 2007.

The Stamp Act

Where the exemption under the Act does not apply, the stamp duty payable in connection with the sale of BVI property to a Belonger shall be calculated at a rate of 4% of the higher of the purchase price and the market value of the property in question.

The Non-Belongers Land Holding Regulation Act

In general terms, the rate of stamp duty payable in respect of Instruments effecting the sale or transfer of BVI property to Non-Belongers is higher compared with that payable by Belongers.  For example, the Non-Belongers Land Holding Regulation Act (the NBLHR Act) provides that the stamp duty payable in connection with the sale of BVI property to a Non-Belonger is calculated at a rate of 12% of the higher of the purchase price and the market value of the property in question.

The Act does not apply to Instruments effecting the sale or transfer of BVI property to Non-Belongers and the provisions of the Stamp Act in conjunction with the NBLHR Act will continue to govern the stamp duty regime in respect of such Instruments.

First time property owners

The Act does not include a definition of a first-time property owner and it remains unclear what verification will be undertaken to determine whether a person is indeed a first-time property owner.

Conclusion

The Act provides for significant stamp duty savings for Belongers in a position to take advantage of the exemption.

Belonger purchasers wishing to take advantage of the exemption should bear in mind that the Act provides that where a Belonger benefits from the exemption under the Act and subsequently sells or transfers the property to a Non-Belonger within a period of seven years, the stamp duty waived by way of the exemption shall become due.

For more information or if you require any assistance with your BVI property transaction, please feel free to email us or reach out to your usual GHP contact.

The OECD’s Global Forum on Transparency and the Exchange of Information for Tax Purposes (the Global Forum) published the ‘Peer Review of the Automatic Exchange of Financial Account Information 2022’ on 9 November 2022. The full publication is accessible HERE.

Download a PDF copy of our legal guide – British Virgin Islands: Peer Review of the Automatic Exchange of Financial Account Information 2022.

The Global Forum monitors and peer reviews the implementation of the global Standard for Automatic Exchange of Financial Account Information in Tax Matters (the AEOI Standard). In pursuance of its mandate, the Global Forum reviewed each participating jurisdiction’s internal legal frameworks to ensure they are complete and that the AEOI Standard is effectively implemented in practice.

AEOI legal framework

The Global Forum concluded that the British Virgin Islands’ domestic and international legal frameworks implementing the AEOI Standard are in place and are consistent with the core requirements of the AEOI Terms of Reference.

Effectiveness in practice of AEOI

The Global Forum found that the British Virgin Islands’ implementation of the AEOI Standard is only partially compliant with the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice.

In broad summary, the Global Forum concluded that the British Virgin Islands’ implementation of the AEOI Standard is on track with respect to exchanging the information effectively in practice, including in relation to sorting, preparing and validating the information, most of the requirements in relation to correctly transmitting the information in a timely manner and providing corrections, amendments or additions to the information. However, it identified some issues relating to the British Virgin Islands’ administrative compliance framework and related procedures and the exchanging of information in a timely manner with all exchange partners.

In particular, the Global Forum noted that the British Virgin Islands is:

• partially meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. More specifically, significant issues were identified, including with respect to the extent of the implementation of the British Virgin Islands’ compliance strategy and verification activities, its monitoring of key information points such as Tax Identification Numbers and dates of birth and with respect to the enforcement procedures;
• fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the required due diligence and reporting procedures;
• meeting expectations in relation to sorting, preparing and validating final account information to be reported (the Information). It was also noted that there is room for improvement with respect to the processes to sorting, preparing and validating the Information;
• fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its exchange partners;
• meeting expectations in relation to exchanging the Information in a timely manner. It was also noted that there is room for improvement with respect to sending information in a timely manner;
• fully meeting expectations in relation to sending the Information in accordance with the agreed transmission methods and encryption standards; and
• appears to be meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information.

The Recommendations

The Global Forum made three recommendations relating to:

• monitoring and verifying compliance with the AEOI Standard including developing and implementing administrative procedures to enable effective enforcement and appropriate sanctions when non-compliance is detected;
• sorting, preparing and validating information to ensure they meet the AEOI Standard; and
• sending information to exchange partners in a timely manner,

(together, the Recommendations).

The British Virgin Islands’ response

In response to the Global Forum’s assessment, the British Virgin Islands has cited the significant progress it has made in implementing the AEOI Standard as an early adopter notwithstanding its challenges. It referred to the hindrances caused by Hurricanes Irma and Maria including damage to infrastructure and resulting loss of staff. It underscored its commitment to meeting its obligation and continuing the work toward the implementation of the AEOI Standard.

What does this mean for industry players?

Based on the British Virgin Islands’ response to the Global Forum’s assessment, we expect that the BVI International Tax Authority will implement the Recommendations in due course. Accordingly, Reporting Financial Institutions should expect progressively increased compliance monitoring, verification activities and enforcements by the International Tax Authority including the establishment of administrative penalties and sanctions to address non-compliance with the AEOI Standard.

Reporting Financial Institutions should take a closer look at their existing CRS policies and procedures. They should also ensure that they identify the Financial Accounts they maintain, the Reportable Accounts among those Financial Accounts (including their Account Holders, and where relevant Controlling Persons) by correctly conducting the due diligence procedures and collecting and reporting the Information with respect to each Reportable Account.

If you need any assistance with the classification and reporting obligations of any entity pursuant to the AEOI Standard, please feel free to contact us.

The Government of the Virgin Islands has issued a statement to the maritime industry indicating that the measure introduced in 2021 to require foreign based commercial recreational vessels conducting charter business in the British Virgin Islands to obtain yacht charter licences and  work permits for crew working on these vessels will be reversed as of Tuesday, 15 November 2022.

Download a PDF of our Legal Update – Foreign Based Commercial Recreational Vessels

The introduction of this measure in 2021 meant a sea (np) change in the regulatory regime governing the operation of foreign based commercial recreational vessels in BVI waters resulting in operators modifying their operational procedures and strategies to comply with the requirements.

With the reversal of this position, there will no doubt be questions as to precisely how the revised regime will work in practice and we anticipate that the authorities will publish updated guidance in this regard in due course. We will therefore continue to monitor this space and share any useful information and guidance as the new procedures are implemented.

For more information or if you require any assistance with BVI shipping matters, trade licences or work permits, please feel free to email us or reach out to one of our lawyers using the contact details below.

Introduction

There is now an updated version of this guidance.  Click here for the March 2023 legal guide on the Stamp Duty exemption for first-time belonger home buyers.

The Stamps (Amendment) Act 2022 (the Act) is now in force, having been granted assent by the Governor on 21 March 2022 and is anticipated to have a positive impact on the number of property transactions taking place in the British Virgin Islands.

Download a PDF of our Legal Guide – Stamp Duty in the BVI – The Stamps (Amendment) Act 2022

The exemption

Stamp duty is a documentary tax that is levied in connection with certain specified legal documents. The primary legislation governing the assessment of stamp duty in the BVI is the Stamp Act. The Act amends the Schedule to the Stamp Act by exempting certain Instruments effecting the sale or transfer of BVI property from the obligation to pay stamp duty.

The exemption applies only in respect of the sale or transfer of BVI property:

• to a Belonger who is a first-time property owner; and
• for a period of one year from the coming into force of the Act.

The exemption under the Act is expressed to apply to Instruments effecting both the sale and the transfer of BVI property to Belongers. The exemption under the Act therefore captures transfers of property in consideration of natural love and affection, notwithstanding only nominal stamp duty is typically payable in connection with such transfers.

In the context of BVI property transactions, stamp duty is typically paid by the purchaser.

Belongers and Non-Belongers

In broad terms, Belonger status is a legal classification that is associated with a number of British Overseas Territories, though the requirements to attain this status and the rights that such status confers, vary from territory to territory.

As far as the BVI is concerned, a Belonger is a person deemed to belong to the BVI according to the Virgin Islands Constitution Order 2007.

The Stamp Act

Where the exemption under the Act does not apply, the stamp duty payable in connection with the sale of BVI property to a Belonger shall be calculated at a rate of 4% of the higher of the purchase price and the market value of the property in question.

The Non-Belongers Land Holding Regulation Act

In general terms, the rate of stamp duty payable in respect of Instruments effecting the sale or transfer of BVI property to Non-Belongers is higher compared with that payable by Belongers.  For example, the Non-Belongers Land Holding Regulation Act (the NBLHR Act) provides that the stamp duty payable in connection with the sale of BVI property to a Non-Belonger is calculated at a rate of 12% of the higher of the purchase price and the market value of the property in question.

The Act does not apply to Instruments effecting the sale or transfer of BVI property to Non-Belongers and the provisions of the Stamp Act in conjunction with the NBLHR Act will continue to govern the stamp duty regime in respect of such Instruments.

First time property owners

The Act does not include a definition of a first-time property owner and it is unclear at this stage what verification will be undertaken to determine whether a person is indeed a first-time property owner.

Conclusion

The Act provides for significant stamp duty savings for Belongers in a position to take advantage of the exemption.

Belonger purchasers wishing to take advantage of the exemption should bear in mind that the Act provides that where a Belonger benefits from the exemption under the Act and subsequently sells or transfers the property to a Non-Belonger within a period of seven years, the stamp duty waived by way of the exemption shall become due.

For more information or if you require any assistance with your BVI property transaction, please feel free to email us or reach out to one of our lawyers using the contact details below.

Overview

On 15 July 2021, the Labour Tribunal (the Tribunal) made four awards against employers relating to complaints made by employees pursuant to the Labour Code, 2010 (the Code) that they had been unfairly dismissed (the Awards). The term “unfair dismissal” refers to a situation where an employer terminates an employment contract without a valid and fair reason and contrary to the provisions of the Code. The Awards ranged from $10,000 to $448,959, signaling the Tribunal’s clear willingness to order significant sums against employers in appropriate cases. The purpose of this article is to set out the Tribunal’s approach articulated in the Awards in relation  to unfair dismissals in the context of summary dismissals and redundancies, the factors that the Tribunal will take into account when assessing the amount of a punitive award against an employer and its approach to costs and interest. The full cases are available by clicking the links embedded in the names of the cases below.

Download a PDF of our Legal Guide – Labour Tribunal – Unfair Dismissal

Brief summaries of the Awards

In Colleth Ranger-Vassell v Mainsail B.V.I. Limited, the employer contended that the employee was summarily dismissed on the basis of insubordination. The employer’s position was that they gave the employee several written warnings regarding her conduct in accordance with the Code, and they were justified in summarily dismissing her due to insubordination. The Tribunal found that the dismissal was not valid as the employer had already taken disciplinary action in the form of demoting the employee following the written warnings which had the effect of wiping her record clean. The Tribunal further stated that the employer did not give the employee a written warning following the employee’s demotion which complied with the provisions of the Code on which it relied. The Tribunal also determined that where an accusation against an employee formed the basis of termination as it did in this case, the employer ought to have carried out an investigation into the matter and must have reasonable grounds for believing the employee was guilty. The employee must also be given a fair opportunity to defend himself or herself. The Tribunal determined that the dismissal was both unfair and illegal.

The Tribunal also considered the issue of summary dismissal in Qasim Yoba v Peter Island (2000) Ltd. In that case, the employee was accused of selling derelict vehicles which belonged to the employer, without the requisite authority.

The Tribunal was satisfied that the employer conducted investigations and provided a letter to the employee with a statement of the precise reason for termination, in accordance with the provisions of the Code relating to summary dismissal. Nevertheless, the Tribunal determined that the termination was unfair as the employer should have provided the employee with full details of its investigation and given him time to consider the accusations against him and to respond.

In Mark McKie v Nanny Cay Resort and Marina Limited, the employee challenged his employer’s decision to make him redundant. The Tribunal outlined the relevant criteria under the Code which must be satisfied for a redundancy to be considered valid. The employer argued that redundancy was based on a cash flow problem which fell within the statutory definition of redundancy under the Code. The Tribunal determined that the employer did not provide sufficient evidence that it was suffering from cash flow problems. The Tribunal found that there was no redundancy within the meaning of the Code and that the employee was unfairly dismissed.

The Tribunal also considered the legal procedure for redundancy in Patricia Hodge v Road Town Wholesale Trading Ltd. The employer claimed that the termination fell within the meaning of redundancy in the Code as it reorganised its business to improve efficiency. The Tribunal accepted that there was a reorganisation of the employer’s business but highlighted that the Code requires not only reorganisation of the business, but also that the reorganisation must be for the purpose of improving efficiency. The Tribunal found that the reorganisation did not reduce the employee’s work and accordingly the employee’s work was not affected by the reorganisation. The Tribunal ordered that the complainant be re-instated with effect from the day after termination with all the rights and privileges at the time of her termination. The employer was ordered to pay the employee $448,959 which represents her salary for the period between termination and reinstatement less a sum of money which she received on termination. The Tribunal also ordered the employer to review her salary which it set at $81,954.53 (up from $75,000 at the time of termination) to take account of increases she was likely to have received had she not been terminated.

These cases highlight several requirements of the Code that employers should take into account when considering the termination of an employee’s employment. We examine these considerations under the various heads below.

What are likely to be the main considerations of the Tribunal in cases of termination by way of redundancy?

In determining the validity of a termination by way of redundancy, the Tribunal indicated that it would ask itself two main questions:

• Whether the employer served the requisite notice in relation to the termination or made a payment in lieu of notice; and
• Whether the termination was for a valid and fair reason.

The Tribunal also confirmed the following important points in respect of termination by way of redundancy:

• a termination will automatically be for a valid and fair reason if it falls within one of the instances of redundancy specified in the Code;
• where an employee is terminated on the basis of redundancy there is no need to notify the employee in writing of the nature and particulars of the reason for the termination or to have given the employee a fair opportunity to defend himself or herself; and
• the employer must always act reasonably in the circumstances.

With respect to redundancies, the test will be whether, on a balance of probabilities, the evidence shows that the dismissal is for any of the specified instances of redundancy set out in the Code. The employer must therefore be prepared to adduce evidence to support the claimed basis of the redundancy. The Tribunal has also noted that if an employee is terminated for two causes,  the Tribunal will consider the predominant cause of the dismissal to determine if it was valid and fair. Therefore, if the Tribunal determines that redundancy is the predominant cause, as it did in Mark McKie, the other cause will fail.

Employers must therefore carefully consider the reasons for any redundancy exercise and maintain the relevant evidence to demonstrate that a legitimate redundancy situation exists if it is called upon to do so.

How should employers handle summary dismissals?

The Code provides that an employment contract shall not be terminated by an employer without a valid and fair reason connected with the capacity or conduct of the employee or with the operational requirements of the business. Where an employer contemplates terminating an employment contract in such cases, the employer must inform the employee in writing of the nature and particulars of the complaint against the employee and give the employee or the employee’s representative a fair opportunity to defend himself or herself including providing access to employment records.

The Code also allows an employer to dismiss an employee summarily if he or she is guilty of serious misconduct of a nature that it would be unreasonable to require the employer to continue the employment relationship. In Qasim Yoba, the Tribunal appears to have accepted that even in cases of summary dismissal, the employee is still to be given a fair opportunity to defend himself or herself in keeping with the overarching requirements of natural justice.

Further, although an employee’s contract of employment provides for summary dismissal, employers will still be held to the provisions of the Code.

What does the Tribunal consider when making a punitive award?

The Code states that where a dismissal was unfair or illegal, the Tribunal may order reinstatement, re-engagement or compensation, where such remedies are acceptable to both parties. The Tribunal has interpreted the Code as constraining it to make a punitive award where both employer and employee have not indicated that compensation is an acceptable remedy. The Tribunal ordered punitive sums against the employers in three of the four Awards.

The Tribunal determined that the appropriate starting point for its punitive awards should be $25,000 which can then be increased or decreased based on various factors including:

• The nature, size and scope of the employer’s business;
• The conduct of the parties from the beginning of the proceedings up to the date of the final award, including the conduct of any legal practitioner at trial;
• The relevance of any compensation that may have been otherwise awarded; and
• Any fine or other penalty already suffered by the employer for the wrongful conduct to ensure that the employer is not punished twice.

It is therefore important for an employer to present evidence of its means to the Tribunal as a reference point for the calculation of any punitive award. Otherwise, the Tribunal is entitled to make an inference regarding an employer’s means which might not be as precise.

Additionally, employers should ensure their defence is carefully drafted to reduce the likelihood of a punitive award being made against them in circumstances where they would have been prepared to agree to compensation if the Tribunal found that dismissal was unfair or illegal.

When will the Tribunal order costs in proceedings? 

The Code provides that the Tribunal may only award costs for exceptional reasons, which the Tribunal considers appropriate. The Tribunal has taken the position that a punitive award itself would ordinarily amount to an exceptional reason to grant costs in favour of an employee.

In the Qasim Yoba case, the Tribunal refused to make an order as to costs in favour of the successful employee on the basis that the assistance that the employee received from his legal practitioner fell below the required standard of a legal practitioner appearing before it. Legal practitioners should therefore monitor their actions before the Tribunal to avoid adverse costs orders against their clients.

When can the Tribunal award interest?

The Code does not expressly empower the Tribunal to award interest on any compensatory or punitive sums ordered by the Tribunal. The only potentially applicable reference to interest payable under the Code appears in respect of an employee’s entitlement to recover wages in a court that have not been paid to him or her plus interest at the rate to be determined by a court.

Although the Tribunal agreed that it is not a court, it concluded that it had jurisdiction to determine employment disputes within its broad powers to make orders which would allow the Tribunal to award pre-and post-judgment interest, at the rates of 3% and 5% respectively. The Tribunal considered that it could order pre-judgment interest from the date of a complaint to the date of the award. Post-judgment interest would begin to accrue 30 days after the date of the award until payment is made.

Employers should take note that the Tribunal’s approach in applying pre- and post-judgment interest could noticeably increase the size of awards made against employers in unfair dismissal cases.

Conclusion

Employers face the risk of potentially high awards in unfair dismissal proceedings before the Tribunal.

As can be seen from the Awards we discussed above, when it comes to termination of employment, the requirements under the Code must be strictly followed in each case. Employers should therefore consult with their attorneys to assure the propriety of their dismissal proceedings to the best extent possible.

These are fairly early days for the Tribunal in its current form. We will continue to report on updates in relation to its findings as it continues to develop its jurisprudence.

If you would like any further information in relation to the matters covered by this legal guide, please email us or reach out to your usual GHP contact.

The British Virgin Islands (BVI) has introduced further changes to the economic substance (ES) regime by way of amendments to the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the Act). The amendments are introduced by the Economic Substance (Companies and Limited Partnerships) (Amendment) Act, 2021 (the Amendment Act) which came into force on 29 June 2021.

Download a PDF copy of our legal guide looking at the amendments introduced by the Economic Substance (Companies and Limited Partnerships) (Amendment) Act, 2021.

This legal guide considers the key changes to the economic substance regime. 

Distribution and service centre business and limited partnerships without legal personality  

Distribution and service centre business

Prior to the changes introduced by the Amendment Act, the provision of consulting or administrative services (CA Services) to foreign affiliates was not expressly included in the definition of “distribution and service centre business”. Nevertheless, the provision of CA Services to foreign affiliates was listed as one of the core income generating activities (CIGAs) relating to “distribution and service centre business” under the Act. As a matter of construction, some industry practitioners were of the view that any relevant entity providing CA Services would likely be providing “services to foreign affiliates in connection with the business” within the meaning of the previous definition. The Amendment Act now makes it clear that “distribution and service centre business” includes the provision of CA Services to foreign affiliates.

Limited partnerships without legal personality

Initially, the definition of “limited partnership” under the Act excluded limited partnerships without legal personality. The Amendment Act removes that exclusion such that every limited partnership, with or without legal personality, is now subject to the ES regime.

Financial periods for limited partnerships without legal personality 

Following the introduction of the Amendment Act, there is now a six-month transition period for limited partnerships without legal personality which were formed prior to 1 July 2021 (Pre-Existing LPs). Limited partnerships without legal personality formed on or after 1 July 2021 (New LPs) will be immediately subject to the Act upon formation as is already the case with other relevant entities. The “financial period” for Pre-Existing LPs and New LPs is:

• • Pre-Existing LPs: such period of one year commencing on a date no later than 1 January 2022 as the Pre-existing LP shall notify to the International Tax Authority (ITA) and thereafter each successive period of one year running from the end of that period;
  • New LPs: such period of not more than one year from the date of formation as the New LP shall notify to the ITA and thereafter each successive period of one year running from the end of that period.

Investment fund business

Prior to the introduction of the Amendment Act, only the Rules on Economic Substance in the Virgin Islands (the Rules) contained any express indication that the business of being an investment fund did not itself comprise a “relevant activity”. The ITA based its conclusion on the exhaustive list of “relevant activities” under the Act, which did not include investment fund business. The Amendment Act now expressly provides that investment fund business is not a “relevant activity”. Accordingly, an entity that only carries on investment fund business will not be required to comply with any of the ES requirements.

What is investment fund business?

The Amendment Act introduces a definition of “investment fund” as “…an entity whose principal business is the issuing of investment interests to raise funds or pool investor funds with the aim of enabling a holder of such an investment interest to benefit from the profits or gains from the entity’s acquisition, holding, management or disposal of investments and includes any entity through which an investment fund directly or indirectly invests or operates (but not an entity that is itself the ultimate investment held), but does not include a person licenced under the Banks and Trust Companies Act, 1990 or the Insurance Act, 2008, or a person registered under the Cooperatives Societies Act 1979 or the Friendly Societies Act 1928.”

The Amendment Act then defines “investment fund business” as “the business of operating an investment fund”.

The definition of “investment fund” does not make a distinction as between redeemable or non-redeemable interests. As such, it likely includes both open-ended and closed-end investment funds.

Based on our interpretation of the Amendment Act, the following entities might meet the definition of “investment fund”:

• Mutual funds recognised as such by the Financial Services Commission (including incubator and approved funds)
• Closed-end funds recognised under the private investment fund regime
• A master fund, being an entity through which an investment fund directly or indirectly invests

It is likely that that the ITA will provide guidance as to which entities or categories of entities might meet the definition of an “investment fund”. Until then, any relevant entity claiming not to be carrying on a “relevant activity” on the basis that it is an investment fund should consult with their BVI counsel to determine whether the entity is indeed carrying on the business of an investment fund in respect of any relevant financial period.

Core income generating activities and winding up

Core income generating activities (CIGAs)

The Act sets out a list of CIGAs for each “relevant activity”. Following the introduction of the Amendment Act, CIGA now also encompasses “all the activities that are of central importance to the relevant entity in terms of generating relevant income and must be carried on in the Virgin Islands”. The ITA had already indicated in the Rules that the specified CIGAs for each “relevant activity” are not confined to those specified activities and that what constitutes the CIGA of a particular activity requires a fact-sensitive analysis in each case. With the new gloss on the definition of CIGA, entities carrying on a relevant activity, other than holding business, might wish to conduct a more structured analysis to pinpoint all activities that generated relevant income for the entity for the financial period under consideration and then determine whether those activities were conducted in the BVI for that period as required by the Act.

Winding up

Given the pending changes to the strike off regime, instead of the ITA seeking for the entity to be struck off under the Act, the ITA will now be seeking for the entity to be wound up in cases where it determines that this is an appropriate enforcement action for any breach of the Act.

What should I be doing now?

Pre-Existing LPs should now be looking to undergo a classification exercise to determine whether the entity is within the scope of the ES requirements. Entities claiming to be conducting only investment fund business and which would accordingly not be required to comply with any of the ES requirements, should also seek legal advice to confirm their status.

If you need further information or any assistance with the classification of your entity for the purposes of the Act, particularly in light of the introduction of the Amendment Act, please feel free to contact us.

 

 

The Probates (Resealing) Act, 2021 (the Act) was Gazetted on 22 June 2021 and took effect from 9 July 2021.

 

Background

The Act repeals and replaces the Probates (Resealing) Act (Cap. 60) (the Original Act), which was enacted in 1937. The purpose of the Original Act was to provide for a simplified procedure to follow in which grants of probate or letters of administration issued by certain foreign courts may be resealed by the courts in the Virgin Islands.

Resealed grants under the Original Act had the same effect as if they were granted by the courts in the Virgin Islands.

Download a PDF of our Legal Update – Probates (Resealing) Act, 2021.

Limitation of the Original Act

The main limitation of the Original Act was that it only applied to grants issued by courts of probate in Her Majesty’s dominions as that term was defined in the Original Act. This included any British protectorate or protected state and any territory in respect of which a mandate or trusteeship was being exercised by Her Majesty’s Government in the United Kingdom or the Government of any part of Her Majesty’s dominions.

The result was that the range of jurisdictions whose court-issued grants of probate or letters of administration could be resealed in the Virgin Islands was necessarily limited.

New legislation

The Act maintains the essence of the Original Act but extends the number of jurisdictions whose grants of probate or letters of administration may be resealed by the Virgin Islands courts. The expanded list of jurisdictions includes all Commonwealth countries and territories and also includes Hong Kong and the United States of America. The Act allows the Governor, with the Agreement of Cabinet to extend the list of applicable jurisdictions, by publication of an Order in the Gazette to that effect. A full list of the current jurisdictions that are covered by the Act is included in the table at the end of this legal guide.

The Act applies to the grant of probate or letters of administration, whether issued before or after the coming into force of the Act.

Creditors

A further change introduced by the Act is that it empowers the High Court to require the giving of security in respect of the payment of debts due from the estate of a deceased person to persons residing in the Virgin Islands before resealing any grant of probate or letters of administration. 

Conclusion

The Act should greatly increase the number of estates that are able to benefit from the simplified procedure through which grants of probate or letters of administration issued by foreign courts may be resealed by the courts in the Virgin Islands. The availability of a simplified procedure in what is undoubtedly a difficult time will be of great benefit to many and shows that the BVI authorities remain conscious of the needs of the users of BVI companies.

If you would like any further information in relation to these changes, or any assistance or guidance in relation to matters relating to wills or probate, please email us or reach out to one of our lawyers using the contact details below.