DIRECTORS

The International Business Companies Ordinance provides that the business and affairs of an International Business Company shall be managed by the board of directors.

The first directors of an International Business Company have to be appointed by the registered agent which is the subscriber to the Memorandum and Articles. Frequently, the registered agent will deal with the basic formalities by appointing a nominee company as director and passing the initial resolutions before appointing new directors and resigning. After the appointment of the first directors by the registered agent, directors are elected by members or by other directors if permitted by the Memorandum and Articles.

MEETINGS OF DIRECTORS

Meetings of directors can be held whenever it is deemed necessary by the directors. There is no requirement that the directors meet once a year, although certain acts can only be done by an actual resolution of directors, for instance the appointment of agents and declaration of dividends. Directors can appoint alternates to attend meetings and vote in their place. Resolutions can be passed by written consent without the need for a meeting.

SHARES

After the International Business Company has been incorporated one of the first steps is for the directors to issue shares. This is important as a result of the provisions of Section 74 of the International Business Companies Ordinance which states that if at any time there is no member of the company, any person doing business in the name of or on behalf of the company is personally liable for payment of all debts of the company contracted during such time. Shares have to be allotted by a resolution of directors. Shares with a par value cannot be issued for less than par value. Shares have to be fully paid on issue unless issued for a promissory note or other binding written obligation to make payment.

SHARE CERTIFICATES

If the Memorandum and Articles provide that share certificates are to be issued by the International Business Company, such certificates must be signed by two directors or two officers of the International Business Company or by one director or one officer. Alternatively the certificate may be issued under the common seal of the International Business Company with or without the signature of any one director or officer.

TRANSFER OF SHARES

Registered Shares

A transfer of registered shares must be made in writing signed by the transferor and containing the name and address of the transferee. The directors may, however, accept such evidence as to a transfer of shares as they consider appropriate.

Bearer Shares

A bearer share is transferable by delivery of the certificate relating to the share.

MEETINGS OF SHAREHOLDERS

Directors can call shareholders' meetings as and when they deem it necessary and there is no requirement for an annual general meeting. The directors must call a shareholders' meeting on the written request of 50% or more of the shareholders or such lesser percentage as may be specified in the Memorandum or Articles. There is no distinction between ordinary and special resolutions.

SPECIAL PROVISIONS FOR BEARER SHARES

If bearer shares are authorised under the Memorandum, it must provide for service of notice on the holders of such bearer shares. Usually, the holder will be required to provide the company with the name and address of an agent for service of any notice but if this is not given the Memorandum will usually specify that publication of a notice in a newspaper, in the most appropriate location, will be sufficient notice.

The Articles will usually set out the way in which holders of bearer shares can pass resolutions. Ordinarily, the Articles provide that for the purposes of attending a shareholders' meeting, the production of the share certificate is sufficient evidence of the right to vote as a member. For the purposes of executing a written consent of shareholders, the signature of the bearer shareholder must be authenticated by a person in a position of responsibility such as a notary public, bank manager, or a director of the company.

AMENDMENTS TO THE MEMORANDUM AND ARTICLES

The Memorandum and Articles can be amended by resolution of the members, or where permitted by the Memorandum and Articles, by resolution of the directors. An extract of the relevant resolution, certified as a true copy by either a solicitor or the registered agent of the company must be filed at the Companies Registry in the British Virgin Islands and the amendment will only take effect from the time the amendment is registered by the Registrar of Companies.

BOOKS AND RECORDS

A) An International Business Company must keep a share register in such form as may be approved by the directors. A copy of the share register must be kept at the registered office of the International Business Company.

B) An International Business Company is also required to keep minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members and is required to keep copies of all resolutions consented to by directors, members, committees of directors, committees of officers and committees of members.

C) An International Business Company may keep a register of directors and may file it at the Companies Registry.

D) An International Business Company has to keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the International Business Company.

REGISTER OF MORTGAGES AND CHARGES

An International Business Company may create a mortgage, charge or other encumbrance over any of its assets situate in any part of the world in accordance with the law of the any jurisdiction of the International Business Company's choice.

An International Business Company also has the option of maintaining at its registered office a Register of Mortgages, Charges and Other Encumbrances in which the following particulars of each mortgage, charge or other encumbrance over the assets of the company may be entered:

  • the sum secured;
  • the assets secured;
  • the name and address of the mortgagee, chargee or other encumbrancer;
  • the date of creation of the mortgage, charge or other encumbrance; and
  • the date on which the particulars specified in points one to four above in respect of the mortgage, charge or other encumbrance are entered in the register.

This is, however, an optional procedure. An International Business Company is not obliged to create such a Register. In the event that an application is made to a court in the British Virgin Islands to enforce any mortgage, charge or other encumbrance created by a company over the assets of an International Business Company, however, the priority of any two or more mortgages, charges or other encumbrances made after 1 January 1991 shall be determined in accordance with their respective dates of entry into such Register, with unregistered mortgages, charges or other encumbrances ranking after registered mortgages, charges or other encumbrances.

The International Business Company Ordinance allows for the optional filing of an International Business Company's Register with the Companies Registry, again at the option of the International Business Company. Please note, however, that the priority of charges is still determined by the date of entry into the Register, not the date of filing of such Register at the Companies Registry. It is quite possible for Registry entries never to be filed at the Companies Registry. Once a Register has been filed publicly, however, the International Business Company in question is required to keep the public register up to date by notifying the Registrar of any changes to the same. The International Business Company may, at any time however, elect to cease registration of such changes by notice in writing to the Registrar.

COMPANY SEAL AND EXECUTION OF DOCUMENTS

An International Business Company must have a common seal and an imprint of such seal has to be kept at the registered office of the International Business Company.

Share certificates may require to be executed under seal. Any deed governed by British Virgin Islands law should be executed under seal. Usually the Articles provide that the affixing of the seal need only be done in the presence of one director or any other person authorised by a resolution of directors.

POWER OF ATTORNEY

A power of attorney granted by the company must be in writing but need not be under its seal.

If you would like further information on the administration of International Business Companies in the British Virgin Islands or details of how Harney Westwood & Riegels can help you with your International Business Companies enquiries, please contact Richard Parsons.

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