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BVI Business Companies Act, 2004

SCHEDULE 2

Transitional Provisions

...

PART IV

TRANSITIONAL PROVISIONS APPLYING TO FORMER ACT COMPANIES THAT ARE AUTOMATICALLY RE-REGISTERED UNDER PART III

Division 1 - Preliminary

Scope of this Part.

6. This Part applies to a former Act company that is automatically re-registered under Part III of this Schedule.

Interpretation for this Part.

7. In this Part, unless the context otherwise requires

“authorised capital” of a company means the sum of the aggregate par value of all shares with par value which the company is authorised by its memorandum to issue plus the amount, if any, stated in its memorandum as authorised capital to be represented by shares without par value which the company is authorised by its memorandum to issue;

“capital” of a company means the sum of the aggregate par value of all outstanding shares with par value of the company and shares with par value held by the company as treasury shares plus

(a) the aggregate of the amounts designated as capital of all outstanding shares without par value of the company and shares without par value held by the company as treasury shares, and

(b) the amounts as are from time to time transferred from surplus to capital by a resolution of directors;

“surplus” in relation to a company, means the excess, if any, at the time of the determination, of the total assets of the company over the sum of its total liabilities, as shown in the books of account, plus its capital.

Division 2 - Memorandum

Memorandum.

8. (1) In place of the requirements specified in section 9, the memorandum of a former Act company incorporated under the International Business Companies Act to which this Part applies must include the following:

(a) the name of the company;

(b) the address within the Virgin Islands of the registered office of the company;

(c) the name and address within the Virgin Islands of the registered agent of the company;

(d) the objects or purposes for which the company is to be incorporated;

(e) the currency in which shares in the company shall be issued;

(f) a statement of the authorised capital of the company setting forth the aggregate of the par value of all shares with par value that the company is authorised to issue and the amount, if any, to be represented by shares without par value that the company is authorised to issue;

(g) a statement of the number of classes and series of shares, the number of shares of each such class and series and the par value of shares with par value and that shares may be without par value, if that is the case;

(h) a statement of the designations, powers, preferences and rights, and the qualifications, limitations or restrictions of each class and series of shares that the company is authorised to issue, unless the directors are to be authorised to fix any such designations, powers, preferences, rights, qualifications, limitations and restrictions and in that case, an express grant of such authority as may be desired to grant to the directors to fix by a resolution any such designations, powers, preferences, rights, qualifications, limitations and restrictions that have not been fixed by the memorandum;

(i) a statement of the number of shares to be issued as registered shares and the number of shares to be issued as bearer shares unless the directors are authorised to determine at their discretion whether shares are to be issued as registered shares or bearer shares and in that case an express grant of such authority as may be desired must be given to empower the directors to issue shares as registered shares or bearer shares as they may determine by resolution of directors;

(j) whether registered shares may be exchanged for bearer shares and whether bearer shares may be exchanged for registered shares; and

(k) if bearer shares are authorised to be issued, the manner in which a required notice to members is to be given to the holders of bearer shares.

(2) For the purposes of subparagraph (1)(d), if the memorandum contains a statement either alone or with other objects or purposes that the object or purpose of the company is to engage in any act or activity that is not prohibited under any law for the time being in force in the Virgin Islands, the effect of that statement is to make all acts and activities that are not illegal part of the objects or purposes of the company, subject to any limitations in the memorandum.

(3) In the case of a former Act company that is incorporated under the Companies Act, the capital stated in its memorandum of association in effect at the date of its application to re-register or at the date of its automatic re-registration, as the case may be, shall be its authorised capital for the purposes of this Part.

Division 3 - Capital, redemptions and dividends

Scope of this Division

9. Paragraphs 10 to 23 apply to a company to which this Part applies in place of sections 56 to 65.

Shares to be fully paid.

10. No share in a company may be issued until the consideration in respect of the share is fully paid, and when issued the share is for all purposes fully paid and nonassessable save that a share issued for a promissory note or other written obligation for payment of a debt may be issued subject to forfeiture in the manner prescribed in paragraph 3.

Kind of consideration for shares.

11. Subject to the memorandum or articles, each share in a company shall be issued for money, services rendered, personal property (including other shares, debt obligations or other securities in the company), an estate in real property, a promissory note or other binding obligation to contribute money or property, or any combination thereof.

Forfeiture of shares.

12. (1) The memorandum or articles, or an agreement for the subscription of shares, of a company may contain provisions for the forfeiture of shares for which payment is not made pursuant to a promissory note or other written binding obligation for payment of a debt.

(2) Any provision in the memorandum or articles, or in an agreement for the subscription of shares of a company providing for the forfeiture of shares shall contain a requirement that written notice specifying a date for payment to be made be served on the member who defaults in making payment pursuant to a promissory note or other written binding obligation to pay a debt.

(3) The written notice referred to in subparagraph (2) shall name a further date not earlier than the expiration of fourteen days from the date of service of the notice on or before which the payment required by the notice is to be made and shall contain a statement that in the event of non-payment at or before the time named in the notice the shares, or any of them, in respect of which payment is not made will be liable to be forfeited.

(4) Where a notice has been issued under this section and the requirements of the notice have not been complied with, the directors may, at any time before tender of payment, by resolution of directors forfeit and cancel the shares to which the notice relates.

(5) The company is under no obligation to refund any moneys to the member whose shares have been cancelled pursuant to subparagraph (4) and that member shall be discharged from any further obligation to the company.

Amount of consideration for shares.

13. (1) Subject to the memorandum or articles, shares in a company may be issued for such amount as may be determined from time to time by the directors, except that in the case of shares with par value, the amount shall not be less than the par value; and, in the absence of fraud, the decision of the directors as to the value of the consideration received by the company in respect of the issue is conclusive, unless a question of law is involved.

(2) A share issued by a company upon conversion of, or in exchange for, another share or a debt obligation or other security in the company, shall be treated for all purposes as having been issued for money equal to the consideration received or deemed to have been received by the company in respect of the other share, debt obligation or security.

Authorised capital in several currencies.

14. (1) The authorised capital, if any, of a company may be stated in more that one currency in which case the par value of the shares, if any, shall be expressed in the same currencies.

(2) The Commission may issue guidelines with respect to the calculation of fees payable pursuant to Part V of this Schedule for companies with an authorised capital stated in a currency other than United States dollars.

Capital and surplus accounts.

15. (1) Upon the issue by a company of a share with par value, the consideration in respect of the share constitutes capital to the extent of the par value and the excess constitutes surplus.

(2) Subject to the memorandum or articles, upon the issue by a company of a share without par value, the consideration in respect of the share constitutes capital to the extent designated by the directors and the excess constitutes surplus, except that the directors must designate as capital an amount of the consideration that is at least equal to the amount that the share is entitled to as a preference, if any, in the assets of the company upon liquidation of the company.

(3) Upon the disposition by a company of a treasury share, the consideration in respect of the share is added to surplus.

Dividend of shares.

16. (1) A share issued as a dividend by a company shall be treated for all purposes as having been issued for money equal to the surplus that is transferred to capital upon the issue of the share.

(2) In the case of a dividend of authorised but unissued shares with par value, an amount equal to the aggregate par value of the shares shall be transferred from surplus to capital at the time of distribution.

(3) In the case of a dividend of authorised but unissued shares without par value, the amount designated by the directors shall be transferred from surplus to capital at the time of the distribution, except that the directors must designate as capital an amount that is at least equal to the amount that the shares are entitled to as a preference, if any, in the assets of the company upon liquidation of the company.

(4) A division of the issued and outstanding shares of a class or series of shares into a larger number of shares of the same class or series having a proportionally smaller par value does not constitute a dividend of shares.

Increase or reduction of share capital.

17. (1) Subject to the memorandum or articles, a company may amend its memorandum to increase or reduce its authorised capital, and in connection therewith, the company may

(a) increase or reduce the number of shares which the company may issue;

(b) increase or reduce the par value of any of its shares; or

(c) effect any combination under (a) and (b).

(2) Where a company reduces its authorised capital under subparagraph (1), then, for purposes of computing the capital of the company, any capital that immediately before the reduction was represented by shares but immediately following the reduction is no longer represented by shares shall be deemed to be capital transferred from surplus to capital.

(3) A company shall, in writing, inform the Registrar of any increase or decrease of its authorised capital.

Division and combination.

18. (1) A Company may amend its memorandum

(a) to divide the shares, including issued shares, of a class or series into a larger number of shares of the same class or series; or

(b) to combine the shares, including issued shares, of a class or series into a smaller number of shares of the same class or series.

(2) Where shares are divided or combined under subparagraph (1), the aggregate par value of the new shares must be equal to the aggregate par value of the original shares.

Acquisition of own shares

19. (1) Subject to the memorandum or articles, a company may purchase, redeem or otherwise acquire and hold its own shares but only out of surplus or in exchange for newly issued shares of equal value.

(2) Subject to subparagraph (1), a company may not purchase, redeem or otherwise acquire its own shares without the consent of the member whose shares are to be purchased, redeemed or otherwise acquired, unless the company is permitted to purchase, redeem or otherwise acquire the shares without that consent by virtue of

(a) the provisions of the memorandum or articles of the company;

(b) the designations, powers, preferences, rights, qualifications, limitations and restrictions with which the shares were issued; or

(c) the subscription agreement for the issue of the shares.

(3) No purchase, redemption or other acquisition permitted under subparagraph (1) shall be made unless the directors determine that immediately after the purchase, redemption or other acquisition

(a) the company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and

(b) the realisable value of the assets of the company will not be less than the sum of its total liabilities other than deferred taxes, as shown in the books of account, and its capital; and, in the absence of fraud, the decision of the directors as to the realisable value of the assets of the company is conclusive.

(4) A determination by the directors under subparagraph (3) is not required where shares are purchased, redeemed or otherwise acquired

(a) pursuant to a right of a member to have his shares redeemed or to have his shares exchanged for money or other property of the company;

(b) by virtue of a transfer of capital pursuant to paragraph 12(1)(b);

(c) by virtue of the provisions of section 179; and

(d) pursuant to an order of the court.

(5) Subject to the memorandum or articles, shares that a company purchases, redeems or otherwise acquires may be cancelled or held as treasury shares unless the shares are purchased, redeemed or otherwise acquired by virtue of a reduction in capital, in which case they shall be cancelled but they shall be available for reissue; and upon the cancellation of a share, the amount included as capital of the company with respect to that share shall be deducted from the capital of the company.

(6) A company may purchase, redeem or otherwise acquire the shares of the company at a price lower than fair value if permitted by, and then only in accordance with, the terms of

(a) its memorandum or articles; or

(b) a written agreement for the subscription for the shares to be purchased, redeemed or otherwise acquired.

Treasury shares disabled.

20. Where shares in a company

(a) are held by the company as treasury shares; or

(b) are held by another company of which the first company holds, directly or indirectly, shares having more than fifty per cent of the votes in the election of directors of the other company, the shares of the first company are not entitled to vote or to have dividends paid thereon and shall not be treated as outstanding for any purpose under this Schedule except for purposes of determining the capital of the first company.

Increase or reduction of capital

21. (1) Subject to the memorandum or articles and subject to subparagraphs (2) and (3), the capital of a company may, by a resolution of members or by resolution of directors, be

(a) increased by transferring an amount out of the surplus of the company to capital; or

(b) reduced by transferring an amount out of capital of the company to surplus.

(2) No reduction of capital shall be effected under subparagraph (1) that reduces the capital of the company to an amount that is less than the sum of

(a) the aggregate par value of

(i) all outstanding shares with par value, and

(ii) all shares with par value held by the company as treasury shares; and

(b) the aggregate of the amounts designated as capital of

(i) all outstanding shares without par value, and

(ii) all shares without par value held by the company as treasury shares that are entitled to a preference, if any, in the assets of the company upon liquidation of the company.

(3) No reduction of capital shall be effected under subparagraph (1) unless the directors determine that immediately after the reduction

(a) the company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and

(b) the realisable value of the assets of the company will not be less than its total liabilities, other than deferred taxes, as shown in the books of account, and its remaining capital; and, in the absence of fraud, the decision of the directors as to the realisable value of the assets of the company is conclusive.

Dividends

22. (1) Subject to the memorandum or articles, a company may, by a resolution of directors, declare and pay dividends in money, shares or other property.

(2) Dividends shall only be declared and paid out of surplus.

(3) No dividend shall be declared and paid unless the directors determine that immediately after the payment of the dividend

(a) the company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and

(b) the realisable value of the assets of the company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account, and its capital; and, in the absence of fraud, the decision of the directors as to the realisable value of the assets of the company is conclusive.

Appreciation of assets

23. Subject to the memorandum or articles, a company may, by a resolution of directors, include in the computation of surplus for any purpose under this Part the net unrealised appreciation of the assets of the company, and, in the absence of fraud, the decision of the directors as to the value of the assets is conclusive, unless a question of law is involved.

Division 4 – Immobilisation of Existing Bearer Shares

Scope of this Division

24. This Division applies to a former Act company incorporated under the International Business Companies Act to which this Part applies in addition to Part III Division 5 of the Act.

Interpretation for this Part

25. In this Part

“authorised custodian” means a person approved by the Commission as an authorised custodian under section 50A(1) or section 50A(2) of the Financial Services Commission Act, 2001;

“custodian” means an authorised custodian or a recognised custodian;

“effective date means 1st January, 2005;

“existing bearer share” means a share in a company that was issued as or converted to a bearer share prior to the effective date and that remains a bearer share in the company on the effective date;

“recognised custodian” means a person recognised by the Commission as a custodian under section 50B of the Financial Services Commission Act, 2001; and

“transition date” means 31st December, 2010.

Issue of bearer shares and conversion of registered shares after effective date

26. (1) Every existing bearer share of a company shall, on or before the transition date

(a) be deposited with a custodian who has agreed to hold the share; or

(b) be converted to, or exchanges for, a registered share.

(2) Subparagraph (1) does not apply to a bearer share that, before the transition date

(a) is cancelled; or

(b) is redeemed, purchased or otherwise acquired by the company as a treasury share.

(3) An existing bearer share in a company is deemed not to have been deposited with a custodian for the purposes of subparagraph (1) until the registered agent of the company has received

(a) in the case of a bearer share deposited with an authorised custodian, notification of the deposit from the authorised custodian in accordance with section 72(1); or

(b) in the case of a bearer share deposited with a recognised custodian, the proof of the deposit of the share and the notice required to be sent by section 71(3).

(4) The Court may, on the application of the company or of a person interested in a bearer share, extend the period specified in subparagraph (1) by such further period or periods not exceeding one year in total as it considers fit.

(5) On an existing bearer share deposited with a custodian in accordance with subparagraphs (1)(a) and (3), it shall for all purposes of this Part cease to be regarded as an existing bearer share and shall thereafter be treated as if it had been issued after the effective date.

Redemption of existing bearer shares

27. (1) Where an existing bearer share in a company is not deposited with a custodian who has agreed to hold the share on or before the transition date, the company may, notwithstanding sections 59 to 62 or any provision in the memorandum or articles, in any shareholders’ agreement or in any other agreement, redeem the share.

(2) Subject to subparagraph (3), sections 176(3) and 179 apply to the redemption of bearer shares under subparagraph (1).

(3) Where a company is unable, on making reasonable enquiries, to ascertain the identity or address of the holder of a bearer share

(a) it is not required to give the member notice under section 176(3);

and

(b) the company shall hold the proceeds of redemption on trust for the owner of the bearer share.

Application for appointment of liquidator

28. Where, after the transition date, a company has one or more existing bearer shares that have not been deposited with a custodian in accordance with this Part, the Commission may apply to the Court for the appointment of a liquidator of the company under the Insolvency Act.

Division 5 - Fees

Scope of this Division

29. The fees in this Division apply to a company to which this Part applies in place of the fees set forth in Schedule 1 of the Act.

Company incorporated in first six months of year

30. Subject to paragraph 33, a company that is incorporated in the first six months of a year shall on or before 31st May in the following year and in each succeeding year pay to the Registrar an annual fee as follows:

(a) $350.00 if on the annual fee payment date

(i) the authorised capital of the company does not exceed $50,000,

(ii) all the shares of the company have a par value, and

(iii) the company is prohibited by its memorandum from issuing bearer shares;

(b) $1,100.00 if either or both of the following apply to the company on the annual fee payment date

(i) the authorised capital of the company exceeds $50,000, or

(ii) the company is not prohibited by its memorandum from issuing bearer shares; and

(c) $350.00 if, on the annual fee payment date, the company is prohibited by its memorandum from issuing bearer shares and

(i) its authorised capital does not exceed $50,000 and some or all of its shares have no par value, or

(ii) it has no authorised capital and all its shares have no par value.

Company incorporated in second six months of year

31. Subject to paragraph 33, a company that is incorporated in the second six months of a year shall on or before 30th November in the following year and in each succeeding year pay to the Registrar an annual fee as follows

(a) $350.00 if on the annual fee payment date

(i) the authorised capital of the company does not exceed $50,000,

(ii) all the shares of the company have a par value, and

(iii) the company is prohibited by its memorandum from issuing bearer shares;

(b) $1,100.00 if either or both of the following apply to the company on the annual fee payment date

(i) the authorised capital of the company exceeds $50,000, or

(ii) the company is not prohibited by its memorandum from issuing bearer shares; and

(c) $350.00 if, on the annual fee payment date, the company is prohibited by its memorandum from issuing bearer shares and

(i) its authorised capital does not exceed $50,000 and some or all of its shares have no par value, or

(ii) it has no authorised capital and all its shares have no par value.

Company not prohibited from issuing bearer shares

32. (1) Notwithstanding paragraphs 30 and 31, during the period from 1st January 2005 to 31st December 2007 the annual fee payable by a company that on 31st December 2004 was not prohibited by its memorandum from issuing bearer shares is

(a) $1,100.00 if, on the annual fee payment date its authorised capital exceeds $50,000; or

(b) in any other case, $350.00.

(2) Notwithstanding paragraphs 30 and 31 and subject to paragraph, during the period from 1st January 2008 to 31st December 2010, the annual fee payable by a company that on 31st December 2004 was not prohibited by its memorandum from issuing bearer shares is

(a) $1,350.00 if, on the annual fee payment dates its authorised capital exceeds $50,000;

(b) in any other case, $600.00.

(3) Notwithstanding subparagraph 2, during the period from 1st January 2008 to 31st December 2010 the annual fee payable by a company that on 31st December 2004 was not prohibited by its memorandum from issuing bearer shares if all the company’s issued bearer shares are held by a recognised custodian, the registered office and head office of which are situated in the Virgin Islands, is

(a) $1,250.00 if, on the annual fee payment date the authorised capital exceeds $50,000; or

(b) in any other case, $500.00.

Increase in annual fee

33. (1) If a company fails to pay the amount due as the annual fee under paragraphs 30 to 32, as the case may be, by the time specified in paragraph 30 or 31, as the case may be, then the annual fee increases by ten per cent of that amount.

(2) If a company fails to pay the amount due as an increased annual fee under subparagraph (1) at or before the expiration of a period of two months from the time specified in paragraph 30 or 31, as the case may be, then the annual fee increases by fifty per cent of that amount.

Company in liquidation

34. Paragraphs 30 to 33 do not apply to a company in liquidation.

Notice of increase or decrease in authorised capital

35. There shall be paid to the Registrar upon the filing of any notice of an increase or a decrease in authorised capital pursuant to paragraph 21 the following fees:

(a) $750.00 in the case of an increase of authorised capital from $50,000 or less to more than $50,000; and

(b) in all other cases, $25.00.

Schedule 1 of this Act to apply

36. All other fees payable by a company to which the provisions of this Schedule apply shall be as set forth in Part I of Schedule 1 of this Act and for this purpose (a) any reference to “is authorised to issue no more than 50,000 shares” shall be deemed to be a reference to “has an authorised capital of no more than $50,000”; and

(b) any reference to “is authorised to issue more than 50,000 shares” shall be deemed to be a reference to “has an authorised capital of more than $50,000”.