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A great deal of global wealth, particularly wealth in the Asian and MENA regions, is held through British Virgin Islands (“BVI”) business companies. Where the shares in a BVI business company are registered in the name of an individual rather than a corporate entity, a question will arise concerning the succession to the shares in the event of the death of the individual. The aims of succession planning are both to provide a reliable answer to this question and to reduce substantially the delay and cost involved in ensuring that effect is given to the individual’s wishes, so far as they may be lawfully achieved, concerning succession.
Failure to put appropriate succession plans in place may result in unanticipated or undesired outcomes which will inevitably involve both delay and increased cost in dealing with the shares after death. This, in turn, may have significant and adverse consequences for the commercial life of the company which may, effectively, be put on hold. The adverse consequences will be exacerbated if the shareholder in question is also the company’s sole director and no reserve director has been nominated – a situation that occurs with surprising frequency – since in such circumstances the assistance of the BVI Court will be required to break the management impasse.
It is therefore very important that careful thought is given to succession planning in relation to BVI shares where they are or will be registered in the name of an individual. Succession planning may take the form of a BVI Will dealing exclusively with the BVI company shares, or the establishment of a BVI trust.
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Shares in BVI Business Companies – Avoiding a Succession Problem