Snapshot: registration of charges and priority of security in BVI law

Under BVI law, it is not necessary to file or record a security document with any BVI authority in order for it to be legal, valid or enforceable.

This snapshot explains how the priority of security interests is determined under BVI law, when and why a charge should be registered and the practical steps for both creditors and BVI companies. 

Registration of charges to preserve priority. 

Although registration with a governmental or regulatory authority, agency or BVI court, is not required for enforceability, registration is crucial to preserve priority. To preserve the priority of a security interest, the particulars should be registered in the public Register of Registered Charges of the BVI company granting such security interest. This can be done by submitting an application in the approved form to the Registrar of Corporate Affairs in BVI under Section 163 of the BVI Business Companies Act, 2004 (as amended) (the BCA). Once the filing has been accepted by the Registrar, the security interest gains priority over any subsequently registered or unregistered charge.  

Charges created before 1 January 2005 

Be aware that charges created prior to 1 January 2005 – when the BCA came into force – retain the priority they held under the previous regime. This means that historic charges may take priority over a charge created on or after 1 January 2005. This is relevant in the case of a BVI company that was originally incorporated under the International Business Companies Act, (Cap 291). 

Internal register of relevant charges 

A BVI company that grants a security interest is also required to enter details of the security interest on an internal register of relevant charges, as required under section 162 of the BCA. A copy of that register must be kept at the company’s registered office or at the office of its registered agent. 

Security over shares: optional notations 

Where security is created over shares in a BVI company, the company whose shares are being charged may voluntarily opt to (or more likely be required as a term of the security to): 

• add a notation of the security interest in its register of members and / or 
• elect to make its annotated register of members – required by the BCA to be filed with the Registrar of Corporate Affair – publicly accessible

Although the notation has no statutory effect, it could, potentially, give notice to any party reviewing the register of members of the security interest. Again, making the annotated register of members publicly accessible has no statutory effect per se, though it could give further notice of the security interest to any party carrying out a search against the BVI company. 

How can Ogier help 

For advice on registering security interests, determining priority, or structuring BVI security packages, contact our BVI Banking and Finance team. We have BVI qualified finance lawyers located across our global network of 13 offices, including on the ground experts in the Caribbean, Hong Kong, London and the Channel Islands. 

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice