2012 ISSUE NO. 1 JURISDICTION UPDATE: BERMUDA BRITISH VIRGIN ISLANDS CAYMAN ISLANDS MAURITIUS BERMUDA BRITISH VIRGIN ISLANDS CAYMAN ISLANDS DUBAI HONG KONG LONDON MAURITIUS MOSCOW SINGAPORE SÃO PAULO conyersdill.com
BERMUDA Bermuda Insurance Update Over the past few months there have been several notable updates regarding Bermuda s insurance industry. In particular, the Bermuda Monetary Authority has significantly reduced the annual licence fees for Special Purpose Insurers from BD$11,600 to BD$6,000. Additionally, the Insurance Amendment Bill 2012, which was recently passed by the Bermuda House of Assembly and will soon become law, is set to enhance the Authority s power to regulate the industry effectively. The Bill will amend sections of the Insurance Act 1978 to strengthen the Authority s disciplinary tools. The proposed amendments will provide for the imposition of civil penalties, the making of prohibition orders, the power to order injunctive relief and to censure registered persons publically. The Bill aims to bring Bermuda s insurance industry up to appropriate international standards by promoting the financial stability and soundness of institutions within their control. These developments will further protect the industry s stakeholders as well as provide an environment for efficient and practicable regulation. The Authority has also recently published feedback to questions from the insurance industry regarding the Authority s consultation paper on the enhanced reporting requirements for Limited Purpose Insurers (a category which includes Class 1, Class 2, Class 3, Class A, Class B and Special Purpose Insurers). This evidences the Authority s commitment to maintaining a healthy partnership and open dialogue with the local insurance industry as a whole. These recent developments confirm Bermuda s pledge to maintain its position as a global leader while continuing to provide a competitive insurance marketplace. Amendments to the Bermuda Companies Act The Companies Amendment (No. 2) Act 2011 brought about significant amendments to the Companies Act 1981, the principal statute governing the formation and operation of companies in Bermuda. The key amendments include: permitting sole directors and corporate directors of Bermuda companies, allowing companies the option to waive annual general meetings; removing prohibitions on providing financial assistance; facilitating paperless share transfers for listed companies; amendments have been made to the solvency test, allowing Bermuda companies to declare dividends or distributions when recording a profit, notwithstanding that the company may carry a negative retained earnings balance; and a new process for mergers has been added as an alternative to the existing amalgamations procedure. In a merger, companies combine their assets, liabilities and undertakings and a surviving company results. conyersdill.com 2
The Act is the result of the Bermuda Government s open communication with the private sector which continues to encourage the promotion and maintenance of Bermuda as a leading international finance centre. This cooperative approach demonstrates the willingness and ability of Bermuda to adapt to the changing product needs of international clients. BRITISH VIRGIN ISLANDS Amendments to the BVI Business Companies Act The Government of the BVI has taken the first steps in implementing amendments to the BVI Business Companies Act. The BVI Business Companies (Amendment) Act 2012 (the Act ) was tabled for its first reading in the BVI House of Assembly on 10 May 2012 and new BVI Business Companies Regulations were published in the Official Gazette. The Act and Regulations are expected to take effect later this year (the draft Act remains subject to a number of readings and reviews) and, in addressing areas such as the use of foreign character names and re-use of company names, voluntary liquidations and voluntary liquidators and rules relating to listed companies, are part of an ongoing process to ensure the BVI s company legislation remains up to date and to ensure the BVI retains its position as the leading offshore corporate domicile. Case Note - Petitioning Creditor Ordered to Pay the Remuneration of Wrongly Appointed Liquidators In May 2012, the Eastern Caribbean Supreme Court of Appeal delivered a judgment in Pacific China Holdings Limited v Grand Pacific Holdings Limited, holding a petitioning creditor liable for the remuneration, costs, fees and expenses of joint liquidators where the liquidators appointment had been subsequently set aside. The judgment was of particular significance as there were no reported cases in the BVI dealing comprehensively with the question of liability for liquidators remuneration in such circumstances and very little in the way of English or other Commonwealth authority on point. Case Note - The Pendulum of Statutory Rectification Under BVI Law and Amendments to Eastern Caribbean Supreme Court Civil Procedure (Amendment) Rules 2011 in BVI A recent decision by the Eastern Caribbean Supreme Court of Appeal in Royal Westminster Investments S.A. and Others v. Nilon Limited and Another bodes well for the ability of beneficiaries of share security to apply for rectification under s.43 of the BVI Business Companies Act to enforce share security in the face of obstinate borrowers and registered conyersdill.com 3
agents. Prior to this decision, two earlier High Court judgments had significantly limited the ability of the Court to grant rectification of a share register in such circumstances. While a prudent approach to taking share security remains advisable, including obtaining undated share transfer forms and undertakings from registered agents, this decision is welcome in terms of increasing the remedies potentially available to secured creditors in a cost efficient manner. CAYMAN ISLANDS Cayman Enterprise City (CEC) Opens for Business In February, Cayman Enterprise City (CEC), the first technology-based special economic zone of its kind in the Caribbean, officially opened for business. It is pursuing partnerships to promote itself in Latin America, North America and the Caribbean region. Latin American Corporate Property Services Inc. (LACPS), a real estate service and consultation company based in Panama, has signed on as the first partner in Latin America and the partnership will provide LACPS clients in 48 countries access to enter CEC. Cayman Enterprise City is a special economic zone being developed in a state-of-the-art campus of innovative and sustainable architecture in Grand Cayman, designed to complement and respect the local environment. It will have six sectors including Cayman Internet Park, Cayman Media Park, Cayman Biotech Park, Cayman Commodities Park, Cayman International Academic Park and Cayman Outsource Park. The Special Economic Zones legislation is specifically designed to foster innovation and entrepreneurship. The government has passed legislation to provide for (eventually) a state-of-the-art campus where all the various special economic zone enterprises will be located. In the meantime, they have made provision for these enterprises to be located temporarily in alternative premises. To attract such business to the Islands, the government has passed legislation making unprecedented concessions and committing to reduced incorporation/set-up periods. For example, the streamlined set-up period is a maximum of 10 days. The concessions relate to reduced trade and import duties, work permit concessions, exemptions from certain license fees and guaranteed protection of intellectual property. The benefit of the special economic zone regime is to enable enterprises to set up operations quickly and cost effectively under the auspices of the Special Economic conyersdill.com 4
Zone Authority. There will be no manufacturing or industrial businesses within the zone. International businesses establishing within the zone will not be permitted to trade in Cayman outside of the zone, so they cannot compete with local businesses. Conyers is in the process of developing a package for potential special economic zone companies and clients interested in the special economic zone should contact their usual Conyers contact for further information. Cayman Islands Insurance Update The Insurance Law (Amendment) Bill has been introduced. It amends the Insurance Law, 2010 which has not yet come into force. What the amendment does, however, is permit companies a period of 18 months within which to become compliant once the new provisions do come into force. The amendment also provides for companies to transfer insurance business by way of continuation into Cayman from another jurisdiction. The 2010 Insurance Law was developed in close co-operation with the private sector and will provide a modern, flexible and comprehensive regulatory regime for the insurance industry designed to ensure Cayman s ongoing compliance with and adherence to the highest international regulatory standards. The new Law covers fundamental matters such as licensing of persons carrying on insurance or reinsurance business and those acting as insurance brokers, agents or managers, the obligations of licensees, and the powers and duties of the Cayman Islands Monetary Authority. Conyers will put out additional updates once this legislation comes into force and/or once subsidiary legislation is introduced. Case Note - Cayman Court of Appeal affirms SPC Fund Structure In ABC Company (SPC) v J&Co Ltd, the Cayman Islands Court of Appeal recently held that in the context of a segregated portfolio company, the loss of substratum basis for an application for the just and equitable winding up of a fund company, was available only with respect to the loss of substratum within the company as a whole, not merely because of illiquidity and suspension of dealings in a particular segregated portfolio. The Court held that the Companies Law does not provide free-standing jurisdiction to wind up an individual segregated portfolio on the just and equitable ground. conyersdill.com 5
MAURITIUS Establishment of an International Arbitration Centre In order to consolidate its position as an international financial services centre, the Mauritian government has since 2008 implemented a number of measures to establish itself as a regional arbitration centre as part of its stated ambition of being a regional business hub. The arbitration centre will provide the international business community in Mauritius with an effective mechanism to resolve any cross-border dispute in connection with their investments in Asia or Africa, and provide a neutral venue for commercial disputes between African litigants and investment disputes in Africa to be referred to arbitration. The island s journey to establish itself as a seat of international arbitration began in 2008 when the International Arbitration Act 2008 (the Act ) was enacted. The Act was based on the UNCITRAL Model Law on international commercial arbitration and the experience of other Model Law jurisdictions of the world. In 2009, the Mauritian state concluded a host country agreement with the Permanent Court of Arbitration ( PCA ) situated at the Hague, under which the PCA is to appoint a permanent representative in Mauritius. In July 2011, the Mauritius International Arbitration Centre Limited ( MIAC ) (an entity established for the purpose of administering international arbitration in Mauritius) entered into an agreement with the London Court of International Arbitration ( LCIA ) for the operation of the international arbitration centre. The newly established entity is known as LCIA- MIAC Arbitration Centre. Features of the Act that are pertinent to those engaged in global business in Mauritius include: provisions that all court applications under the Act go directly to the Supreme Court of Mauritius, with an automatic right of appeal to the Judicial Committee of the Privy Council. This will allow interlocutory issues to be disposed of swiftly by the courts; provisions that allow the shareholders of a global business company ( GBC ) in Mauritius to have any dispute concerning the constitution of a GBC or relating to the GBC to be referred to arbitration under the Act; a mechanism that grants jurisdiction for all appointment and certain administrative functions to the Permanent Court of Arbitration at the Hague instead of the domestic court in Mauritius; the possibility of setting aside an arbitral award on the ground that there has been a breach of the rules of natural justice during the arbitral proceedings; conyersdill.com 6
a specific focus on investment arbitration by making the Act applicable to international arbitration rather international commercial arbitration and by adopting a wider definition of arbitration agreement; and express provisions that permit foreign lawyers to represent parties and to act as arbitrators in international commercial arbitration in Mauritius. The LCIA-MIAC Arbitration Centre will appeal to three main groups in the international business community: global business companies already established or to be established in Mauritius that are faced with a commercial dispute in connection with their investments in Asia or Africa; African litigants looking for a non-eurocentric disputeresolution venue; and foreign investors involved in investment disputes in Africa seeking an alternative to domestic African courts. Mauritius has thus taken a bold step to establish itself as a place to resolve cross-border disputes through arbitration, under a legal framework familiar to the international business community. The first referral of disputes to the LCIA-MIAC Arbitration Centre cannot be too far away. This update is not intended to be a substitute for legal advice or a legal opinion. It deals in broad terms only and is intended to merely provide a brief overview and give general information. About Conyers Dill & Pearman Conyers Dill & Pearman advises on the laws of Bermuda, the British Virgin Islands, Cayman Islands and Mauritius. Conyers lawyers specialise in company and commercial law, commercial litigation, restructuring, insolvency and private client matters. The combination of Conyers international structure encompassing 11 offices in jurisdictions around the world, its culture and unrivalled expertise enables the highest quality, responsive, timely and thorough legal advice. Conyers affiliated companies (the Codan Group of companies) provide a range of trust, corporate secretarial, accounting and management services. Founded in 1928, Conyers has 550 staff and approximately 150 lawyers. conyersdill.com 7
BERMUDA Clarendon House 2 Church Street Hamilton HM 11 Bermuda Contact: John Collis Tel: +1 441 299 4910 john.collis@conyersdill.com LONDON 10 Dominion Street London EC2M 2EE Contact: Charles Collis Tel: +44 (0)20 7562 0345 charles.collis@conyersdill.com BRITISH VIRGIN ISLANDS Commerce House, Wickhams Cay 1 P.O. Box 3140 Road Town, Tortola British Virgin Islands VG1110 Contact: Robert Briant Tel: +1 284 852 1100 robert.briant@conyersdill.com MAURITIUS Level 3, Tower I Nexteracom Towers Cybercity, Ebene Mauritius Contact: Craig Fulton Tel: +230 404 9900 craig.fulton@conyersdill.com CAYMAN ISLANDS Boundary Hall, 2nd Floor Cricket Square P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Contact: Richard Finlay Tel: +1 345 814 7360 richard.finlay@conyersdill.com MOSCOW Ducat Place III 6 Gasheka Street Moscow 125047 Russian Federation Contact: Claire McConway Tel: +7 495 775 4514 claire.mcconway@conyersdill.com DUBAI Level 2 Gate Village 4 Dubai International Financial Centre P.O. Box 506528 Dubai, U.A.E. Contact: Kerri Lefebvre Tel: +9714 428 2900 kerri.lefebvre@conyersdill.com SÃO PAULO Edificio Platinum, 7 Andar Rua Jerônimo da Veiga 384 São Paulo, SP 04536-001 Brasil Contact: Alan Dickson Tel: +55 11 3216 1452 alan.dickson@conyersdill.com HONG KONG 2901 One Exchange Square 8 Connaught Place Central Hong Kong Contact: Lilian Woo Tel: +852 2842 9588 lilian.woo@conyersdill.com SINGAPORE 9 Battery Road #20-01 Straits Trading Building Singapore 049910 Contact: Tan Woon Tiang Tel: +65 6603 0712 tan.woontiang@conyersdill.com BERMUDA BRITISH VIRGIN ISLANDS CAYMAN ISLANDS DUBAI HONG KONG LONDON MAURITIUS MOSCOW SINGAPORE SÃO PAULO conyersdill.com