Colleagues of Conyers LLP have made available for download their article, “Estate Administration in the British Virgin Islands: the Relevant Factors for the Removal of an Administrator or Executor,” published in JDSUPRA. The abstract begins as follows:
The holding company of many corporate groups trading in Asia is frequently incorporated in an offshore financial centre such as the British Virgin Islands (“BVI”). It is therefore common for high-net-worth individuals domiciled in Asia to hold shares in companies incorporated in the BVI, which in turn hold highly valuable operating subsidiaries in jurisdictions such as Hong Kong, Mainland China and Taiwan.
Where an individual dies holding shares in a BVI company, it is not possible to deal with those shares until an administrator or executor (referred to collectively as a “Personal Representative”) is formally appointed by the BVI Court. A Personal Representative is appointed by way of a grant of representation, being either a grant of probate or letters of administration. The grant of representation formally recognises the Personal Representative as the legal representative of the deceased person’s estate. All of the deceased’s assets, including any shares held in companies incorporated in the BVI, therefore vest in the name of that Personal Representative who effectively steps into the Deceased person’s shoes in respect of those companies, meaning the Personal Representative is able to exercise voting rights and effect share transfers.
The Personal Representative will often have discretion as to aspects of the management and administration of the estate. For example, the Personal Representative will typically have discretion as to the exercise of voting rights and may have scope to determine whether, and when, beneficiaries receive an in specie transfer of shares or an equivalent cash distribution. As such, a grant of representation can put a Personal Representative in a significant position of control in respect of a BVI company, the shares of which form part of a deceased estate.
In light of this, beneficiaries may find themselves in a position where they disagree with the Personal Representative’s administration of the estate and its underlying BVI companies such that they are compelled to consider available forms of relief. This article discusses the relevant duties that are owed by a Personal Representative to the beneficiaries and the required threshold for the replacement of a Personal Representative in the BVI.
Click here to view Conyer LLP’s summary of “Estate Administration in the British Virgin Islands: the Relevant Factors for the Removal of an Administrator or Executor”
Posted by Melissa Zheng, Associate Editor, Wealth Strategies Journal.