The British Virgin Islands in Asia – An Overview

The British Virgin Islands in Asia – An Overview

Barry Mitchell

2 October 2013

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Financial / Legal Services in Asia – Opportunities for Growth

1. Hong Kong

2. People’s Republic of China

3. Singapore

4. Indonesia

5. Taiwan

6. India

7. Thailand

8. Vietnam

9. South Korea

10. Japan

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Types of Transactions / Matters

Hong Kong•REIT’s – market is quiet – yields remain insufficient•Closely held property / holding companies

– No change– Banking and finance

•Hedge funds •Private equity funds•Small number of manager / administrator licensing applicants•Private client / wealth planning / succession•Probate•Trust disputes•Shareholder disputes•Take privates

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People’s Republic of China

• BVI still second largest investor into PRC behind Hong Kong but signs market is slowing

• BVI companies still preferred vehicle for inbound and outbound investments

• Used in increasingly complex and substantial deals

• A lot of financing transactions

• Private client / wealth / succession

Private Equity and Venture Capital

• Private transactions in growing companies – potential IPOs

• Early stages of funding

• Wide range of deals – expansion / seed capital / pre IPO

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People’s Republic of China

• Established private businesses• Sectors – broad range

– Telecom /agriculture / infrastructure companies – Media– IT– Property

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Singapore – Capital markets – bonds / notes– Banking and finance – hub for SE Asia – Funds– Asset and Project Finance – shipping and aircraft– Probate– Private client / wealth planning/ succession

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Indonesia (via Singapore)– Capital markets – issuing notes / bonds– Financing transactions– Infrastructure projects

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Taiwan– Private investment vehicles– Hedge funds– Financing– Bond / Note issues– Private client / wealth planning / succession– Probate

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India•Continues to be a developing market

– Structured finance – Private equity financing– Funds

•Exchange controls being loosened – easier to enter market•English speaking and common law – easier than China?•Private client / wealth / succession

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Thailand (via Singapore)•Property – hasn’t fully recovered from 2008 crash

– Condominiums– Mainly financing

•Concerns over political stability

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Vietnam•Funds and fund managers

– But a difficult market

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South Korea•Has become more active but has not grown at the rate we had hoped•Tends to be related to financing transactions

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Japan•A difficult market for BVI

– Quite entrenched in using Cayman

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What Are We Seeing?

• IPO’s– BVI gained listing rights on the Hong Kong Stock Exchange in late 2009– Have slowed significantly since 2008 crash– 3 BVI companies have listed to date but conceivably plenty to come– Maples and other firms currently have several in the pipeline– - Was an issue over the requirement for “nexus” with the BVI but confident

this is now resolved

• Bond / Note issues • Structured finance• Asset finance / banking• Take privates

– Alibaba from the HKSE– Shanda Interactive / Funtalk / Chemspec from the USA

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What Are We Seeing?• Litigation

– Potential for significant trust litigation in the foreseeable future– Shareholder disputes

• Private client– Significant potential for growth in PRC / Indonesia– VISTA trusts well accepted in HK / PRC / India– Recent amendments to trust legislation well received– Increasing understanding of the trust concept in the region– Pre – IPO trusts set up by founders– Employee Benefit Trusts – linked to possible listings

• Market conditions– Very competitive– Issues with bank account opening for BVI companies

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Random Thoughts / Observations

BVI got it right with the BCA•Continues to be well accepted•Distribution regime very popular•Reserve directors popular (particularly in HK)•Chinese names very popular in HK / PRC

Market likes to have HK based advisors•Maples office now has over 25 attorneys doing BVI law in HK •Other BVI law firms / company secretarial operations have increased in size / entered the market

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Random Thoughts / Observations

BVI House Asia – a very good thing•Long overdue – private sector has driven growth in Asia to date•Need to take advantage of it – feed comments back to BVI•Allows for general business development and regulator to regulate exchanges (hopefully)

Industry Association is being developed•Largely a result of BVI House Asia•Has focused on bank account opening issues•Industry members had a fruitful meeting with members of the FSC around the official launch of BVI House Asia last month

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Random Thoughts / Observations• Hong Kong Listings - still huge potential business for BVI• Clients are better educated – helps with compliance – EI letters• Industry needs to be nimble and act quickly – getting better at this• Need to think laterally to find new structures / products

– Bring the offshore, onshore

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Summary• Still feeling the effects of the financial crisis 5 years on• Asia has been relatively insulated but now arguably China is starting

to slow• Outlook for business in Asia is generally still positive• BVI offering is very good

– Still lots of interest– Beijing and Shanghai Offshore Summit each attracts 400 plus delegates

• Need to focus on:– Intermediary compliance– Increasing banks understanding of BVI as a jurisdiction

• Good opportunities in the private client / wealth planning / succession areas

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BiographiesExpertiseBarry has extensive experience in all aspects of corporate, banking and trust law matters. He heads the BVI law desk in the Hong Kong office.

Professional BackgroundBarry joined Maples and Calder in 2004 on the merger with Smith-Hughes, Raworth & McKenzie in the BVI. He was previously managing director of an international trust company and before that, worked for Simpson Grierson Butler White and Russell McVeagh McKenzie Bartleet & Co in New Zealand.

Barry Mitchell, PartnerDirect: +852 2971 3004Mobile: +852 9096 [email protected]

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The British Virgin Islands in Asia – An Overview