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Many high-net-worth individuals have used companies incorporated in offshore ﬁnancial centres, such as the British Virgin Islands (“BVI”) to hold their assets and business. When they plan their estate or distribute the estate of their deceased family members, they often adopt a family-oriented approach: the passing of the family assets and business to the next generation.

There are many ways to achieve this strategically:

Amending the articles of the asset-holding companies;
Obtaining a grant of representation in the relevant offshore jurisdiction; and
Contesting a will to prevent any assets or business falling in the hands of a non-family member. These options are available at different stages of a person’s estate arrangement.

A. Planning ahead: amending the articles of the asset-holding companies Having the appropriate provisions in the articles of the asset-holding companies can simplify the passing of the asset-holding company to the next generation upon the untimely demise of the family head, doing away with the need to apply to the BVI court for a grant of representation.

For example, the articles can provide for the issuance of, say, three classes of shares: Class A, Class B and ordinary shares. Class A shares are issued to the parents, Class B to the children and ordinary shares to other investors. The articles can further provide that upon the death of one or more parents, their shares as well as their management powers will automatically transmit to the children.

B. Making a Will

When the estate of the family consists of more than just shares in companies or where shares are held in a BVI company with other shareholders, a Will could help you in ensuring that all of the properties within the estate will be appropriately managed and distributed pursuant to your will.

A Will is a written instrument validly and legally executed pursuant to which a person may make dispositions of his or her estate to take effect after death. A Will determines how your estate will be distributed and who will assume responsibility for your spouse, children and other persons or entities whom you wish to beneﬁt. A suitably drafted and validly executed Will can provide you with the peace of mind of knowing that your family business, members and other causes you wish to support will be left with your nominated person whom you trust to manage your estate.

Where assets involve shares in a BVI company, it is important to note that probate will need to be sought in the BVI. It may therefore simplify and expedite estate administrator to have a speciﬁc Will to cover solely the BVI assets in an estate.

C. Distributing the estate: obtaining a Grant in offshore jurisdictions

When a family member passes away, his or her executors or administrators often face the need to apply for a Grant of representation in order to manage and distribute the estate. As mentioned earlier, where the estate includes shares in a BVI company, a Grant will need to be sought in the BVI.

There are three main types of applications for a Grant of representation:

An application for a grant of probate which is made where the deceased has left a will and appointed an executor;
An application for letters of admin-istration with will annexed which is made where the deceased has left a will but failed to appoint an exec-utor; and
An application for letters of admin-istration which is made where the deceased has died intestate (i.e. without leaving a will).

D. Contesting a will

Family members who are disinherited by persons outside of the family are conceiv-ably disappointed. They may be able to contest a will with a view to safeguarding the integrity of the family business. Below are some of the common grounds for launching such a challenge:

Want of due execution
Lack of testamentary capacity
Undue influence
Fraud
Forgery

The proceedings are often complicated, involving the application of a speciﬁc set of rules, fact-sensitive arguments, review of a large amount of historic documents and the use of expert evidence.

E. Duties of an administrator to an estate In determining any dispute as to representation of an estate, it is well-established that the fundamental duty of personal representatives is to administer the estate and to distribute it in accordance with the will or under the rules of intestacy. In carrying out these duties, an administrator must be cognisant that he or she is acting in a ﬁduciary capacity.

Conclusion

It would be worthwhile considering the need for the continuation for the family business and legacy well in advance. It is imperative to plan ahead and ensure that your family business could be well protected to ensure family business’ continuation and harmony.

Lim has spent 35 years in the legal industry. He joined Conyers in 2007. A corporate and commercial law specialist, he advises on capital markets, corpo-rate, ﬁnance, mergers and acquisitions, mortgage backed securities transac-tions, MTN programmes, tender offers, consent solicitations, IPOs and pre-IPOs in the Hong Kong, London and the US exchanges involving Cayman Islands, Bermuda and British Virgin Islands offshore companies.

Can you tell me about your notable work in the past year?

Some of the signiﬁcant matters that I have advised on include acting for Agile Group Holdings Limited on various debt capital transactions involving, amongst others, high yield Reg. S senior notes, green bonds, exchangeable bonds with complex cross border multi-jurisdic-tion third party security package and intercreditor arrangements; acting for Ebang International Holdings Inc. following its US listing and its follow on offers for sale of shares and share purchase warrants; acting for Kingsoft Cloud Holdings Limited on its pre- and post-merger structures and merger transaction.

What are some of the attributes that clients look for in their offshore lawyers?

Expected attributes are responsiveness; managing expectations on deal ﬂow; the ability to evaluate and provide creative and bespoke solutions to issues arising on transactions; and sound practical and commercial advice to achieve the desired result in a transaction.

What motto or philosophy do you live by?

“Made weak by time and fate, to strive, to seek, to ﬁnd but not to yield.”

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Hau has spent almost 20 years in the legal industry. He joined Conyers in 2012. Hau is a seasoned commercial litigator with extensive experience in restructuring and insolvency matters and shareholders disputes in Hong Kong, Bermuda, the British Virgin Islands and Cayman Islands. He has also been recognised in the 2020 Edition of IFLR1000, named among the “Top 15 Offshore Litigators 2021” by Asian Legal Business Magazine, and “The A-List Top 50 Offshore Lawyers 2022” by Asia Business Law Journal.

Can you tell me about your notable work in the past year?

Some of the signiﬁcant disputes that I have advised on in the past year include: acting for Fang Holdings Limited (NYSE: SFUN) a leading real estate Internet portal in China in defending a winding up petition on the just and equitable grounds and an application for appointment of provisional liquidators in the Cayman Grand Court; acting for the minority shareholder claimants in King Bun Limited & others v. Lau Man Sang, James & others (BVI Commercial Court) in obtaining a judgment on liability (dated 11 August 2021) against its Hong Kong based directors for damages caused to Vanway International Group Limited (BVI company) as a result of breaches of ﬁduciary duties, fraud on the minority and a grossly undervalued sale of its asset to its majority shareholder; acting for displaced directors in Re Titan Petrochemicals Group Limited in their appeal against a winding up order made against the company in Bermuda based on the defence that the petitioning debt arose out of a fraudulent scheme orchestrated by former management of the Company.

I also continue to be active in the debt restructuring space. I advised various Hong Kong listed companies in their debt restructuring/liquidation proceedings in offshore jurisdictions, including GTI Holdings Limited (3344), Silver Base Group Holdings Limited (0886), Sun Cheong Creative Development Holdings Limited (1781), China Animal Healthcare Limited (0940) and Moody Technology Holdings Limited (1400).

What are some of the attributes that clients look for in their offshore lawyers?

The ability and determination to navigate through any given complex legal situation involving offshore laws in an effective manner.

What motto or philosophy do you live by?

“Those who cannot change their minds cannot change anything.” George Bernard Shaw

Estate in the BVI and other Offshore Jurisdictions: Your Family Business

A Q&A with Paul Lim, one of ALB Asia’s Offshore Client Choice List

A Q&A with Norman Hau, one of ALB Asia’s Offshore Client Choice List

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