British Virgin Islands Companies may now list in the Hong Kong Stock Exchange

British Virgin Islands (“BVI”) companies are now able to list on the Hong Kong Stock Exchange (“HKSE”) following a decision by Hong Kong Exchanges and Clearing to place BVI on its list of acceptable jurisdictions under Chapter 19 of HKSE’s Listing Rules.

In its decision HKSE noted that the BVI has a common law system based on the English model; that English common law and equitable principles form part of the substantive laws of the BVI; and that the BVI courts will look to English decisions for guidance in interpreting these principles.

BVI companies have been used extensively in private equity transactions because:

• BVI is a tax neutral and flexible jurisdiction
• Relatively low maintenance costs
• Ease of post-incorporation administration

Since BVI companies are allowed to list on HKSE, it is expected that the use of a HKSE listing as an exit option for private equity investors with investments in China using BVI vehicles is likely to increase.

The list of the acceptable overseas jurisdictions (other than People's Republic of China, Bermuda and Cayman Islands) in the SEHK currently include: Australia, BVI, Canada (British Columbia), Canada (Ontario), Cyprus, Germany, Jersey, Luxembourg, Singapore and the United Kingdom.

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