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This briefing provides an overview of the British Virgin Islands (“BVI”) restricted purposes company, a vehicle specifically designed for securitizations and other transactions where an insolvency-remote vehicle is required.

A key principle underpinning BVI company law is transactional certainty and the protection of third parties. A third party who transacts with a BVI business company can generally be confident of the validity of the transaction and that it will not be set aside as a result of a lack of capacity, power or authority of the company.

However, as a popular jurisdiction for structured finance transactions, the BVI also recognises that in certain circumstances it may be advantageous to restrict the range of transactions that can validly be entered into by a BVI company. In particular, where an insolvency-remote company is required, it is highly desirable to limit the transactions the company can lawfully enter into to a specific transaction at hand. To this end, the BVI has introduced a unique and innovative vehicle, the restricted purposes company, which will be of interest to lenders, sponsors and other parties involved in securitizations and other transactions where an insolvency-remote vehicle is required.

This article looks at some of the main features and uses of a BVI restricted purposes company.