Walkers' BVI Office Celebrates its 20 Year Anniversary

Walkers is celebrating 20 years of operating in the British Virgin Islands.

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Guernsey Climbs Legal 500 Rankings

Walkers' Guernsey office is now ranked by Legal 500 as Tier 1 for legal advisers in five of its core practice areas.

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10 Walkers' Lawyers Recognised in Asia Business Law Journal's Top 50 Offshore Lawyers 2022

10 lawyers across Walkers' Bermuda, Cayman, Hong Kong and Singapore offices have been recognised in the Asia Business Law Journal’s A-List of top offshore lawyers.

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Walkers is a leading international law firm. We advise on the laws of Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey.
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Chambers Global Practice Guide 2022: Banking & Finance – Bermuda: Law and Practice

Partner Adam Bathgate and senior counsel Nathalie West have authored the Chambers 2022 Global Practice Guide: Banking & Finance - Bermuda: Law and Practice.

The new Banking & Finance 2022 guide covers 35 jurisdictions. The guide provides the latest legal information on the impact of the COVID-19 pandemic; environmental, social and governance (ESG) lending; restrictions on foreign lenders and foreign currency exchange; tax and usury laws; guarantees and security; enforcement of foreign judgments; bankruptcy and insolvency; and project finance.

There have not been any significant legislative or regulatory changes affecting the rights of lenders or secured creditors over the past year, nor any that would affect Bermuda’s status as a leading creditor-friendly jurisdiction.


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Published with permission from Chambers and Partners (October 2022)

Bermuda Insights: Regulatory & Risk Advisory

The economic substance regime has continued to develop, with the most notable change being the amendment to the definition of the ‘relevant activity’ of ‘fund management’, which was effective from 1 January 2022. As a result of the amendments, an entity will be carrying on the ‘relevant activity’ of ‘fund management’ if it manages investments for an investment fund, as defined under the Investment Funds Act 2006 (as amended), whether or not it is required to be licensed under the Investment Business Act 2003 (as amended) and will therefore include all entities even if they do not have a physical presence in Bermuda.

In March 2022, the ROC issued the first Notice to Comply and Warning Notices (the “Notices”) for non-compliance with the economic substance requirements. These Notices were issued to entities that self-declared on their economic substance declarations filed with the Registrar of Companies for the 2019 and 2020 relevant financial period that the entity was non-compliant with the economic substance requirements as defined in section 3 of the Economic Substance Act 2018 and the Economic Substance Regulations 2018. The Notices permitted entities to make representations to the ROC for the ROC to decide whether the actions taken by the entity are adequate to meet the economic substance requirements or whether further enforcement action is required.

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This article is taken from the Bermuda Insights: Trends and Opportunities 2022 white paper, available here:

Bermuda Trends 2022

Grand Court of the Cayman Islands reconfirms Flexible Balance Sheet Insolvency Test for Segregated Portfolios

The Grand Court of the Cayman Islands (Kawaley J) handed down a recent decision appointing receivers over a segregated portfolio, in the case of In the Matter of Green Asia Restructure Fund SPC[1]. The judgment is a timely reminder of the unique nature of Segregated Portfolio Companies ("SPCs"), and reconfirms that a different insolvency test applies when seeking the appointment of receivers in respect of segregated portfolios within an SPC.

Seeking the appointment of receivers over a segregated portfolio of an SPC involves a two-step analysis:

  • First, it must be proven that the portfolio is insolvent. Section 224(1) of the Companies Act (as amended) (the "Act"), requires that the Grand Court be satisfied "that the segregated portfolio assets attributable to a particular segregated portfolio of the company (when account is taken of the company’s general assets, unless there are no creditors in respect of that segregated portfolio entitled to have recourse to the company’s general assets) are or are likely to be insufficient to discharge the claims of creditors in respect of that segregated portfolio" (emphasis added); and

  • Second, once the insolvency test is satisfied, the receivership proposed must also meet the purposes of section 224(3) of the Act, which are for the "… orderly closing down of the business of or attributable to the segregated portfolio" and "the distribution of the segregated portfolio assets attributable to the segregated portfolio …".
As to the first test, Justice Kawaley considered the judgment of Justice Parker in Re Obelisk Global Fund SPC[2], which determined at paragraphs 35 to 39, that the insolvency test is a ‘balance sheet’ test, rather than a cash flow test. Justice Kawaley accepted that the proper construction of section 224(1) justified a somewhat fluid balance sheet solvency test applying in order to establish a prima facie case at least. As to the phrases, "are" or "are likely to be", Justice Kawaley found that, when expressed as alternatives, they must be intended to be different. A creditor could therefore prove either that, a probable deficiency exists, or that the evidence establishes a cogent or real risk of deficiency such that a receiver ought to prima facie be appointed.


Ultimately, Justice Kawaley agreed with Justice Parker that Parliament must have intended that a more flexible and functional solvency test apply for the appointment of receivers of segregated portfolios of SPCs. Justice Kawaley made two further important comments in relation to the more flexible balance sheet solvency test:

  1. His Lordship considered that the more nimble nature of SPCs as investment vehicles, and the flexibility of the powers and orders available under the Act (when compared against the more drastic and final remedies involved in a winding up) supported a finding that a flexible balance sheet solvency test was appropriate; and

  2. The potential risk of prejudice that may flow from an overly flexible solvency test was counterbalanced by the two-step test for the appointment of receivers over segregated portfolio companies. Importantly, even where insolvency is proven, receivers will not be appointed as a right – the overall financial state of the portfolio must be taken into account, and further, section 224(3) of the Act requires than an order must always demonstrate that the business of the segregated portfolio ought properly to be closed down.
In this case, despite the direct evidence only supporting a finding of cash flow insolvency, Justice Kawaley inferred from the failure of the SPC to respond in any evident way to the application to appoint receivers on the grounds of insolvency, that the requisite statutory balance sheet insolvency test was satisfied.


This decision reinforces that the insolvency test for SPCs involves a flexible variation of the balance sheet test, unlike the cash flow test ordinarily applied to determine whether a company ought to be wound up on the grounds of insolvency. A petitioner must, however, always show that the business of the segregated portfolio ought properly to be closed down, in order to obtain orders appointing receivers over such segregated portfolio.

[1] FSD 112 and 113 of 2022 (IKJ) (6 July 2022).
[2] Unreported, FSD 87 of 2021 (RPJ) (12 August 2021).


BVI VASP Update: A Two Step Approach

As widely expected, the British Virgin Islands ("BVI") is shortly bringing into force new legislation to implement the Financial Action Task Force's standards on virtual assets and virtual asset service providers (known as "VASPs").

The BVI is taking a two-step approach: AML/CFT/CPF compliance is required from 1 December 2022, and registration with the BVI financial services regulator (the "FSC") within six months of the new VASP law coming into force.

In relation to AML/CFT/CPF, the first key compliance date for VASPs is 1 December 2022. On this date, a VASP who is carrying on or providing "virtual asset services" when a transaction involves virtual assets valued at US$1,000 or more will need to be compliant with the BVI's Anti-Money Laundering Regulations ("AMLR") and related Anti-Money Laundering and Terrorist Financing Code of Practice ("Code").  The AMLR include the key definitions of "virtual asset services" as well as a VASP so there is clarity on who will need to comply from 1 December.

The compliance obligations in the AMLR and the Code have as their goal ensuring the VASP has in place effective systems and controls to mitigate the risk of the business being used for financial crime, such as money laundering, sanctions breaches, terrorist financing and proliferation financing. The obligations are extensive.  They include having in place a Money Laundering Reporting Officer, as well as appropriate policies and procedures to identify and mitigate financial crime risk.

These procedures include establishing and maintaining an effective system to identify and verify the identity of customers and prospective customers, risk rating the business's products and services, its customers and delivery channels, as well as having in place effective sanctions screening, record keeping, staff training, testing, and establishing an effective system in relation to suspicious activity and transaction monitoring and reporting. Compliance with the "travel rule" is also required for transactions over a specific threshold. Outsourcing to specialist service providers is permitted, though the compliance obligations remain with the VASP.

The BVI is expected shortly thereafter to bring into force its Virtual Asset Service Providers Act ("VASP Act"), currently in draft. Like many other jurisdictions, the BVI is establishing a registration regime for VASPs, requiring them to be registered with the FSC. There is expected to be a period of "transitional relief" of six months for VASPs to make their application to the FSC without having to stop their business (although full compliance with the AMLR and Code is mandatory during this time).

Although the go live date of the new VASP Act (and the final version) is yet to be published, it is expected to be in December or in the first quarter of 2023. Although the final text of the new VASP Act is not yet published, the definitions of a VASP and a virtual asset service in the draft law currently mirror those in the AMLR and Code and are not expected to change.  

Walkers Regulatory & Risk Advisory group has dedicated specialists across our global offices with extensive experience of advising businesses operating in this field, including advising on compliance with the AMLR and the Code. We also have extensive experience of making applications to regulators, including the FSC. For more information please reach out to your usual Walkers contact, or any member of the Regulatory & Risk Advisory group.

Bermuda Insights: Corporate 2022

The last few years have been standout years for take private transactions globally – representing the most active years since 2007 - with Bermuda incorporated listed companies involved in a number of the largest deals. What is driving the rush to the listco exit ramp? A convergence in the valuations of public companies - particularly in sectors adversely affected by COVID-19 - with their private company counterparts, record levels of private equity dry powder, relative ease (and affordability) of fundraising, increasing activism of minority public company shareholders, geopolitics and regulatory push factors have all played their part.

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This article is taken from the Bermuda Insights: Trends and Opportunities 2022 white paper, available here:

Bermuda Trends 2022

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