The British Virgin Islands thrives on its liberal business laws to be a favourite offshore joint venture destination. These include ignoring the basic principles of corporate governance by legally permitting the directors to disregard companies’ interests. It may sound unreal, but the fact of the matter is that lawyers consider such a provision as moden and pragmatic. Raghavendra Verma reports
According to Section 120(4) of the British Virgin Islands
(BVI) Business Companies Act, 2004, “A director of a (joint venture)
company... (may) act in a manner which he believes is in the best interests of
a shareholder...even though it may not be in the best interests of the
company”.
COMMERCIAL REALITY
By including this special provision in the company law, the
BVI authorities have essentially accepted the commercial reality that in
international joint ventures, the directors seldom move against the wishes of
the shareholders who appoint them. Mostly, these directors are senior employees
of the holding company and, therefore, their loyalties remain with the parent
company.
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