As a good illustration of the difference between beneficial ownership and actual control of a company, the Commercial Court of the British Virgin Islands has held that a beneficial owner of shares in a BVI company does not have standing to lodge a claim under s184B BVI Business Companies Act.

In a reserved judgment, Mr Justice Davis-White QC rejected the claimant’s submission that the beneficial owner who holds an interest through a nominee is nonetheless 'a shareholder' within the meaning of s78 Business Companies Act and thus 'a member' for the purposes of s184B. In reaching his decision, the judge declined to follow the decision in Headstart Class F Holdings Limited and Citco Global Custody NV v Y2K Finance Inc [2008] BVIHCV2007/0278, holding that the judge in that case had erred in her interpretation of the key English authority Atlasview v Brightview [2004] BCC 542 in finding that a 'shareholder' for the purposes of s184I (unfair prejudice claims) may include the beneficial owner of shares in a BVI company, where the registered shareholder is acting as nominee for the beneficial owner. Justice Davis-White noted that the court in Brightview had in fact decided that the beneficial owner was not entitled to make such an application and found:

(i) Section 184B Business Companies Act confers a right on a 'member' with regards to conduct of the company in question or of a company director that contravenes the Act or the memorandum or articles of the company.
(ii) A 'member' is defined for the purposes of section 184B by 184A as 'a shareholder' or a shareholder's personal representative.
(iii) Sections 2 and 78 of the Act define a shareholder as “a person whose name is entered in the register of members as the holder of one or more shares, or fractional shares, in the company.”
(iv) It was accepted that the claimant’s name was not entered in the register of members as the holder of shares and so was not a 'member' within the meaning of the Act.
(v) As a result, the claimant had no locus standi to take action under s184B.

The case has broader ramifications because the definition supplied by s184A also applies to claims under s184C (derivative claims) and s184I (unfair prejudice).

* Rosalind Nicholson can be reached on +1 284 852 2237 and at rosalind.nicholson@walkersglobal.com