Wednesday, January 06, 2010Harneys Breaks Ground In BVI

HarneysHarneys completes The First Scheme Of Arrangement In The BVI

Leading British Virgin Islands law firm Harneys has broken new ground by guiding its client Amber Petroleum Ltd (Amber) to a successful reverse takeover of AIM-listed AfNat Resources Limited (formerly Lithic Metals and Energy Limited) (AfNat) by means of a scheme of arrangement under section 179A of the BVI Business Companies Act, 2004 (BCA).

This is thought to be the first time the scheme of arrangement procedure under the BCA has been used in the British Virgin Islands.

Section 179A borrows heavily from section 425 of the English Companies Act and provides a statutory and court sanctioned exchange of collective rights of creditors or shareholders. The scheme must be approved by a high proportion of the affected creditors or shareholders; there must be complete transparency throughout the procedure and the Court will only sanction a scheme if it is fair to do so.

In Amber’s case, each Amber shareholder was invited to vote on a scheme which allowed them to exchange each Amber share they held for 6 new shares in AfNat in order to gain access to a public market for their investment. The meeting of the Amber shareholders was convened in accordance with an order of the BVI Commercial Court and following the approval of the requisite majority (a majority in number of those Amber shareholders present in person or by proxy at the meeting representing at least 75 per cent. in value of the shares which are voted at that meeting), the scheme was sanctioned by the BVI court and took effect once the order of the court was filed at the Registry of Corporate Affairs in the BVI on 22 December 2009.

Rachel Graham, the London based Corporate Partner who led the Harneys team said, “A key advantage for Amber and AfNat of using the scheme of arrangement procedure was that they had the certainty of knowing that once the requisite resolution had been passed by the Amber Shareholders and sanctioned by the Court, the scheme would be binding on all of the Amber shareholders.

“This means schemes of arrangement are definitely an efficient means of concluding a takeover without the added complications of statutory rights for dissenters which may apply to a takeover structured by way of a statutory merger or court approved plan of arrangement,” Graham continued.

Chris Young, Litigation Partner in the BVI office, represented Amber at the BVI court hearings.

About Harneys

Harneys is a leading international offshore law firm providing British Virgin Islands, Cayman Islands and Cyprus legal advice. Through its offices in the BVI, Cayman Islands, Cyprus, Hong Kong and London the firm provides legal services to the world’s top law firms, financial institutions and corporates. Over its 50 year history Harneys has been consistently ranked as the top law firm in the British Virgin Islands.

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