Offshore Lending and Financing. A Practical and Legal Handbook for Lenders, Borrowers, Investors and their Professional Advisers

306 Pages·1998·16.53 MB·English

by  Vaumini Amin (Auth.)

Offshore
lending and
financing
a practical and legal handbook for
lenders, borrowers, investors and
their professional advisers
Vaumini Amin, BA (Hons), FOB, FRSA
GRESHAM
BOOKS
WOODHEAD
PUBLISHING
LIMITED
IN ASSOCIATION WITH
THE CHARTERED
INSTITUTE OF
BANKERS
Edited by Paul B Sugden, BA (Hons), ACIB, Advocate of the Royal Court of Jersey,
Barrister of Lincoln's Inn.
Published by Gresham Books, an imprint of Woodhead Publishing Limited,
Abington Hall, Abington, Cambridge CB1 6AH, England
First published 1998
© 1998, Woodhead Publishing Ltd
The author has asserted her moral rights.
Conditions of sale
All rights reserved. No part of this publication may be reproduced or transmitted in any form
or by any means, electronic or mechanical, including photocopying, recording, or any
information storage and retrieval system, without permission in writing from the publisher.
While a great deal of care has been taken to provide accurate and current information,
neither the author nor the publisher, nor anyone else associated with this publication, shall
be liable for any loss, damage or liability directly or indirectly caused or alleged to be caused
by this book.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN 1 85573 329 3
Typeset by Euroset, Hampshire, England.
Printed by St Edmundsbury Press, Suffolk, England.
To my husband Mahendra Amin, my mother Hirnaxi Patel
and to my late father, Chimanbhai Dahyabhai Patel,
who is greatly missed.
Preface
This is a book intended to identify the key dos and don'ts of lending with
an offshore element; it aims to serve as a source of practical guidance for
bankers and others concerned in lending transactions involving a
connection with a foreign law. It is not the intention that the book will
provide a full comparative legal reference work, but it is intended to
provide sufficient information as to the issues that arise for lenders so as to
identify relevant issues of concern. The inclusion of consideration of tax
treatment is intended to be a basic guide only and to assist the lender in
identifying the types of tax-based uses for lending that involve the use of
international offshore financial centres.
The book has been prepared in two parts, with an intended emphasis
on practical guidance in the context of relevant law. The first part serves as
a general introduction to the selection, usage and language of international
offshore financial centres. Although the focus of attention is the use of such
centres in lending structures, many of the issues highlighted (for example,
choice of applicable or governing law) are relevant to lending with any
foreign law connection. The second part focuses on the law and practices
of some of the most frequently encountered international offshore financial
centres. The chapters dealing with each chosen international offshore
financial centre are, so far as possible, set out in the same order and manner
in order to facilitate easy cross-reference and comparison.
This book has been prepared on the basis of the issues relevant to a
lender operating from an 'onshore' jurisdiction, the law of which is familiar
to the lender. For most purposes it is assumed that the United Kingdom is
the onshore jurisdiction. In this context, and for most purposes, references
to 'the lender' may concern matters that are of equal significance for an
investor. Similarly, references to 'the borrower' should be read as including
a third-party guarantor, surety or other provider of security.
Every effort has been made to ensure accuracy in the text, but it is
recognised that there may yet remain an occasional error. Likewise, every
xii Preface
effort has been made to trace relevant copyright owners, but if any have
been inadvertently omitted, an appropriate acknowledgement will be made
at the earliest opportunity.
The law is stated up to date as at January 1997 but it should be
recognised that the competitive nature of international offshore financial
centres raises the prospect of unanticipated change. This work is not
intended to be an exhaustive reference work and no attempt has been
made to consider complex transactional issues arising, for example, on
syndications.
The author's thanks are due to the editorial staff of Woodhead
Publishing, the Chartered Institute of Bankers and its library and, especially,
to Chris Moon and to Geoffrey Reeday for their help. Thanks are also due
to the editor, Advocate Paul Sugden, and to his wife Carol who typed the
complete text. Finally, and most importantly, personal thanks are due to my
husband Mahendra for his support, encouragement, general forbearance
and practical help in proof-reading.
Table of cases
Abbott Industries v Warner (Jersey judgment unreported), 63
Ashbury Railway Carriage and Iron Co v Riche [1875] L.R. 7 H.L. 653, 71
Ayers v C & K (Construction) Ltd [1975] S.T.C. 345, 59
Baden Delvaux and Lecuit v Societe Generate pour Favoriser le Developpement du
Commerce et de Industrie en France S.A. [19831 B.C.L.C. 325, 85
Bank of America Trust (Re) 1992-1993 C.I.L.R. 574 , 253
Banque des Marchands de Moscou (Koupetschesky) v Kindersley [1951] Ch. 112,
83
Behrends (Re) [1865] 12 L.T. 149, 65
Bell v Kennedy (1868) L.R.I Sc. & Div. 307, H.L., 20
Bodley Head Limited v Flegon [1972] 1 W.L.R. 680, 51
British South Africa Co v Companhia de Mozambique [1893] A.C. 602, 104
Carl-Zeiss Stiftung v Rayner and Keeler [No 2] [1970] Ch.D 506, 70
De Beers Consolidated Mines Ltd v Howe [1906] A.C. 455, 25, 70
Derby & Co Ltd v Weldon (Nos 3 and 4) [1990] Ch. 65, 83
Dulip Singh (Re) [1890] 6 T.L.R., 20
Felixstowe Dock and Railway Co v United States Lines Inc [1989] Q.B., 66, 86
First National Bank of Chicago (CI) Ltd v Arab Monetary Fund [1986], 192
Gasque v I.R.C. [1940] 2 K.B. 80, 69
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] A.C. 465, 122
Henderson v Henderson [1967] P.77, 19
I.R.C. v Lysaght [1928] A.C. 234, 24, 55
Inglis v Robertson [1898] A.C. 6l6, 105
J H & S Timber Ltd v Quirk [19731 S.T.C. Ill, 59
xiv Table of cases
Kuenigl v Donnersmarck [1955] 1 Q.B. 515, 69
Levene v I.R.C. [1928] A.C. 217, 24, 55
MacMillan and Bishopsgate Investment Trust Pic and Others (No. 3) 1996 1 ALL ER
585, 106
Matheson Brothers Ltd (Re) [1884] 27 Ch. D. 225, 83
Matter of ABC Ltd [1985] F.L.R. 159, 252
Queensland Mercantile and Agency Co. Ltd v Australasian Investment Co. Ltd [1888]
15 R.935, 86
R v H M Treasury and Inland Revenue Commissioners, ex parte Daily Mail and
General Taist Pic [1988], 79
Rea Brothers (Guernsey) Ltd v Securities and Exchange Commission [1986], 192
Re Robinson [1883] 22 Ch. D., 65
Salomon v Salomon & Co [1897] A.C.22, 36
Spiliada Maritime Corpn. v Cansulex Ltd [1987] A.C. 470, 65
Swedish Central Railway v Thompson [1925] A.C. 495, 76
Tenon v Mars [1828] 3 MAN & Ry. 38, 66
Tournier v National Provincial and Union Bank of England [1924] 1 K.B. 46l, 143,
173, 252, 272
Tovarishestvo Manufactur Liudvig Rabenek [1885] 29 Ch. D. 219, 83
Trendtex Trading Corporation v Bank of Nigeria [1977] Q.B. 529, 81
Trepca Mines Ltd (Re) [I960] 3 All ER 304 (Re), 86
Udny v Udny (1969) L.R.I. Sc. & Div. 441, H.L., 20
Unit Construct Co Ltd v Bullock [I960] A.C, 79
Vita Food Products Inc. v Unus Shipping Co. [1939] A.C.277, 14
Waite v Bingley [1882] 21 Ch. D. 674, 66
Wicker v Hume (1858) H.L.Cas.124, 17
Table of statutes
United Kingdom
Administration of Estates Act 1925, 44
Bankruptcy Act 1914, 66
Charitable Uses Act 1601, 46
Charities Act I960, 46
Civil Jurisdiction and Judgments Act 1982, 16, 17, 70, 83, 104
Civil Jurisdiction and Judgments Act 1991, 16, 17, 20, 104
Companies Act 1985, 78, 80, 85
Companies Act 1986, 78
Companies Act 1989, 71, 78
Contracts (Applicable Law) Act 1990, 12
Co-operation of Insolvency Courts (Designation of Relevant Countries and
Territories) Order 1986 (S.I. 1986 No 2123), 67
Criminal Justice Act 1988, 30
Criminal Justice Act 1993, 30
Drug Trafficking Offences Act 1986, 29, 30
Drug Trafficking Offences Act 1994, 29
English Criminal Justice (International Co-operation) Act 1990, 33
Finance Act 1988, 79
Finance Act 1991, 41
Finance Act 1993, 57
Finance Act 1996, 11
Financial Services Act 1986, 145, 274
Foreign Companies (Execution of Documents) Regulations 1994, 73
Foreign Sovereign Immunities Act 1976, 62
xvi Table of statutes
Income and Corporation Taxes Act 1988, 59, 76, 77, 100
Inheritance Tax Act 1984, 20
Insolvency Act 1986, 64, 66, 67, 83, 84
Law of Property Act 1925, 44
Law of Property (Miscellaneous Provisions) Act 1989, 73
Limited Partnership Act 1907, 40
Money Laundering Regulations 1993 (S.I. 1993), 30
Partnership Act 1890, 39
Prevention of Terrorism (Temporary Provisions) Act 1989, 30
State Immunity Act 1978, 61, 81
Taxation of Capital Gains Act 1992, 57, 79
Taxation of Chargeable Gains Act 1992, 57
Unfair Contract Terms Act 1977, 15
Bermuda
Banks Act 1969, 273
Bankruptcy Act 1989, 283, 288
Bermuda Constitution Act 1967, 272
Bermuda Monetary Authority Act 1969, 272, 273
Bermuda Stock Exchange Company Act 1992, 274
Companies Act 1981, 273, 275, 276, 287
Companies Amendment Act 1986, 273, 275
Companies Amendment Act 1993, 276
Companies Amendment Act 1994, 273, 275
Companies Amendment Act 1996, 276, 279
Conveyancing Act 1983, 283
Conveyancing Amendment Act 1994, 283, 284
Exempted Undertakings Tax Protection Act 1986, 283
Exchange Control Act 1972, 272
Insurance Amendment Act 1981, 273
Insurance Amendment Act 1983, 273
Insurance Amendment Act 1996, 273
Insurance Law 1978, 276, 279
Insurance Law 1996, 276, 279
Limited Partnership Act 1883, 285
Partnership Law 1902, 285
Table of statutes xvii
Trust Companies Act 1981, 274
Trust Companies Act 1994, 283
Trustee Act 1975, 283
Taists (Special Provisions) Act 1989, 283
USA - Bermuda Tax Convention Act 1986, 273, 288
The British Virgin Islands
Banks and Trust Companies Act 1990, 236, 237, 241
Companies Act 1885, 237
Company Management Act 1990, 236, 237, 241
Dmg Trafficking Offences Act 1992, 236
Daigs (Prevention and Misuse) (Amendment) Act 1992, 236
Foreign Judgments (Reciprocal Enforcement) Act, 248
Insurance Act 1994, 237
International Business Companies Ordinance 1984, 237, 239
Mutual Legal Assistance (United States of America) Act 1990, 236, 238
Partnership Act 1888, 247
Reciprocal Enforcement of Judgments Act, 248
The Cayman Islands
Banks and Taists Companies Law 1989, 252
Banks and Taists Companies (1995 Revision), 254
Companies Law (1995 Revision), 256, 257
Companies Management Law 1984, 254, 257
Confidential Relationships (Preservation) Law 1976, 252
Confidential Relationships (Preservation) 1995 Revision, 252
Exempted Limited Partnership Law 1991, 265
Exempted Limited Partnership Regulations 1991, 265
Foreign Judgment Reciprocal Enforcement Law, 269
Fraudulent Dispositions Law 1989, 263
Insurance Law 1979, 254
Law of Property (Miscellaneous Provisions) Law 1994, 269