Securities and Investment Business Act (Revised 2020)

Summary

This is the consolidated Securities and Investment Business Act, the core BVI statute governing investment business licensing, public offers of securities, mutual funds, private investment funds and market abuse. It establishes the licensing and recognition regimes administered by the BVI Financial Services Commission and sets out ongoing obligations for licensees, funds and public issuers.

• Investment business: Prohibits carrying on investment business without a Commission licence and sets categories/sub-categories of licence, capital and financial soundness requirements, and rules on directors, senior officers, name changes, professional indemnity insurance and client assets.
• Public issues of securities: Controls public offers of securities in the Virgin Islands, requiring registration of a prospectus and imposing compensation and enforcement mechanisms for misleading offers.
• Mutual funds: Requires public funds to be registered, and private and professional funds to be recognised, before carrying on fund business; sets obligations to act in accordance with constitutional documents, maintain financial records and appoint functionaries.
• Private investment funds: Establishes a separate recognition regime (Part IIIA) for private investment funds, prohibiting unrecognised private investment fund business and fund promotion, subject to specific exemptions.
• General provisions: Requires licensees and funds to have an authorised representative, prepare and submit audited financial statements to the Commission, and report information to the Commission on request.
• Market abuse: Creates offences for insider dealing and for making misleading statements or engaging in market manipulation in relation to securities.

Transitional provisions (Schedule 8 and Part IIIA) phase in certain obligations for entities that were already operating before the Act, or a later amendment, came into force, including a transition period during which existing private investment funds may continue operating while an application for recognition is determined.

Key obligations

• A person must not carry on investment business in or from the Virgin Islands without an investment business licence issued under section 6.
• Licensees must maintain a financially sound condition and prescribed capital resources on an ongoing basis.
• Licensees and funds must appoint and maintain an authorised representative once section 65 and 66(2) take effect.
• Relevant licensees and public funds must prepare financial statements, have them audited, and submit them to the Commission.
• No person may make a public offer of securities in the Virgin Islands without a registered prospectus, except where an exemption applies.
• Public funds must register with the Commission and comply with prospectus registration and investor disclosure requirements before inviting the public to subscribe.
• Private and professional funds must be recognised by the Commission and act in accordance with their constitutional documents.
• Private investment funds must apply for recognition under Part IIIA; carrying on unrecognised private investment fund business or promoting an unrecognised private investment fund is prohibited outside stated exemptions and transitional protections.
• Licensees and funds must maintain records and safeguard client assets in accordance with the Regulatory Code.
• Persons must not engage in insider dealing or make misleading statements/engage in market manipulation with respect to securities covered by Part V.

Applies to

investment business licensees, fund managers, fund administrators, public funds, private funds, professional funds, private investment funds, recognised foreign funds, public issuers of securities, authorised representatives, auditors

Deadlines

• 17 May 2010: General commencement date of the Act, except for Part II (Public Issues of Securities).
• 1 July 2020: Commencement date for section 3 (meaning of investment activity and investment business), as inserted/amended by Act 12 of 2019.
• transition date: Certain obligations (e.g. maintenance of financial records under section 59(1)(c)-(d), enforcement action under section 60(1)(b), and authorised representative requirements under sections 65 and 66(2)) do not take effect for existing private or professional funds/licensees until the transition date specified under transitional provisions.
• transition period: Existing private investment funds are protected from offences under section 63B and are not treated as carrying on unauthorised financial services business during the transition period, or until an application for recognition or related appeal is determined if lodged during that period.

Related documents

• Securities and Investment Business (Amendment) Act, 2023 amends this document