Private Investment Funds Regime Guidelines 2019

Summary

These Guidelines from the BVI Financial Services Commission explain the Private Investment Funds Regime introduced by 2019 amendments to the Securities and Investment Business Act (SIBA) and the Private Investment Funds Regulations, 2019. They set out how closed ended funds that do not offer investors redemption on demand can apply for recognition as private investment funds, and detail the ongoing obligations that apply once recognised.

• Application: An applicant must submit Form IB/PIF-1 via a local representative, together with constitutional documents, director/general partner/trustee details, the offering document or term sheet, the valuation policy, and the application fee.
• Authorised Representative: Must appoint and retain a Commission certified Authorised Representative and notify the Commission within 14 days of any change.
• Directors, General Partners, Trustees: Companies need a minimum of 2 directors (one an individual); details of general partners or trustees must be provided depending on the fund's constitution; changes must be notified within 14 days.
• Appointed Persons: Funds must maintain 3 appointed persons responsible for management, valuation and safekeeping of assets, with notifications required within 7 days if an appointed person ceases to act or a replacement is proposed.
• Financial Statements: Annual financial statements must be prepared under a recognised accounting standard, audited under a recognised auditing standard, and submitted within 6 months of financial year end (subject to possible exemption or extension).
• Offering Document or Valuation Policy Changes: Any changes to the offering document/term sheet or valuation policy must be notified to the Commission within 7 days.
• Other Notifications: Changes in place of business, material changes in business nature/scope (for funds formed outside the Virgin Islands), and amendments to constitutional documents must be notified within 7 days.
• Fees: Application, recognition and annual renewal fees apply as set out in Appendix II, with a lower recognition fee before 30 June and a reduced fee after that date.

A transitional period ran from 31 December 2019 to 1 July 2020 during which existing private investment funds had to apply for recognition; funds operating without recognition after that date risk being treated as conducting unauthorised financial services business and facing enforcement action.

Key obligations

• Entities operating as private investment funds during the transitional period must apply for recognition on or before 1 July 2020, or risk being treated as conducting unauthorised financial services business.
• A recognised private investment fund must appoint and at all times retain an Authorised Representative and notify the Commission within 14 days of any change of Authorised Representative.
• Companies must maintain a minimum of 2 directors (at least one an individual); changes to directors, general partners or trustees must be notified to the Commission within 14 days.
• Funds must maintain 3 appointed persons responsible for management, valuation and safekeeping of fund property, following relevant guidelines for safekeeping arrangements.
• If an appointed person ceases to act, the fund must notify the Commission within 7 days with an explanation, and notify the Commission of a proposed replacement within 7 days.
• Funds must prepare annual financial statements under a recognised accounting standard and have them audited under a recognised auditing standard, submitting audited statements within 6 months of financial year end unless an exemption or extension is granted.
• Funds must maintain a valuation policy and notify the Commission of any amendments within 7 days.
• Funds must notify the Commission within 7 days of issuing an amended or new offering document or term sheet.
• Funds must notify the Commission within 7 days of changes in place of business, material changes in business nature/scope, or amendments to constitutional documents.
• Once recognised, funds must pay initial and ongoing (annual renewal) fees as set out in the fee schedule.

Applies to

private investment funds, BVI business companies, limited partnerships, unit trusts, authorised representatives, registered agents

Deadlines

• 31 December 2019 to 1 July 2020: Transitional period during which entities operating as private investment funds must apply for recognition
• 1 July 2020: Deadline to apply for recognition as a private investment fund before enforcement action applies
• within 14 days of change: Notify the Commission of a change of Authorised Representative
• within 14 days of change: Notify the Commission of changes to directors, general partners or trustee
• within 7 days after occurrence: Notify the Commission when an appointed person ceases to act, with explanation
• within 7 days after occurrence: Notify the Commission of a proposed replacement appointed person
• within 6 months after financial year end: Submit audited financial statements
• within 7 days of issuance: Notify the Commission of a new or amended Offering Document or Term Sheet
• within 7 days of amendment: Notify the Commission of amendments to the valuation policy
• within 7 days of occurrence: Notify the Commission of changes in place of business, material changes in business nature/scope, or amendments to constitutional documents
• on or before June 30th: Recognition fee of $1000 applies if granted on or before this date
• after June 30th: Recognition fee of $500 applies if granted after this date