Directive - Collection of Modern Art Inc. (2012-12-10)

Summary

This is an enforcement action notice: an amended Directive issued by the BVI Financial Services Commission under section 40(1)(b) of the Financial Services Commission Act, 2001 to Collection of Modern Art Inc., a public fund. It amends an earlier Directive issued to the Fund on 21 February 2012, replacing two of its conditions with a new set of steps the Fund must follow regarding recalculation of its Net Asset Value.

• Amendment: Paragraphs 1(ii) and (iii) of the earlier Directive are deleted and replaced with new conditions; paragraph 2 of the earlier Directive is also deleted.
• Member notice: The Fund must prepare a notice to members covering the appointment of Bonhams to independently value the Fund's artwork, the Director's reasons for recalculating the Net Asset Value (per the resolution of 16 June 2012), the proposed recalculation methodology, the previous and revised Net Asset Values (including per share), and the effect of the recalculation on outstanding redemptions.
• Platform letter: The Fund must prepare a letter to distribution platforms and intermediaries requesting disclosure of the notice to their clients invested in the Fund.
• Commission pre-clearance: Both the member notice and the platform letter must be submitted to the Commission for review before dissemination.
• Dissemination: Once the Commission's comments are received, the Fund must disseminate the notice to members and the letter to platforms.
• Member comment period: Members must be given ten days to reply with comments or concerns about the notice.
• Reporting back: The Fund must provide the Commission with an analysis of the comments and concerns received from members.

All other provisions of the original Directive remain in effect. This notice is specific to Collection of Modern Art Inc. and does not create general obligations for other regulated entities.

Key obligations

• Prepare and submit a notice to Fund members detailing the appointment of Bonhams, reasons for the NAV recalculation, the recalculation methodology, prior and revised NAVs, and the effect on outstanding redemptions
• Prepare a letter to platforms and intermediaries requesting disclosure of the notice to their clients invested in the Fund
• Submit the member notice and platform letter to the Commission for review prior to dissemination
• Disseminate the notice and letter only after receiving the Commission's comments
• Allow Fund members ten days to reply with comments or concerns on the notice
• Provide the Commission with an analysis of the comments and concerns received from members

Applies to

public funds, investment business (Collection of Modern Art Inc.)

Deadlines

• 10 days: Period the Fund must allow its members to reply with comments or concerns after the notice is disseminated