Investment Business (Approved Managers) Regulations (Revised 2020)

Summary

These Regulations create a light-touch approval regime for investment managers (as opposed to full licensing) under the BVI Securities and Investment Business Act. A BVI business company or BVI limited partnership can apply to the Financial Services Commission to become an 'approved investment manager' and, once approved, is treated broadly as a licensee but subject to a narrower set of permitted functions and ongoing obligations.

• Who can apply: A BVI business company or a limited partnership registered under the Partnership Act may apply to the Commission for approval as an investment manager instead of seeking a full investment business licence.
• Permitted activities: An approved investment manager may act as investment adviser or manager to private funds, professional funds, closed-ended funds with equivalent characteristics, affiliated persons, and certain other persons approved case-by-case or based in recognised jurisdictions.
• Application process: Applications must be submitted at least 7 days before the intended start of business (unless a shorter period is accepted), accompanied by prescribed information (constitutional documents, director/officer/shareholder details, fund details, agreements, fit-and-proper declarations, legal practitioner confirmation) and the prescribed fee; incomplete applications may be denied.
• Provisional operation: An applicant may commence and carry on relevant business for up to 30 days from submission (extendable by a further 30 days by the Commission) while the application is pending, and is deemed approved during that period.
• Fees and penalties: Approval must be renewed annually on payment of a renewal fee; late payment triggers administrative penalties as if the manager were a licensee, and failure to pay the maximum penalty and fee within 30 days forces the manager to cease acting.
• Assets under management cap: An approved investment manager whose aggregate assets under management exceed 400,000,000 US dollars (or the prescribed amount for closed-ended funds) must notify the Commission in writing within 7 days, and generally ceases to qualify unless it falls back under the threshold, applies for a full licence, or the Commission otherwise permits continuation, within 3 months.
• Ongoing obligations: Approved managers must submit financial statements, maintain a compliance officer function, and file an annual return confirming continued eligibility, fitness and propriety of directors/senior officers/significant shareholders, and details of funds served, assets under management, investor numbers and significant complaints as at 31 December of the preceding year.
• Disqualification and public interest powers: A manager that ceases to qualify must stop taking on new business and notify the Commission immediately, and generally has 3 months (extendable by 3 months) to cease relevant business or obtain a full licence; the Commission may also direct a manager, on public interest grounds, to apply for a licence or cease relevant business immediately.
• Public register: The Commission maintains a public register of approved investment managers, open for inspection, from which extracts may be requested.

Because approved investment managers are treated as licensees for enforcement purposes but operate outside the full licensing regime, the Regulations impose distinct notification, renewal, reporting and cessation duties rather than the full suite of licensing conditions applicable under Part I of the Act.

Key obligations

• Submit an application for approval at least 7 days before the intended commencement of relevant business (unless the Commission accepts a shorter period)
• Accompany the application with all required information under regulation 5 and the prescribed fee under regulation 6
• Pay the annual renewal fee to maintain approval, or become liable to prescribed late-payment penalties
• Notify the Commission in writing within 7 days of aggregate assets under management exceeding 400,000,000 US dollars (or the prescribed closed-ended fund threshold)
• Cease relevant business and/or apply for a full investment business licence within 3 months (extendable by up to 3 months) if disqualified or if the assets-under-management threshold is exceeded and not remedied
• Notify the Commission immediately upon ceasing to qualify as an approved investment manager, and not take on new relevant business thereafter
• Submit financial statements to the Commission as required under regulation 14
• Maintain a compliance officer as required under regulation 15
• File an annual return confirming continued eligibility, fitness and propriety of directors, officers and significant shareholders, and providing fund, assets under management, investor number and significant complaint details as at 31 December of the preceding year
• Apply for a licence or cease relevant business within 3 months (extendable by 3 months) if directed to do so by the Commission on public interest grounds

Applies to

investment managers, approved investment managers, applicants for approval as investment manager, BVI business companies, limited partnerships, private funds, professional funds, closed-ended funds

Deadlines

• at least 7 days prior to commencement of relevant business: Deadline for submitting an application for approval as an investment manager, unless the Commission accepts a shorter period
• up to 30 days from submission (extendable by a further 30 days): Period during which an applicant may provisionally carry on relevant business while the application is pending
• annually: Renewal fee must be paid to continue approval as an investment manager
• within 7 days of exceeding the threshold: Notify the Commission in writing after aggregate assets under management exceed 400,000,000 US dollars or the prescribed closed-ended fund amount
• within 3 months of ceasing to qualify (extendable by up to 3 months): Cease carrying on relevant business, or apply for and obtain a full investment business licence, after disqualification or exceeding the assets-under-management threshold
• as at 31 December of the preceding year: Date as of which annual return details on funds served, assets under management, investor numbers and complaints must be reported
• within 3 months of a public interest notice (extendable by up to 3 months): Apply for and obtain a licence to carry on investment business if directed to do so by the Commission on public interest grounds
• within 30 days of becoming liable to the maximum penalty: Pay outstanding renewal fee and applicable maximum penalty or cease functioning as an approved investment manager