Mutual Funds (Foreign Funds) Regulations (Revised 2020)

Summary

These Regulations set out the regime for foreign mutual funds that seek recognition to offer or promote their shares in the Virgin Islands. They cover the application process for recognition, ongoing operational obligations of recognised foreign funds, and notification duties owed to the Financial Services Commission.

• Recognition application: A foreign fund seeking recognition must apply in the approved form, providing details of its regulatory status, directors, functionaries, auditor, records locations and VI promoters, together with constitutional documents, incorporation evidence, prospectus and valuation policy.
• Prospectus: Any prospectus issued by a recognised foreign fund must comply with the Public Funds Code and cannot be issued without at least 7 days prior notice to the Commission.
• Directors and functionaries: A recognised foreign fund must at all times have at least 2 directors (one an individual), and must maintain a fund manager, fund administrator and custodian (custodian requirement can be waived by the Commission). New director, functionary or auditor appointments require 7 days prior notice.
• Valuation policy: Funds must maintain and implement a valuation policy meeting specified standards, with valuations conducted at least annually and conflicts of interest managed and disclosed where the manager is involved in valuation.
• Financial statements and audit: Financial statements must comply with IFRS, UK GAAP, US GAAP, Canadian GAAP or an equivalent standard, be audited under specified auditing standards, and audited statements must be filed with the Commission within 6 months of financial year end (extendable, in aggregate, up to 15 months).
• Notifications: Funds must notify the Commission of a range of events, including changes of address, records location, functionary departures, proposed amendments to constitutional documents or valuation policy, enforcement actions, and cessation of regulation by their home Regulatory Authority.

A transitional schedule delays application of the Regulations to funds already recognised before commencement until 1 July 2020, giving existing recognised foreign funds a lead-in period to achieve compliance.

Key obligations

• An applicant for recognition must submit the specified information and supporting documents (constitutional documents, incorporation certificate, evidence of regulatory status, prospectus, valuation policy) with its application.
• A recognised foreign fund must not issue a prospectus or amended prospectus without giving the Commission at least 7 days prior notice, including a copy of the document.
• A recognised foreign fund must at all times have at least 2 directors, at least one an individual, and must notify the Commission within 7 days if it breaches this requirement.
• No person may be appointed as a director, functionary or auditor of a recognised foreign fund without at least 7 days prior notice to the Commission.
• A recognised foreign fund must at all times maintain a fund manager, fund administrator and custodian, unless exempted from the custodian requirement by the Commission.
• A recognised foreign fund must give written notice to the Commission within 7 days of a functionary ceasing to hold office, stating the reason, and must appoint a replacement within 14 days to avoid breaching the functionary requirement.
• A recognised foreign fund must maintain a valuation policy and ensure valuations of fund property occur at least annually.
• A recognised foreign fund must prepare financial statements under a recognised accounting standard and have them audited by an appointed auditor.
• A recognised foreign fund must provide the Commission with a copy of its audited financial statements within 6 months of its financial year end, or within an approved extended period not exceeding 15 months in aggregate.
• If a recognised foreign fund ceases to be regulated by its Regulatory Authority, it must notify the Commission within 5 days and cease offering shares in the Virgin Islands.
• A recognised foreign fund must notify the Commission of specified changes and events (address changes, records location changes, proposed constitutional or valuation policy amendments, enforcement actions) within the timeframes set out in regulation 12.

Applies to

recognised foreign funds, fund managers, fund administrators, custodians, auditors, directors of recognised foreign funds

Deadlines

• 31 December 2019: Commencement date of the Regulations
• 7 days prior: Notice required before issuing or amending a prospectus
• 7 days: Notification to the Commission of a breach of the minimum director requirement
• 7 days prior: Notice required before appointment of a director, functionary or auditor
• 7 days: Notice to the Commission after a functionary ceases to hold office, stating the reason
• 14 days: Period within which a replacement functionary must be appointed to avoid breaching regulation 7(1)
• annually: Minimum frequency for valuation of fund property
• 6 months after financial year end: Deadline to provide audited financial statements to the Commission (extendable up to 15 months in aggregate, with extensions beyond 9 months requiring exceptional circumstances)
• 5 days: Notification to the Commission after ceasing to be regulated by the Regulatory Authority, and cessation of share offers in the Virgin Islands
• 14 days: Notification of changes such as address, records location, or functionary/director/auditor cessation under regulation 12(1)(a)-(d)
• 7 days prior: Notification before issuing a proposed amended constitutional document or valuation policy under regulation 12(1)(e)-(f)
• 5 days: Notification of enforcement action against the fund under regulation 12(1)(g)
• 1 July 2020: Date on which the Regulations take effect for existing foreign funds already recognised before commencement