Private Investment Funds Regulations (Revised 2020)

Summary

These Regulations, made under section 63A of the Securities and Investment Business Act, set out the framework for private investment funds (PIFs) recognised by the BVI Financial Services Commission. They govern how a fund applies for recognition as a PIF, and impose ongoing requirements on directors, appointed persons, offering documents, valuation, financial reporting and notifications to the Commission.

• Recognition application: A fund seeking recognition as a PIF must apply in the approved form, disclosing its place of business, directors, authorised representative, trustee or general partners (as applicable), appointed persons, and must submit constitutional documents, certificate of incorporation/formation, any offering document or term sheet, and its valuation policy.
• Investor thresholds: The specified sum for a professional investor is $1,000,000, and the minimum initial investment for other non exempted investors is $100,000 or its currency equivalent.
• Directors: A PIF must at all times have at least two directors, at least one an individual, and must notify the Commission within 7 days if it breaches this requirement.
• Appointed persons: A PIF must at all times have an appointed person responsible for management, valuation and safekeeping of fund property; proposed appointments must be notified to the Commission at least 7 days in advance, and cessation of an appointed person's role must be notified within 7 days with reasons given.
• Offering documents or term sheets: Offers to investors must generally be made through an offering document or term sheet containing prescribed disclosures (investor suitability, investment objective, no redemption on demand statement, appointed persons, fees); if none is issued, the Commission must be told why and how information will otherwise be provided to investors.
• Valuation policy: A PIF must maintain and implement a valuation policy appropriate to the fund, requiring valuations at least annually, and must manage and disclose any conflicts where the same appointed person handles both management and valuation.
• Financial statements and audit: Financial statements must be prepared under IFRS, UK/US/Canadian GAAP or an approved equivalent, audited to a recognised auditing standard, and copies of audited financial statements must be filed with the Commission within 6 months of financial year end (extendable, with Commission approval, up to 15 months in aggregate).
• Ongoing notifications: The Commission must be notified within 14 days of specified events, including appointment or cessation of directors, authorised representatives or auditors, changes of business address, material changes in business nature, amendments to constitutional documents, and issuance or amendment of offering documents or the valuation policy.
• Public register: The Commission maintains a public register recording each fund's place of business, authorised representative, recognition date and status, and fee payment status.

The Regulations commenced on 31 December 2019 and remain in force as revised to 1 January 2020, applying to funds recognised or seeking recognition as private investment funds in the Virgin Islands, together with their directors, appointed persons and auditors.

Key obligations

• A PIF must apply to the Commission for recognition, providing specified fund details and accompanying constitutional documents, certificate of incorporation/formation, any offering document/term sheet, and its valuation policy.
• A PIF must maintain at least 2 directors at all times, at least one an individual, and notify the Commission within 7 days of any breach.
• A PIF must ensure an appointed person is in place at all times for management, valuation and safekeeping of fund property, and must notify the Commission at least 7 days before appointing a new appointed person.
• A PIF must notify the Commission within 7 days after an appointed person resigns, is terminated, or otherwise ceases to act, including the reason.
• Offers to investors must be made through an offering document or term sheet containing prescribed disclosures, or the fund must explain to the Commission why none is issued and how information will be provided to investors.
• A PIF must maintain and implement a comprehensive valuation policy with valuations conducted at least annually, and disclose and manage conflicts of interest where management and valuation functions are combined in one appointed person.
• A PIF must prepare financial statements under a specified accounting standard and have them audited under a specified auditing standard.
• A PIF must submit audited financial statements to the Commission within 6 months of its financial year end, or within an approved extended period not exceeding 15 months in aggregate.
• A PIF must notify the Commission within 14 days of specified events such as changes in directors, authorised representative or auditor, business address changes, material business changes, constitutional amendments, and issuance or amendment of offering documents or the valuation policy.

Applies to

private investment funds, directors of private investment funds, appointed persons, auditors, BVI business companies, partnerships and unit trusts operating as private investment funds

Deadlines

• 31 December 2019: Commencement date of the Private Investment Funds Regulations.
• within 7 days after the breach occurred: Notification to the Commission if a PIF falls below the minimum of 2 directors (at least one individual).
• at least 7 days prior to appointment: Notice to the Commission of a proposed appointed person before the appointment takes effect (unless a shorter period is agreed by the Commission).
• within 7 days: Notice to the Commission after an appointed person resigns, is terminated, or otherwise ceases to act, and, if applicable, appointment of a replacement to avoid contravening the appointed person requirement.
• within 6 months after the financial year end (extendable up to 15 months in aggregate): Filing of the PIF's audited financial statements with the Commission.
• within 14 days after the occurrence of the matter: Notification to the Commission of specified matters such as changes in directors, auditor, business address, constitutional documents, offering documents or valuation policy.