Investment Business (Approved Managers) Regulations, 2012, as amended09 Jul 2014
Much anticipated and welcomed change was introduced to the regulatory regime that applies to British Virgin Islands (BVI) domiciled fund managers and advisors by the Investment Business (Approved Managers) Regulations, 2012 (the "Regulations") as amended which came into force in December 2012.
Prior to the enactment of the Regulations, a BVI manager or advisor carrying on any investment business was required to obtain a license under the Securities and Investment Business Act, 2010 ("SIBA") as amended. Once licensed, the manager/advisor would be subject to substantial ongoing obligations under SIBA and the Regulatory Code 2009 (the "Code"). While the Regulations do not create an outright exemption from regulation for approved managers, they enable an eligible manager or advisor to apply for approval as an approved investment manager through a simplified process. The Regulations strike a balance by providing managers with an attractive, time and cost effective alternative to the full licensing regime under SIBA while still providing an appropriate level of regulatory supervision by the Financial Services Commission (the "Commission").
To be eligible for approval under the Regulations, a manager or advisor must be established as a business company or a limited partnership in the BVI and have, in aggregate assets under management of not more than US$400,000,000 or equivalent in any other currency where it is providing management services to an open-ended fund or not more than US$1 billion where it is acting in relation to a closed-ended fund. The Commission will need to be satisfied that the applicant and each director, general partner or senior officer and each person who holds or owns a significant interest in the applicant is fit and proper in accordance with the Code and a declaration to that effect will need to be provided by the applicant. The Commission will also need to be satisfied that the approval of the applicant is not against the public interest.
The Investment Business (Approved Managers) (Amendment) Regulations 2013 (the "Amending Regulations") which came into force on 2 January 2014 has broadened the scope of the persons to whom an approved manager may act as investment manager. Prior to the Amending Regulations, an approved manager could only provide services to open-ended private or professional funds domiciled in the BVI and/or to BVI domiciled closed-ended funds with the equivalent characteristics of private or professional funds. With the Amending Regulations, an approved manager can act as investment manager of a non-BVI fund domiciled in any recognised jurisdiction . An approved manager can also provide services to a fund that is not domiciled in a recognised jurisdiction provided that the fund invests all or a substantial part of its assets into a qualifying fund domiciled in the BVI or in a recognised jurisdiction.
An application for approval as an approved manager must be submitted to the Commission at least seven days prior to the intended date for commencing the applicant's business unless the Commission has agreed to a shorter period. When the seven days expires the applicant may commence and carry on business for a period of up to thirty days from the date of submission of the application. This thirty day period may be extended for an additional thirty days by the Commission or upon the written request of the applicant.
If an applicant is approved, the Commission will register the applicant in a register of approved investment managers and issue the manager with a certificate of approval.
In terms of ongoing obligations, an approved manager will be required to:
- pay an annual renewal fee;
- have a minimum of two directors, one of whom must be an individual;
- have an authorised representative in the BVI;
- notify the Commission of any change to any of the information submitted to the Commission in its application for approval within 14 days of the change;
- notify the Commission of any matter in relation to it or its conduct which has or is likely to have a material impact or significant regulatory impact with respect to the approved manager or its business;
- prepare and file annual financial statements to the Commission. However, there is no audit requirement; and
- prepare and file an annual return with the Commission containing the details as set forth in the Regulations by 31 January of each year.
 The recognised jurisdictions for the purposes of the Regulations are Argentina, Australia, Bahamas, Bermuda, Belgium, Brazil, Canada, Cayman Islands, Chile, Curacao, Denmark, Finland, France, Germany, Gibraltar, Greece, Guernsey. Hong Kong, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, Panama, Portugal, Singapore, Spain, South Africa, Sweden, Switzerland, United Kingdom and the United States of America.