Road Town, British Virgin Islands (PRWEB UK) 4 November 2012
A new "regulation light" fund manager regime for the British Virgin Islands is one step closer to launch with the publication on 1 November of the final form of the Investment Business (Approved Manager) Regulations, 2012 ("Regulations"), according to Harney Westwood & Riegels, the leading BVI law firm.
“The Approved Manager regime seeks to strike the right balance of flexibility and effective regulation taking into account the relative risk profile of the business carried on. I believe that the regime achieves this and will prove to be an attractive option for fund managers seeking to commence business quickly and in a cost effective manner,” said Ross Munro, global head of investment funds at Harneys. Munro is also chairman of the Securities, Investment Business and Mutual Funds Advisory Committee (SIBAC) which has worked closely with the BVI Financial Services Commission in the development of the new regime.
Before the Regulations can come into force some simple amendments are to be made to the Securities and Investment Business Act ("SIBA") and the Approved Manager Guidelines and a template Application Form must be published by the Financial Services Commission. All this is in progress and the new regime is expected to go live in the coming weeks.
The new regime will offer a welcome alternative to fund managers and advisers domiciled or doing business in the BVI who are currently otherwise required to hold a full licence under Part I of SIBA. The new Approved Manager regime provides for eligible fund managers and advisers to submit a simple and short application to the Commission and then automatically commence business 7 days later (unless the Commission raises an objection during that period). This contrasts to the current position where it will typically take the Financial Services Commission a minimum of four weeks to process an application for a Part I licence.
Under the Regulations, an Approved Manager can act as the investment manager or investment advisor to any number of private or professional funds recognised under SIBA as well as any number of closed-ended funds domiciled in the BVI which have the key characteristics of a private or professional fund. The Approved Manager can also act for non-BVI feeder funds into BVI master funds. The key restriction is that aggregate assets under management of all of the open ended funds can not exceed $400 million and the capital commitments of all of the closed ended funds cannot exceed an amount to be specified in the Guidelines. As closed ended funds are considered to expose the jurisdiction to a lower level of regulatory risk the Guidelines are widely expected to provide for the capital commitment restriction for closed ended funds to be significantly higher than $400 million.
While an Approved Manager will not be restricted to any material extent on the way it carries on business, the regime has been intentionally crafted to be a "licensing regime" rather than an entirely exempted activity. The Commission will have powers at its disposal to take enforcement action against the Approved Manager should it determine it is necessary to do so in order to discharge its function as a regulator.
An Approved Manager will be subject to a small number of ongoing obligations. The key obligations are as follows:
More than 2,400 investment funds are registered in the British Virgin Islands making it the second largest domicile of offshore investment funds. The BVI is known for effective and well respected regulation while regulatory fees are significantly lower than competitor jurisdictions. Harneys has the largest investment funds and regulatory practice in the BVI having assisted more clients in establishing funds than any other law firm in the territory.
Harneys will publish a detailed guide to the new Approved Manager regime when the Guidelines have been issued and a firm date has been announced for its launch. In the meantime if you have any queries please contact Ross Munro (ross.munro(at)harneys(dot)com) at our British Virgin Islands Office or Timothy Bridges (timothy.bridges(at)harneys(dot)com) in our Hong Kong Office.