BVI Investment Funds Update

The government of the BVI has recently adopted new legislation which has an important impact to BVI investment funds and how they are operated.

We have summarised below the most important regulatory amendments.

Fund Property
The Fund must define and identify the property and assets of the fund.

Valuation of Fund Property
The Mutual Funds Regulations, 2010 and the Securities Investment Business (Incubator and Approved Funds) Regulations, 2015 have been amended to ensure that investment funds have in place comprehensive policies in respect of the valuation of their property. These amendments apply to all categories of BVI investment funds.

The new valuation procedures and policies are as follows:

  • be appropriate for the nature, size, complexity, structure and diversity of the fund and the fund property;
  • be consistent with the provisions concerning valuations contained in the fund’s constitutional documents and offering documents;
  • require valuations to be undertaken at least on an annual basis;
  • include procedures for preparing reports on the valuation of fund property; and
  • specify the mechanisms in place for the dissemination of valuation information and reports to investors.

For those investment funds that have appointed an administrator, the directors of the investment fund must ensure that the administrator has effectively implemented the fund’s valuation policy. For those investment funds that have not employed an administrator, the directors need to ensure that the person controlling the valuations adheres to the valuation policy and procedures of the investment fund.

Should there be any conflicts of interest resulting from the investment manager of the fund being involved in the valuation process and/or conflicts in respect of the valuation process related to the lack of independence between the investment manager and the administrator of the fund, the new regulations require that the fund identify, manage and monitor such conflicts of interest, how these will be managed and disclose the same to the investors of the fund.

Safekeeping and segregation of fund property
BVI investment funds must ensure that appropriate arrangements are in place in respect of the safe keeping, and where necessary segregation, of the fund’s property.

This new regulation requires that all Incubator and Approved fund must have in place such arrangements for the safekeeping of fund property, including if necessary the segregation of the same, bringing the statutory requirements of the aforementioned types of funds more in line to those applicable to BVI Private, Professional and Public funds.

Accounting Standards
Audit standards for financial statements prepared by BVI investment funds (as applicable) must be done in accordance with international standards accepted by the BVI Financial Services Commission (“FSC”) (e.g. US GAAP, UK GAAP, IFRS, etc.) or such other recognised international auditing standard to be approved by the FSC, which allows the fund to choose an auditor in a jurisdiction that suits best the operations of the fund.

Private Investment Fund
We would like to remind our clients of the new legislation affecting the so called “closed-ended funds” (now defined as Private Investment Fund), which are now required to be recognised by the FSC.

For more information on Private Investment Funds, we refer you to our newsletter dated January 20, 2020 which you will find on our website by clicking on the following link: https://amsfinancial.com/bvi-private-investment-fund-update/

How can we Help
Our investment fund team together with our associated law firm AMS Law, can assist with the required updates to your fund’s constitutional and offering documents and any registration that may be required by the FSC.

Should you be interested in fund administration services, through our sister company, Circle Partners, we can provide a comprehensive range of customised fund administration solutions to clients. Circle Partners can take care of all day-to-day middle and back office functions, which include the valuation policies and procedures stated in this newsletter.

Should you have any queries in relation to the contents of this newsletter, please do not hesitate to contact David Payne at david.payne@amsfinancial.com