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FAQs

 

Are existing professional funds, required to amend their memorandum and articles of association (M&A) to specify that i) the fund interests of the fund shall be issued only to professional investors; and ii) the initial investment of each investor in the fund, other than exempted investors, shall be not less than such sum as may be prescribed in the Mutual Funds Regulations? If so, in what time frame must this be completed?

Under paragraph 10 of Schedule 8 to SIBA, all existing professional funds are deemed to be recognised under section 55. Existing professional funds must therefore satisfy the criteria for such recognition, including the requirements of section 55(2)(c) that their constitutional documents should specify that i) the fund interest of the fund shall be issued only to professional investors; and ii) the initial investment of each investor in the fund, other than exempted investors, shall be not less that $100,000 (as prescribed in the Mutual Funds Regulations). In order to comply with this requirement, existing professional funds should amend their constitutional documents and provide evidence of same to the Commission before the second transition date of 12 October 2010.

However, as a matter of policy, where the Commission has granted approval under the BVI Business Companies Act, 2004, to an existing fund to voluntarily liquidate or where a liquidator has been appointed under the Insolvency Act, 2003, the fund would not be required to amend its constitutional documents to comply with section 55(2)(c).

In addition, where an existing fund is closed to new investors, or is otherwise winding down its business, it need not immediately amend its constitutional documents to comply with the requirement. However, the fund would be required to provide written confirmation to the Commission from its directors (supported by a board resolution) that it is closed to new investors or is winding down its business. Where the fund subsequently proposes to make an offer to new or existing investors it must, prior to the offering, amend its constitutional documents to comply with the requirements of section 55(2)(c)and file a copy of same with the Commission.

Are existing private and professional funds required to update their offering documents to contain the investment warning in accordance with Regulation 9(1) of the Mutual Fund Regulations?

Where the offering document of an existing private or professional fund does not contain an investment warning, the offering document must be amended to include same before the fund makes an offer or invitation to an investor or potential investor to purchase or subscribe for shares. This requirement is prescribed by Regulation 9 and takes effect on the first transition date of 3 August 2010.

The investment warning should be included in a prominent place in the fund’s offering document. Where no offering document is issued the investment warning should be provided to each investor as a separate document. The requirement to issue an investment warning is therefore a prerequisite to the making of an offer or invitation to purchase or subscribe for shares.

Existing funds that are not making an offer or invitation need not amend their offering documents unless and until they make an offer or invitation to investors or potential investors.

Where an existing private or professional fund has not issued an offering document, should the fund provide to each investor a copy of the investment warning in accordance with Regulation 9(3)?

An existing private or professional fund that has not issued an offering document is required to provide investors and potential investors with an investment warning in all cases where an offer or invitation to purchase or subscribe for shares is made. In relation to existing investors an investment warning is required only where the fund continues to offer them its shares for purchase or subscription. The investment warning should be provided to each investor as a separate document.

Are existing private or professional funds that do not currently have a custodian or fund manager required to appoint a custodian and fund manager?

Yes. All private and professional funds, including existing funds, are required to have a custodian and fund manager at all times, unless they are exempted from this requirement by the Commission. Where an existing private or professional fund has not appointed a custodian or a fund manager it should take steps to do so before the first transition date of August 3, 2010, or apply to the Commission for an exemption.

As regards the application process for exemptions, a single application may be made by or on behalf of two or more funds stating the names of the funds for which the exemption is sought and the reasons for the exemption.

Are private and professional funds now required to prepare and submit audited financial statements to the Commission and, if so, how does this affect existing funds?

Yes. Under Regulation 10(1) and (4) all private and professional funds, including existing funds, are required to prepare and provide a copy of their audited financial statements to the Commission within six months after the financial year end, unless they have been exempted from the requirement under Regulation 10(2). Existing funds are not required to prepare or submit financial statements in respect of the current financial year where the financial year began before, and ends after, the commencement date (May 17, 2010). However, audited financial statements would be required in respect of the subsequent financial year.

Can an investment business licence be extended to include a different category of investment business or is a new application required?

Schedule 3 of SIBA lists the categories and sub-categories of investment business licences that may be issued by the Commission. A single licence may be issued in one or more of the categories listed in Schedule 3. Where a licence-holder wishes to extend the scope of its licence to provide services that fall under a new category of investment business, an application for the grant of a licence in the new category must be made. Where the applicant satisfies the requirements for the grant of a licence, the existing licence may be amended to include the new category of investment business. In order to facilitate the application for a licence in the new category of investment business, the Commission may waive the requirement to provide information and supporting documents that were submitted when the application for the existing licence was made.

Is it a requirement that the Commission’s approval be sought for the use of the word “fund” or a derivative thereof prior to the entity being incorporated?

Yes. An entity that intends to use the word “fund” or a derivative thereof in its name is required to seek the Commission’s approval prior to incorporation. However, the Commission has streamlined its procedures to facilitate the approval process. Accordingly, where an entity upon incorporation intends to make an application for licensing, recognition or registration under SIBA, the entity may provide a written undertaking to the Registrar of Corporate Affairs (on making the application for incorporation) stating that upon incorporation, it will make an application for recognition, registration or licensing under SIBA. The undertaking will avoid the need for a separate application for approval to use the “fund” and facilitate the timely incorporation of the entity.

Are application fees and approval fees payable in respect of applications for the appointment of a director or functionary of a public fund?

With effect from January 1, 2011, the application fee for the appointment of a director of a public fund is $150 and the approval fee for the appointment of a director of a public fund is $250. There is no application fee or approval fee for the appointment of a functionary of a public fund.

Are application fees and approval fees payable for the appointment of a director or senior officer of an investment business licensee?

With effect from January 1, 2011, the application fee for the appointment of a director or senior officer of an investment business licensee is $150 and the approval fee for the appointment of a director or senior officer of an investment business licensee is $250.

Is there a separate fee payable for the approval to appoint directors, senior officers, functionaries or auditors where the approval forms part of an application for licensing, registration or recognition?

As the processing of new applications under SIBA involves the assessment of the applicant’s directors, senior officers, functionaries and auditors, a separate fee is not payable for approval of the appointment.