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Public Statement No. 2 of 2008 - Reserve International Liquidity Fund Ltd. (16 December 2008)

Public Statements

The British Virgin Islands Financial Services Commission (the "Commission") has issued this public statement pursuant to Section 37A (4) of the Financial Services Commission Act, 2001.

The Commission considers it necessary to issue this public statement in order to protect the public interest or the interests of the customers, creditors or investors of Reserve International Liquidity Fund Ltd. (the "Fund").

The Commission wishes it to be known that:

On 17 October, 2008, the Commission issued a directive to the Fund under Section 40(1)(b) of the Financial Services Commission Act, 2001, requiring the Fund to take the following action:

To forthwith suspend:

the subscription of shares by new or existing investors;
the redemption of shares by investors; and
the payment of the proceeds of the redemption of shares until further notice by the Commission.

To submit monthly reports to the Commission setting out:

details of its cash balance, including the institution(s) at which the cash is held;
details of its investments, including the jurisdiction of issuer, type/category of investments and the current value of the investments at cost and current market value; and
an update on all ongoing litigation involving the Fund until further notice by the Commission.

Since the issue of the directive, the Commission has continued to engage in dialogue with the Fund's representatives concerning its requirements. As part of this process, on 12 November, 2008, the Fund submitted a draft Plan of Liquidation and Distribution of Assets to the Commission outlining its proposals for the payment of an interim distribution to investors on a pro rata basis. The Commission conducted a detailed review of the proposals and reverted to the Fund with its requirements on 5 December, 2008. The Commission is in agreement with the Fund's proposals but is concerned to ensure that the proposals are in keeping with the Fund's constitutional documents and the relevant requirements of BVI law and is awaiting confirmation from the Fund in this regard. The Commission proposes to vary the directive to allow for the payment of the distribution once the required confirmations are received.
The Commission would provide an update on developments as matters progress.

Robert A. Mathavious
Managing Director /CEO
British Virgin Islands Financial Services Commission
Pasea Estate, Tortola, British Virgin Islands
Telephone: (284) 494-4190
Facsimile: (284) 494-5016
Hours: Monday - Friday 8:30 am - 4:30 pm