British Virgin Islands: Ongoing Obligations Of Approved Managers

Introduction

The BVI Business Companies Act 2004 (the "Business Companies Act") imposes continuing obligations on all business companies. The main requirements of the Business Companies Act are summarised below.

Registered agent / registered office

A BVI business company must at all times maintain a registered office in the BVI. The registered office must be a physical address in the BVI. A business company is also required to have a registered agent in the BVI.

Corporate registry fees

A business company must pay its annual fee on or by 31 May or 30 November each year, depending on the date of incorporation.

A business company which is an unlimited company not authorised to issue shares and a foreign company registered under the Business Companies Act, are required to file an annual return made up to 31 December of the previous year, on or before 31 March of each year.

Corporate records

A BVI business company must maintain the following documents in the BVI, either at the office of its registered agent (items 1-4) or at its registered office (item 5):

  1. the memorandum and articles of association;
  2. the register of members, in the form specified in the Business Companies Act;
  3. the register of directors or a copy of the register of directors, in the form specified in the Business Companies Act;
  4. copies of all notices and other documents filed by the company in the previous ten years; and
  5. register of charges, mortgages and other encumbrances in the form specified in the Business Companies Act.

In addition, the company must keep the minutes of all meetings and copies of all resolutions consented to by directors, members, committee of directors, and committee of members at the office of its registered agent or at such other place or places within or outside the BVI, as determined by the directors of the company. The registered agent must be provided with a written record of the physical address of the place or places where the records are kept, and must be notified within fourteen days if the locations are changed.

A BVI business company is also required to keep at the office of its registered agent or at such other place or places, within or outside the BVI, as the directors may determine, the records and underlying documentation of the company that are in such form as:

  1. are sufficient to show and explain the company's transactions; and
  2. will, at any time, enable the financial position of the company to be determined with reasonable accuracy.

Where the records and underlying documentation of a BVI business company are kept at a place or places other than at the office of the company's registered agent, the registered agent must be notified of the physical address where they are kept and under whose control there are. The registered agent must similarly be notified within fourteen days of any such changes.

Those companies that are licensed by the BVI Financial Services Commission ("FSC") as approved investment managers ("Approved Managers") are subject to additional on-going obligations. The bulk of the provisions regarding on-going obligations are contained in the Investment Business (Approved Managers) Regulation, 2012 (the "Regulations"), the Approved Managers Guidelines (the "Guidelines"), the Securities and Investment Business Companies Act, 2010 ("SIBA") and in the Regulatory Code (the "Code").

Licences and FSC fees

Description

Payable to regulator (US$)

Application for approval as an Approved Manager

$1,000

Approval to act as an Approved Manager on or before 30 June

Approval to act as an Approved Manager after 30 June

$1,500

$750

Annual renewal of approval as an Approved Manager

$1,500

The approval to act as an Approved Manager may be renewed upon payment of the requisite renewal fee. Failure to pay the renewal fee after it becomes due shall result in:

  1. the Approved Manager being liable to an administrative penalty; and
  2. where an Approved Manager becomes liable to the maximum administrative penalty prescribed, any further directives issued to include ceasing to carry on business as an Approved Manager.

General restrictions

An Approved Manager who ceases to qualify as such must notify the FSC immediately and cease from taking on any new relevant business. Where a person ceases to qualify as an Approved Manager it must stop carrying on any existing relevant business within three months from the date on which he ceased to qualify as an Approved Manager. A person who ceases to qualify as an Approved Manager may apply to the FSC to be licensed to carry on investment business under SIBA.

Restrictions in relation to assets under management

Assets under management of an Approved Manager may not exceed:

  1. US$400 million aggregate assets under management for open-ended funds;
  2. US$1 billion aggregate capital commitments for closed-ended funds; and
  3. US$1 billion aggregate assets in respect of managed accounts.

An Approved Manager whose assets under management exceed the values specified above must notify the FSC of this fact within seven days of exceeding the prescribed amount.

An Approved Manager who exceeds the amounts prescribed ceases to qualify as an Approved Manager unless, within three months of the date on which he ceased to qualify, the Approved Manager no longer exceeds the prescribed amount, or has submitted an application to the FSC to be licensed under SIBA.

Directors and senior officers

Where an Approved Manager is a body corporate, it must have at least two directors, one of whom must be an individual, at all times, and notify the regulator immediately if this is not the case. (In the case of an Approved Manager constituted as a limited partnership, such partnership must, at all times, have at least one general partner).

Authorised representative

Approved Managers are required to have an authorised representative (being a person in the BVI licensed to operate as an authorised representative).

Auditors and audited financial statements

An Approved Manager is not required to appoint an auditor. However, the Approved Manager must submit financial statements and, where necessary, ensure that the notes to the financial statements give a true and fair view of the matters to which they relate.

Financial statements must be submitted to the FSC within six months of the end of the financial year to which they relate and must comply with prescribed accounting standards.

Financial statements must be signed by a director or, in the case of a partnership, a general partner of the Approved Manager and must be accompanied by a director's certificate, a report on the affairs of the Approved Manager made in respect of the relevant financial year and any other documents that may be prescribed by the Regulations. For the purposes of the Guidelines, a director's certificate may be completed by a general partner where the Approved Manager is established as a partnership and any such certificate shall be construed as a valid certificate. Walkers can provide the form of directors' certificate from the Approved Forms Guidelines, if necessary.

An Approved Manager who has not conducted any business activity during a particular year may apply in writing, to the FSC during the period when the financial statements are due, or any period of extension, for an exemption from preparing and submitting financial statements for that year.

An Approved Manager who has conducted business during a particular year but forms the view that it has good reason not to be required to submit financial statements in respect of that year may apply, in writing to the FSC, at least three months before the financial statements are due, for an exemption from preparing and submitting financial statements for that year.

The FSC, upon receipt of a written application above, may grant an Approved Manager an exemption from preparing and submitting financial statements once it can satisfy itself that the Approved Manager has not conducted any business activity for the year the exemption is being sought, or provided good reason why it should not be required to prepare and submit financial statements for the year in question, as the case may be.

Annual financial statements must comply with any of:

  1. International Financial Reporting Standards (IFRS);
  2. UK Generally Accepted Accounting Principles (GAAP);
  3. US GAAP;
  4. Canadian GAAP; or
  5. International recognised and generally accepted accounting standards "equivalent to" the standards in (1) – (4), as determined by the directors and approved by the FSC.

Filing of annual returns

An Approved Manager must file with the FSC, no later than 31 January each year, a return in the prescribed form:

  1. stating that it is not in breach of the requirements of the Regulations that entitle it to continue as an Approved Manager;
  2. confirming that each director and senior officer of, and shareholder with a significant interest in, the Approved Manager is fit and proper; and
  3. providing, as at the 31st day of December of the preceding year, details of:
    1. the persons for which it provides services;
    2. the assets under management of each person for which it acts;
    3. the number of investors in each person for which it acts; and
    4. any significant complaints received by the approved manager.

The Authorised Representative should be able to assist you with such filing.

Other general obligations and notifiable events

If at any time after being approved, the information provided by an Approved Manager in its application for approval changes, the Approved Manager is required to notify the FSC in writing of the change and provide all relevant details. Such notification must be made within fourteen days of the change and must be accompanied by a written declaration stating whether the change complies with the requirements of the Regulations.

An Approved Manager is also required to notify the FSC of any matter related to the Approved Manager or the Approved Manager's conduct of its relevant business activities which may have a material impact or significant regulatory impact on the Approved Manager or its relevant business.

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