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Offshore Mutual Funds
I. Introduction
IV(a). Regulation of BVI Mutual Funds - The Mutual Fund Act 1996
The BVI Mutual Fund Act (as amended, extensively, by the Mutual
Fund Amendment Act 1997) (together "the Act") is in force effective
January 2, 1998. The Act deals with five principal areas, as follows:
IV(b). Registration of Public Funds
A public fund is a mutual fund the shares of which are offered
to the general public. Public funds must be registered, or have
consent to registration under a pre-filing procedure, before carrying
on business or engaging in any activity in the BVI. A public fund
must issue and file a prospectus including the information required
by the Act and must produce and distribute audited annual financial
statements. Registration is at the discretion of the
Minister/Registrar of Mutual Funds. The registration application
includes details of all directors and professionals involved in the
management of the fund, as the Registrar will wish to ensure that
these are all fit and proper persons.
The Act requires a public fund's prospectus to make full
disclosure of all matters affecting the price or value of the shares
being offered. However, the disclosure requirements are not as
burdensome as those typically found under U.S., U.K. or similar
securities legislation. Prospectuses are, therefore, typically much
shorter.
In the event of any misrepresentation in the prospectus of a
public fund, investors have the right to rescind their purchase, or
recover damages. However, the investor must commence any action
within 6 months after becoming aware of the misrepresentation and
within 1 year after the shares were purchased. Furthermore, damages
will be limited to the public offering price of the shares, plus fees
and charges paid.
IV(c). Recognition of Non-Public Funds
A non-public fund is a mutual fund the shares of which are not
deemed to be offered to the general public. In the future, there are
likely to be several classes of non-public funds, although presently
not all have been defined. Two particular classifications will be
the "private" fund and the "professional" fund:
IV(d). Mutual Fund Management and Administration
All managers or administrators of mutual funds in the BVI must be
licensed by the Government. In order to obtain a license, the
applicant must show, among other things, that it has the financial,
human and administrative resources and facilities necessary for the
competent and efficient conduct of its business. Where the manager
is either a non-resident BVI IBC or a subsidiary of a manager
licensed in another approved, regulated jurisdiction, a simplified
application process is available.
IV(e). Registrar of Mutual Funds
The Registrar is responsible for supervising all licensed persons
and mutual funds, processes all applications for licenses,
registration and recognition and ensures compliance with the
provisions of the Act. The Registrar of Mutual Funds will maintain
public records, listing the basic details of all private funds,
public funds and licensed managers and administrators. The Registrar
also collects the annual fees payable by each fund and licensed
person ($500 for a public fund $350 for a recognized private or
professional fund).
IV(f). Transitional Provisions
All existing mutual funds that are incorporated in the BVI, or
that are administered in the BVI (wherever incorporated), will need
to make the appropriate filings with the Registrar of Mutual Funds,
within a transitional period of nine months after the Act came into
force. All existing mutual fund managers and administrators that are
incorporated or operate in the BVI will need to obtain a license
within three months after the Act came into force.
I. Introduction
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