British Virgin Islands Regulatory Requirements for Private Investment Funds

The British Virgin Islands (BVI) has introduced a new regulatory regime for closed-ended funds in the BVI, effective December 2019. This regime requires private investment funds (PIFs) to apply to the Financial Services Commission of the BVI (FSC) for recognition and regulation.

What is a Private Investment Fund?

Definition

A PIF is defined as a company, partnership, or unit trust that collects and pools investor funds for collective investment and diversification of portfolio risk. A PIF issues fund interests, which entitle the holder to receive an amount computed by reference to the value of a proportionate interest in the whole or part of the net assets of the company, partnership, or unit trust.

Key Requirements

Eligibility Criteria

• A PIF must have at least two directors (or the general partner in the case of a limited partnership or trustee in the case of a unit trust).
• The PIF must maintain financial records to explain its transactions.
• The audited accounts of a PIF must be filed with the FSC within 6 months of the PIF’s financial year end.
• A PIF must notify the FSC upon the occurrence of certain events, including changes in directors or appointed persons.

Consequences of Breach

Schedule 7 of the Securities and Investment Business Act (Revised Edition 2020), as amended, sets out the monetary penalties for offences related to a PIF. These include fines for carrying on business as a PIF without recognition by the FSC and for failing to maintain financial records.

Further Assistance

This publication is not intended to be a substitute for specific legal advice or a legal opinion. If you require further advice relating to BVI Private Investment Funds, please contact us.