Introduction
The British Virgin Islands Financial Services Commission ("FSC") announced on 9 September 2008 the introduction of an annual financial reporting regime, which will require all funds to file a "Mutual Funds Annual Return" each year (the "Return").
The implementation of this annual financial reporting regime takes immediate effect and imposes a regulatory obligation on funds to file a Return for the reporting period ending 31 December 2008 and each year thereafter.
Which funds will be required to file a Return?
The requirement to file a Return applies to all funds which are licensed under the Mutual Funds Act, 1996 and as a consequence, all private, professional and public funds will, going forward, be required to file a Return each year.
Funds which are not subject to licensing by the FSC under the Mutual Funds Act, 1996, through virtue of being close-ended entities, will not be required to file a Return.
What information needs to be disclosed within the Return?
The Return requires funds (or their representatives) to report annually as to their:
- basic prudential and governance information (including providing details of their operating structure; registered agent and registered office; and functionaries); and
- summary financial information (including NAV at the beginning of the reporting period; total subscriptions and total redemptions over the reporting period; increase or decrease in nets assets over the reporting period; dividends/ distributions over the reporting period; NAV at the end of the reporting period; and gross assets at the end of the reporting period), asset allocation (by product and jurisdiction), investment information (ie whether fund is listed and its principal strategies) and expenses (management and performance fees, administration fees and professional expenses paid during the reporting period).
When does the Return need to be filed?
The annual reporting period is the calendar year and so the period ending 31 December.
Funds are required to file their Return within six months of the end of each reporting period.
When does this change take effect?
The implementation of this annual financial reporting regime takes immediate effect.
The FSC is recommending that funds file a Return for the financial year ended 31 December 2007 with the deadline for making this filing being 31 October 2008. However, it should be noted that filing a Return for the reporting period ending 31 December 2007 is a voluntary filing.
For the reporting period ending 31 December 2008 and all future reporting periods, it will be mandatory for a fund to file a Return.
Will the contents of the Return be available to the public?
Importantly, the information submitted by funds in the Return will not be available publicly. The information submitted to the FSC in the Return is for statistical and compliance purposes and will not be shared outside the FSC other than on an aggregate basis or as required by law.
The purpose of the Return is to enable the FSC to gather financial information which will assist it with its strategic development of the BVI funds industry and to enable the BVI to appropriately benchmark its funds industry, whilst also conforming to international reporting standards.
Ogier comment
The introduction of this annual financial reporting regime imposes similar annual financial reporting obligations on BVI funds as are already imposed upon funds in other leading offshore financial jurisdictions, including the Cayman Islands, Guernsey and Jersey, and represents a positive step which demonstrates the growing sophistication of the BVI as an offshore financial centre. In addition it further demonstrates another example of the convergence of laws and financial services regulations amongst the leading offshore financial jurisdictions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
