The British Virgin Islands Financial Services Commission has announced the creation of a new Annual Return regime for BVI investment funds.
The British Virgin Islands Financial Services Commission has announced the creation of a new Annual Return regime for BVI investment funds. Comparable to the system launched two years ago by the Cayman Islands, the new Annual Return replaces the Mutual Funds Survey in which funds have been invited to participate since 2004.
Completion of the Annual Return is voluntary for the year ending December 31, 2007 but the BVI regulator has said that participation will be mandatory as of the following year. Although the enacting legislation is not yet in place, funds should begin making preparations in order to be able to complete the return for the 2008 calendar year, which will be due no later than June 30 next year, according to BVI law firm Harney Westwood & Riegels.
‘We recommend that fund managers take the opportunity now to ensure that their own systems and those of the fund’s administrator are able to generate the information required to be disclosed in respect of the 2008 reporting period,’ says Ross Munro, BVI head of investment funds at Harneys.
‘Subject to the enacting legislation coming into force, failure to complete the Annual Return for the 2008 reporting period may lead to enforcement action being taken by the Financial Services Commission including the application of administrative penalties. Also, any licensee is subject to enforcement action if it provides the FSC with false, inaccurate or misleading information.’
Harneys says the requirement to file an Annual Return applies to all funds licensed under the 1996 Mutual Funds Act, comprising private, professional and public funds, but not funds that fall outside the scope of the legislation, such as closed-ended vehicles.
The Annual Return requires each fund to report annually its basic prudential and governance information and summary financial information including details of its asset allocation. The return does not require disclosure of any information regarding the identity of investors or of specific investments held by the fund. The reporting period for the return is the calendar year, regardless of the financial year operated by the fund.
The summary financial information to be disclosed includes opening NAV, total subscriptions and total redemptions, net income or loss, dividends and distributions, summary expenses and closing NAV. Each fund is also required to disclose its asset allocation by product and jurisdiction.
The form of the Annual Return along with the regulator’s guidance notes is available at www.bvifsc.vg. Harneys says the Commission has indicated that an electronic reporting system should be in place for the 2008 reporting period, which will allow the information to be input and submitted online.
The return includes a declaration that the information represents a true and fair view of the fund’s position as at the reporting date, which must be signed by a director, officer or other authorised representative of the fund. Harneys notes that although the declaration’s ‘true and fair view’ representation is akin to a traditional audit opinion, the information is not required to be audited.
The regulator says the information gathered will be used for statistical and compliance purposes only and will not be shared outside the Commission except on an aggregated basis or as required by law. Completed Annual Returns will not be available to the public.
The Annual Return is designed to enable the BVI to benchmark its fund industry, to conform with international reporting standards, and to enable the regulator to gather financial information that may assist with the strategic development of the BVI funds industry.
Although the initial return for 2007 is voluntary, the Commission ‘strongly urges and recommends’ completion of the Annual Return for the year ending December 31, 2007, in order for funds and their managers to become familiar with the new reporting requirements. Harneys recommends that funds work on the basis that completion of the Annual Return will be mandatory for the 2008 reporting period and thereafter.
