This week the British Virgin Islands (BVI) introduced its Investment Business Regulations that provide private fund managers a lite touch regulatory regime.
The rules, which have no capital requirement or indemnity insurance provisions on funds, mean that managers can become registered with authorities within a week.
The reforms will be a boon for the industry as the previous regime resulted in the island’s regulator, the Financial Services Commission, typically needing about three months to register a manager, according to market sources.
“A manager wishing to use a BVI company to manage an unregulated BVI private fund previously had to go through a disproportionate level of checks to obtain a license for the management vehicle,” said in an interview Philip Graham, partner at offshore law firm Harneys. “The new approved manager regime will make the process far quicker and much more cost efficient.”
He added that the new regime is a huge advantage because often managers wanting to place money in a new fund could do that very quickly, but if they wanted to manage the fund from the BVI, then there would often be a timing issue.
The regime was drafted to be a “licensing regime” rather than an entirely exempted activity, according to sources, and the island’s securities regulator will have powers to take enforcement action against managers found to be in violation of the rules.
The regime however may not be suitable for all managers. Despite being able to run as many funds as they wish, GPs are subject to an aggregate cap – meaning a manager cannot have more than £1 billion (1.2 billion; €$1.6 billion) in aggregate assets under management.