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Industry Updates

New Regulatory Regime for Closed-Ended Funds in the British Virgin Islands

17 Mar 2020

The Securities and Investment Business Act, 2010 ("SIBA") has been amended by the Securities and Investment Business (Amendment) Act, 2019 to introduce a new regulatory regime for closed-ended funds (termed private investment funds) in the British Virgin Islands ("BVI").

The amendments to SIBA and the related Private Investment Funds Regulations, 2019 (the "Regulations"), have been implemented as a response to European Union ("EU") and other international recommendations and reflect the BVI's continued commitment to retain its status as a co-operative jurisdiction.

In recognition of the jurisdiction's compliance with EU standards for tax transparency, fair taxation and anti-base erosion and profit shifting, the BVI was confirmed as being on the EU list of fully cooperative tax jurisdictions.  This follows a decision made by the EU Finance Ministers at the Economic and Financial Affairs Council meeting on 18 February 2020.

What is a private investment fund?

A private investment fund ("PIF") is defined as a company, partnership, unit trust or any other body that:

(a) collects and pools investor funds for the purpose of collective investment and diversification of portfolio risk; and

(b) 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 in a part of the net assets of the company, partnership, unit trust or other body.

Recognition Process and Timing

Subject to certain exceptions, any BVI company, partnership, trust or any other body that operates as a PIF will need to apply to the Financial Services Commission (the "FSC") for recognition and will be subject to the ongoing requirements of SIBA and the Regulations.

PIFs in existence prior to 1 January 2020 have until 1 July 2020 to apply to be recognised by the FSC.

New PIFs must apply for recognition within 14 days of commencing business and are permitted to operate for up to 21 days without being recognised by the FSC, provided they comply with all other provisions of SIBA and the Regulations applicable to PIFs.

Requirements for Eligibility

The FSC will recognise a PIF if it is satisfies the following conditions:

(a) it is incorporated, registered, formed or organised under the laws of the BVI or of a country outside the BVI;

(b) its constitutional documents specify that:

(i) it is not authorised to have more than 50 investors; or

(ii) an invitation to subscribe for, or purchase fund interests shall be made on a private basis only; or

(iii) the fund interests shall be issued only to professional investors with a minimum initial investment (other than for certain exempted investors) as may be prescribed in the Regulations (such amount currently being US$100,000);

(c) it meets such criteria as may be specified in the Regulations;

(d) upon recognition, it will be compliant with SIBA, the Regulations and any applicable practice directions; and

(e) it is not against the public interest to recognise the PIF.

Key Regulatory Obligations

In addition to the requirement to be recognised by the FSC, PIFs must:

(a) operate in accordance with any restrictions on numbers or types of investors or in the offering of interests as may be prescribed in its constitutional documents;

(b) offer fund interests using an offering document or a term sheet;

(c) maintain a clear and comprehensive policy for the valuation of fund property with procedures that are sufficient to ensure that the valuation policy is effectively implemented;

(d) appoint an authorised representative in the BVI;

(e) prepare and submit audited financial statements within six months of the end of the financial year end, subject to any extension or exemption; and

(f) comply with the various notification requirements set out in the Regulations.

Related Legislative Changes

The Anti-Money Laundering Regulations 2009 have been amended to include PIFs within the definition of a 'Relevant Person'.  This means that PIFs are required to comply with the same anti-money laundering standards and obligations that already apply for open-ended funds.


Although closed-ended funds now fall under a new regulatory regime, the eligibility requirements, application process and ongoing regulatory obligations are very similar to the regime that has applied to open-end 'professional and private funds' for many years in the BVI and are not considered to be onerous.  As such, we do not expect the regime to require significant changes to the way closed-end funds typically operate in practice.

The Maples Group can assist with the application process for existing PIFs to be recognised by the FSC prior to the 1 July 2020 deadline. 

If you would like further information, please contact your regular Maples Group contact or any of the contacts listed below. 


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Advising on the laws of the BVI, the Cayman Islands, Ireland, Jersey and Luxembourg, our global Funds & Investment Management team provides expert legal advice on every aspect of the life cycle of an investment fund including set up, management and investment across a broad range of fund structures and management entities.  

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Risk management and regulatory compliance have become key priorities for clients with both regulators and investors demanding greater transparency and enhanced reporting. Compliance with these obligations means ensuring a clear understanding of the ongoing requirements and often the aggregation, calculation, maintenance, reconciliation and submission of extensive data sets to various parties on a regular basis. The Maples Group has unrivalled expertise in regulatory matters, particularly in the field of anti-money laundering and counter-terrorist financing. We pride ourselves on our established relationships with regulatory bodies and have had significant involvement with the development of financial services law and policy both locally and internationally. Our ability to draw on this experience enables us to provide prompt, pertinent and clear advice that adds real value and helps our clients determine how best to maintain compliance across multiple jurisdictions.