AUDITED ACCOUNTS – 30 JUNE 2016
FUND ANNUAL RETURN – 30 JUNE 2016
RECORD KEEPING – ONGOING
AEOI – ONGOING
TIGHTENING ATTITUDE OF THE COMMISSION TO LATE FILINGS
During the past year we have seen that the British Virgin Islands ("BVI") Financial Services Commission (the "Commission") has become increasingly strict with payment and filing deadline contraventions and we have seen a number of administrative penalties levied and other enforcement action taken in respect of late filing of annual returns, failure to obtain the prior consent of the Commission (where required) and changes to functionaries. We expect this trend to continue with further penalties and potential enforcement action by the Commission for non-compliance, in particular in relation to late filing of annual returns and annual accounts.
As such, we recommend that all regulated entities ensure that their audited financial statements and annual returns, as applicable, are submitted to the Commission prior to 30 June 2016. In addition, we recommend that all regulated entities review their procedures for identifying changes that require notifications to or approvals of the Commission and to undertake a review of their current status with the Commission, with a view to bringing all requisite filings up to date before 30 June 2016.
AUDITED FINANCIAL STATEMENTS FOR FUNDS AND LICENSEES
Pursuant to the Securities and Investment Business Act, 2010 ("SIBA") and the Mutual Funds Regulations, 2010, all BVI private, professional and public funds ("Funds") and all BVI investment business licence holders ("Licensees") are required to appoint, and at all times have, an auditor for the purposes of auditing their financial statements, unless expressly exempted from this requirement.
All Funds and Licensees are required to submit a copy of their audited financial statements to the Commission within six months of the end of each financial year. Funds and Licensees with a financial year ending on 31 December are therefore required to submit their audited financial statements for the 2015 financial year to the Commission on or before 30 June 2016.
Funds and Licensees could be faced with administrative penalties and/or enforcement action if they fail to meet the deadline.
Funds, Licensees, Approved Funds and Approved Managers must prepare financial statements for each financial year in accordance with one of the prescribed accounting standards1 or internationally recognised and generally accepted accounting standards equivalent to such prescribed accounting standards.
Exemptions and Extensions
Funds and Licensees which have not appointed an auditor will need to make a written application to the Commission for an exemption from the requirement to appoint an auditor and submission of audited financial statements. Alternatively, Funds and Licensees which are not in a position to file the audited financial statements by the annual filing deadline may apply to the Commission for an extension. The Commission may, in normal circumstances, grant a maximum extension of up to nine months following the end of the relevant financial year. Please note that in respect of a Licensee an application for exemption must be submitted to the Commission at least three months prior to the relevant filing deadline. Please liaise with your usual Maples and Calder contact or one of the individuals listed above.
Approved Funds and Approved Managers
All Approved Funds under the Securities and Investment Business (Incubator and Approved Funds) Regulations, 2015, and all Approved Managers under the Investment Business (Approved Managers) Regulations, 2012, are required to submit a copy of their financial statements to the Commission within six months of the end of each financial year. Approved Funds and Approved Managers with a financial year ending on 31 December are therefore required to submit their financial statements for the 2015 financial year to the Commission on or before 30 June 2016.
Approved Funds and Approved Managers are not required to appoint an auditor but must submit financial statements to the Commission in accordance with SIBA and which comply with required accounting standards as noted above.
In addition, all Approved Funds and Approved Managers are required to submit an annual return to the Commission, in the prescribed form, no later than 31 January each year. Please liaise with your usual Maples and Calder contact or one of the individuals listed above for further details on the annual return requirement.
Other types of funds that are not registered or recognised under SIBA, for example closed-ended funds domiciled in the BVI, are not required to prepare or submit audited financial statements to the Commission.
Procedure for Submission
Funds, Licensees, Approved Funds and Approved Mangers should submit their financial statements to the Commission through their appointed authorised representative, Maples Authorised Representative Services (BVI) Limited.
ANNUAL RETURNS FOR FUNDS
All Funds are subject to an annual reporting regime under which a mutual fund annual return ("MFAR") must be submitted to the Commission.
Information to be disclosed in the MFAR
Each Fund must report on the following:
(a) Basic prudential and governance information, which includes information on its registered agent and functionaries.
(b) Summary financial information for the relevant reporting period, which includes: opening NAV, total subscriptions, total redemptions, net income/net loss, dividends/distributions, ending NAV and year-end gross assets.
Asset allocation details are also required, but there is no need to set out specific details of individual investments. Details of investors do not have to be disclosed in the MFAR.
When do MFARs need to be filed?
The reporting period for the MFAR is every calendar year, ending on 31 December. Funds are required to submit the MFAR within six months of the end of each reporting period, i.e. on or before 30 June.
Purpose of MFARs
The Commission intends to use the information filed in the MFAR to measure and develop the BVI funds industry whilst at the same time meeting international reporting standards. We understand that the Commission will not make the MFAR publicly available, but may share information gathered from the MFAR on an aggregate basis.
Filing Procedure for the MFAR
The MFAR must be submitted to the Commission electronically.
If you have not previously filed your MFAR electronically then you will need to register as a new user on the Commission's website and obtain log in details by email.
BVI Financial Services Commission Guidance Notes
If you require assistance with the MFAR please liaise with your usual Maples and Calder contact or one of the individuals listed above. You may also contact the Commission directly.
ENHANCED RECORD KEEPING REQUIREMENTS
Since 2005, BVI business companies have been required under the BVI Business Companies Act, 2004 to keep records that are sufficient to show and explain the company's transactions and that enable the financial position of the company to be determined with reasonable accuracy at any time. These statutory record keeping requirements on companies remain in force and have now been applied to BVI limited partnerships by way of an amendment to the Partnership Act, which came into force in November 2012. BVI companies and partnerships remain entitled to adopt accounting standards appropriate to them in the jurisdictions in which they operate, provided the minimum transparency standard discussed above is met.
The records and underlying documentation that BVI companies and limited partnerships are required to keep must now be kept for a period of at least five years, following the enactment of the Mutual Legal Assistance (Tax Matters) Act, 2012 which also came into force in November 2012. The five year period starts on the date of completion of the transaction to which the records and underlying documentation relate, or the termination of the business relationship to which they relate.
The records and documentation of a company or a limited partnership are not required to be kept in the BVI. However, the company or limited partnership must notify its registered agent of the physical location of its records and underlying documentation.
As an additional requirement, all BVI business companies must notify the registered agent of the identity of the natural person who maintains and controls the company's records and underlying documentation. Changes to either the location or person maintaining and controlling the records and documentation must be notified to the registered agent within 14 days of any change. As such, all Funds that are formed as companies or limited partnerships are required to notify their registered agent in the BVI of the location of the financial records and documents of the Fund and, in the case of companies, the person who maintains and controls those records.
If you have not already done so, please notify us of the location of the records and documents and, where relevant, the identity of the person who maintains and controls the records and underlying documentation as soon as possible either through your usual Maples and Calder contact or one of the individuals listed above.
As a reminder, all reporting Financial Institutions have obligations to conduct due diligence and report to the BVI's International Tax Authority (the "ITA") under the Mutual Legal Assistance (Tax Matters) Act, 2003 (as amended) in respect of Reportable Accounts pursuant to US FATCA, UK FATCA / UK CDOT and the OECD's Common Reporting Standard ("CRS"). We have issued separate updates regarding the detail of the obligations but, in summary, all Funds should ensure that they comply with the following deadlines, as they apply to them:
31 May 2016
- Second reporting deadline for US FATCA – reporting on US Reportable Accounts for 2015
- ARR returns required to be submitted to the ITA in respect of UK FATCA / UK CDOT
10 June 2016
- Deadline for enrolment on the BVI FARS portal for UK FATCA / UK CDOT where not enrolled for US FATCA
29 July 2016
- First reporting deadline for UK FATCA / UK CDOT – reporting on UK Reportable Accounts for 1 July 2014 to 31 December 2015
31 December 2016
- Deadline for completing due diligence on High Value Individual Accounts for CRS reporting for 2016
30 April 2017
- Deadline for enrolment on BVI FARS portal for CRS where not enrolled for US FATCA or UK FATCA
31 May 2017
- First reporting deadline for CRS – reporting on relevant Reportable Accounts identified as such for the period 2016
- Third reporting deadline for US FATCA – reporting on US Reportable Accounts for 2016
- Second reporting deadline for UK FATCA – reporting on UK Reportable Accounts for 2016
31 December 2017
- Deadline for completing due diligence on Low Value Individual Accounts and Entity Accounts for CRS
(a) The International Financial Reporting Standards, promulgated by the International Accounting Standard Board;
(b) UK GAAP;
(c) US GAAP;
(d) Canadian GAAP; or
(e) Such other recognised international accounting standards as may be approved by the Commission on a case by case basis.