Update on Mutual Fund Legislation

• Clients are reminded again that all BVI mutual funds, (i.e. private, professional and public funds recognised or registered under the BVI Mutual Funds Act, 1996), are required to submit a return in the prescribed form to the BVI Financial Services Commission, (“FSC”).  The period to be covered in the return is the calendar year up to 31 December 2008.
  
  At the time of writing, the necessary legislation to make the return mandatory has yet to be passed into law.  The deadline for completion is 30 June 2009, and we continue to urge clients to treat the filing as mandatory.  When the legislation has been passed, failure to complete a return may render a fund liable to administrative penalties and/or enforcement action.
  
  Also in the investment business arena, the FSC have recently issued drafts of the Securities & Investment Business Act, 2009, (“SIBA”), and Mutual Funds Regulations, 2009, (“MFR”), for public consultation.  The intention is that SIBA and the MFR will become law later in 2009 - the draft legislation is available on the FSC website, (www.bvifsc.vg).
  
  SIBA proposes a new investment business licensing regime to regulate investment advisers, custodians, broker-dealers, etc., and also restrictions on, and regulation of, public issues of securities.  
  
  More relevant to our clients, the Mutual Funds Act, 1996 will be repealed and replaced with Part III of SIBA and the MFR.  These are very similar to the current Mutual Funds Act, and propose to maintain the two-tier regulatory regime, with a clear distinction between the regulatory requirements for private and professional funds, as opposed to public funds.  Many of the proposed changes simply codify established FSC practice.