application to british virgin islands funds

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Global Legal Solutions

Application to British Virgin Islands Funds

IntroductionThis factsheet is aimed primarily at non-EU managers of British Virgin Islands fund vehicles.

Please also refer to our fact sheet: Third Country Requirements – Selling under the National Private Placement Regimes, for information on exemptions, and also transparency and disclosure requirements which may apply to managers of British Virgin Islands funds under AIFMD.

PreconditionsPrior to British Virgin Islands funds being marketed in the European Economic Area (“EEA”), certain pre-conditions specified in the AIFMD must be met:

>> Co-operation agreements must be in place between the competent authorities in the EEA member states where the British Virgin Islands fundis to be marketed and the regulators in the countries where the British Virgin Islands fund (ie. British Virgin Isalnds) and the non-EU managerare established.

As at the date of this factsheet, the British Virgin Islands Financial Services Commission (“FSC”) has entered into cooperation agreements with the following 25 regulators of the EU and the broader EEA, and is in the process of finalising agreements with the remaining EU Members States:

AIFMD Factsheet

>> Belgium (Financial Services and Markets Authority)

>> Bulgaria (Financial Supervision Commission)

>> Cyprus ( Cyprus Securities and Exchange Commission)

>> Czech Republic (Czech National Bank)

>> Denmark (Finanstilsynet)

>> Estonia (Estonian Financial Supervision Authority)

>> Finland (Finanssivalvonta)

>> France (Autorité des marchés financiers)

>> Greece (Hellenic Capital Market Commission)

>> Hungary (Pénzügyi Szervezetek Állami Felügyelete)

>> Iceland (Fjármálaeftirlitið)

>> Ireland (Central Bank of Ireland)

>> Latvia (Finanšu un kapitala tirgus komisija)

>> Liechtenstein (Finanzmarktaufsicht)

>> Lithuania (Bank of Lithuania)

>> Luxembourg (Commission de Surveillance du Secteur Financier)

>> Malta (Malta Financial Services Authority)

>> Norway (Finanstilsynet)

>> Poland (Polish Financial Supervision Authority)

>> Portugal (Comissão do Mercado de Valores Mobiliários)

>> Romania (Financial Supervisory Authority)

>> Slovak Republic (Národná banka Slovenska)

>> Sweden (Finansinspektionen)

>> The Netherlands (Autoriteit Financiële Markten)

>> UK (Financial Conduct Authority)

http://www.walkersglobal.com/images/AIFMD/AIFMD-Third-Country-RequirementsPost-July-2013.pdf




Walkers will keep clients updated as and when additional cooperation agreements are finalised with the outstanding European regulators.

U.S. based asset managers should note that the US Securities and Exchange Commission has also announced that it has concluded memoranda of understanding with 25 EU and 3 EEA member state regulators.

>> Neither the British Virgin Islands fund nor the non-EU manager can be established in a FATF blacklisted jurisdiction. The British Virgin Islands is not a FATF blacklisted jurisdiction, so this pre-condition has been satisfied in relation to British Virgin Islands funds. >> Should British Virgin Islands funds be permitted to avail of the pan-EU passport in 2015 – 2018, a pre-condition to a British Virgin Islands fund obtaining such a passport will be for a Tax information Sharing Agreement to be in place between the British Virgin Islands and each EU jurisdiction in which the British Virgin Islands fund is to be marketed under the passport. The British Virgin Islands has entered into over 22 Tax information Sharing Agreements, including with a number of key members of the EEA including Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Sweden and the United Kingdom.

Marketing in the EEASubject to entering into the final cooperation agreements with European regulators, the British Virgin Islands will have met the pre-conditions set out in the AIFMD to permit the marketing of British Virgin Islands funds in the EEA post 22 July 2013, under the National Private Placement Regimes (“PPRs”) of the relevant EEA Member States.

It is important to note that the PPRs are optional and that each EEA Member State may impose stricter requirements under their PPRs over and above the minimum AIFMD requirements. This may include full compliance with the AIFMD or conversely a restriction or prohibition of British Virgin Islands funds entirely. It is our understanding that the UK has indicated an intention to continue its PPR to British Virgin Islands funds and that it is in fact extending the grandfathering provisions to such structures (subject to meeting certain criteria), which means that managers seeking to market British Virgin Islands funds in the UK will not have to comply with the minimum AIFMD requirements with respect to those funds until 22 July 2014.

However, other countries, such as Germany, France, Italy and Spain have indicated an intention to restrict British Virgin Islands funds from being sold under their PPRs. Non-EU managers of British Virgin Islands funds intending to market their funds into the EEA will need to take legal advice in each of the EEA Member States in which they intend to market to determine whether such activities are permitted. Walkers is able to arrange introductions to counsel in the EEA and/or obtain advice of counsel in each of the EEA Member States, as required.

If not already done, managers of British Virgin Islands funds intending to market interests in such funds into the EEA will need to be amending offering documents and preparing for ongoing reporting compliance. British Virgin Islands funds managed by a non-EU manager which had EEA domiciled investors prior to 22 July 2013, but which do not intend to market into the EEA after 22 July 2013 will fall outside of the scope of AIFMD and will not need to take any action in relation to AIFMD compliance.

Closed-Ended FundsThe AIFMD definition of what constitutes an AIF is very broad and will capture both British Virgin Islands open and closed ended funds, and all types of strategies, including private equity and property fund structures

Requirement to Register Closed-Ended Funds?British Virgin Islands closed-ended funds are generally outside of the scope of the British Virgin Islands Securities and Investment Business Act, and are therefore not regulated by FSC. There is no specific requirement under the AIFMD for a closed-ended British Virgin Islands fund to be regulated by FSC, however, as a pre-condition to its distribution in the EEA, there must be a co-operation agreement in place between FSC and the regulator of each jurisdiction where the fund is to be marketed in the EEA.




DisclaimerThe information contained in this advisory is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter.

The cooperation agreements entered into by FSC with EEA regulators address “Covered Funds”, which is a broad definition in line with the AIFMD definition of what constitutes an AIF. This definition would bring closed ended funds within the ambit of the cooperation agreements.

Provided there is a cooperation agreement in place between FSC and the regulator(s) in the European jurisdiction(s) in which the fund is to be marketed, the FSC considers that the powers available to it under the Financial Services Act of the British Virgin Islands will allow the FSC to demonstrate that British Virgin Islands closed ended funds would meet the AIMD requirements should they be caught due to their particular circumstances. However, the FSC is continuing its review of requirements in respect of closed-ended funds under the AIFMD.

application to british virgin islands funds

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