The British Virgin Islands has written the Securities & Investment Business Act into law, which is designed to strengthen the legal and regulatory support for funds incorporated on the islands.

The act replaces the Mutual Funds Act, 1996.

According to the authorities, the enactment of SIBA does not materially change the regulation of BVI funds, but merely codifies “existing BVI Financial Services Commission policies which have developed over recent years in line with evolving international standards.”

The act introduces an investment business licence regime to regulate entities conducting investment business in or from the BVI; it also adopts restrictions on, and regulations for, the making of “public issues of securities” into the BVI, and introduces a market abuse regime.

Among the specific changes the act makes are:

A requirement for BVI funds to have at least two directors

A requirement for BVI funds, licensed managers and licensed administrators to appoint a BVI resident authorised representative

A change in the minimum initial investment by investors investing in professional funds to $100,000

A requirement for professional and private funds intending not to appoint an investment manager, administrator or custodian (functionaries) to apply to the FSC for an exemption

A requirement for seven days prior notification of a proposed appointment to a functionary of a private or professional fund, unless the commission agrees to accept a shorter notice period

A change in the timeframe in which professional funds are able to commence business before receiving recognition from the FSC; professional funds can now commence business up to 21 days before receiving FSC recognition, provided the application for recognition is submitted to the FSC for consideration within 14 days of the launch date (previously under the Mutual Funds Act, 1996, a professional fund could commence business for up to 14 days before receiving FSC recognition).