Guide to ongoing obligations for BVI private investment funds

A private investment fund (PIF) is defined as:

a company, a partnership, a unit trust or any other body that is incorporated, registered, formed or organised, whether under BVI law or the laws of any other country, which:

• collects and pools investor funds for the purpose of collective investment and diversification of portfolio risk
• issue 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

Eligibility criteria

To be eligible to be recognised as a PIF, the following eligibility criteria must be satisfied:

• the fund must be lawfully incorporated, registered, formed or organised (whether in the BVI or elsewhere)
• the fund's constitutional documents must specify:
  • that the fund is not authorised to have more than 50 investors, or
  • that an invitation to subscribe for or purchase, fund interests issued by the fund must be made on a private basis only, or
  • that fund interests shall be issued only to professional investors, with an initial investment of each professional investor, other than an exempted investor, not being less than US$100,000
• the fund must satisfy such other criteria as may be specified for recognition of a private investment fund in the Private Investment Funds Regulations, 2019 (the PIF Regulations)
• the fund will, on being recognised, be in compliance with SIBA, the PIF Regulations and any practice directions applicable to the fund
• recognising the fund as a private investment fund is not against the public interest

A PIF's offering document / term sheet must clearly indicate that:

• the fund is recognised by the FSC as a private investment fund (including the relevant eligibility criteria)
• the investment objective of the fund
• a written statement that investors do not have the right to redeem or withdraw fund interests on demand
• the names and addresses of the appointed persons for the fund
• any fees to be paid by the fund
  
  

Where a PIF has not issued or does not intend to issue an offering document or a term sheet, the application to the FSC must state the reason why the fund does not intend to issue an offering document or term sheet and how information concerning the fund and any invitation or offer will be provided to investors or potential investors.

What this means from a practical perspective is that where a PIF opts not to issue an offering document or term sheet, the required regulatory disclosures will need to be contained elsewhere in the constitutional documents and / or subscription agreement.

A PIF is required to maintain a clear and comprehensive valuation policy and such valuation policy should be:

• appropriate for the nature, size, complexity, structure and diversity of the fund and fund property
• consistent with the provisions concerning valuation contained in its constitutional documents and offering document or term sheet
• require valuations to be undertaken on an annual basis
• include procedures for preparing reports on valuation of fund property
• specify the mechanics in place for disseminating valuation information and reports to investors

A PIF must submit an application to the FSC for recognition within 14 days of commencing business.  

Prior to receiving its certificate of recognition, a PIF may carry on business for a period not exceeding 21 days.

An application for recognition as a PIF must be accompanied by the following:

• a completed prescribed application form
• a copy of the fund's certificate of incorporation, formation or registration (as applicable)
• a copy of the fund's constitutional documents (memorandum and articles of association / limited partnership agreement (as applicable))
• a copy of the offering document / term sheet
• the register of directors of the company
• a resume / biography for each director, general partner, trustee or underlying individual where the director, general partner or trustee is a corporate entity
• the fund's valuation policy
• auditor's "consent to act" letter

FSC application fee of US$850.

FSC approval fee of US$1,200.

Actions required / notes

A PIF structured as a company shall have at least two directors, at least one of whom shall be an individual. There is no requirement for the directors to be resident in the BVI.

Applying the FSC's "four eyes" principle, where one director is an individual and the other director is a corporate entity, it will be necessary to demonstrate that the individual director is functionally independent of the corporate director.

A PIF structured as a limited partnership must appoint a general partner. The FSC has confirmed that it does not require the general partner to have at least two directors (or equivalent officers).

A PIF shall at all times have an appointed person (the Appointed Person) responsible for undertaking each of the following:

• management
• valuation
• safekeeping of fund property
  
  

An Appointed Person may be:

• a person licensed by the FSC or a regulatory authority in a recognised jurisdiction to perform the specified functions
• an independent third party with the experience in performing the specified functions
• a director, partner or trustee of the PIF 
  
  

The Appointed Person responsible for the management function must be independent from the Appointed Person responsible for the valuation process, except where that PIF determines that the management and valuation functions "must be" performed by the same Appointed Person.

In which case, as noted above, the fund shall identify, manage and monitor any potential conflicts of interest, disclose to investors that the Appointed Person responsible for the fund's management function is also the Appointed Person responsible for the valuation of fund property and details of how many potential conflicts of interest will be managed.

A PIF must have at all times an "authorised representative" in the BVI to act as the main intermediary between the fund and the FSC to:

• accept services of notices and other documents
• keep such records (or copies thereof) as may be prescribed
• submit all documents required and pay all fees payable to the FSC

A PIF must prepare and file audited financial statements with the FSC within six months after each financial year end (subject to such extension as the FSC may allow).

The financial statements must be audited in accordance with an approved accounting standard (IFRS, UK GAAP, US GAAP, Canadian GAAP or such other account standard as is equivalent to these accounting standards).

An exemption from the requirement to prepared audited financial statements is available in limited circumstances, upon application to the FSC.

A PIF is required to maintain financial records that:

• are sufficient to show and explain its transactions
• at any time enable its financial position to be determined with reasonable accuracy
• enable it to prepare such financial statements and make such returns as it is required to prepare and make under the Securities and Investment Business Act, 2010 (as amended) (SIBA) and the PIF Regulations
  
  

Such financial records are required to be maintained for a period of at least five years after completion of the transaction to which they relate.

On an annual basis, a PIF must pay:

• an annual recognition fee to the FSC of US$1,200, which is payable by 31 March each year
• an annual registry fee to the Registrar of Corporate Affairs in the BVI which is currently US$1,350 if the fund is authorised to issue in excess of 50,000 shares and US$550 if the fund is authorised to issue less than 50,000 shares, which is payable by 31 May or 30 November each year (depending on when the fund was incorporated)
• in respect of a limited partnership established under the laws of the BVI, an annual registry fee to the Registrar of Corporate Affairs which is currently US$750

A PIF shall provide written notice to the FSC in accordance with the PIF Regulations of:

• the appointment of a director, authorised representative or auditor
• a director, authorised representative or auditor ceasing, for whatever reason, to hold office
• any change in the address of the fund's place of business, whether in or outside the BVI
• any material change in the nature and scope of the fund's business, in the case of a fund incorporated, constituted, formed or organised under the laws of a country outside the BVI
• any amendment to the fund's constitutional documents
• the issuance of an offering document or a term sheet that was not provided to the FSC with the fund's application for recognition
• the amendment of any offering document or term sheet previously provided to the FSC, whether with its application or in accordance with the preceding paragraph
• any amendment to the fund's valuation policy
  
  

Notification of the matters specified above shall be provided within 14 days of the occurrence of the matter in respect of which notice is given.

A PIF must provide the FSC with at least seven days prior notification for the appointment of an Appointed Person.

A PIF must notify the FSC within seven days after an Appointed Person resigns, is terminated or ceases to act. The notification must include a statement of the reason for the Appointed Person ceasing to act.

Annual FATCA / CRS reporting should be filed by 31 May of each year on the International Tax Authority's reporting portal (BVIFARS).

The PIF should also initially register on BVIFARS as soon as possible following incorporation / formation.

By anniversary of incorporation date – as a BVI fund, undertaking "Investment Fund Business", the fund will not be undertaking "relevant activities" and the self-certification will confirm this. 

The PIF's registered agent should be instructed to make this filing on the PIF's behalf upon receipt of written confirmation of all necessary information from the PIF.

The PIF must comply with the requirements set out in section 96A of the BVI Business Companies Act, 2004 (as amended) or section 53B of the Limited Partnership Act, 2017 (as amended) (as relevant) and associated BVI Business Companies and Limited Partnerships (Beneficial Ownership) Regulations, 2024 to collect, keep and maintain beneficial ownership information.