On December 10, 2012 the Investment Business (Approved Managers) Regulations, 2012 came into force. These regulations ushered in the concept of an Approved Manager.
Approved Manager Regime
The Approved Manager regime permits a BVI company or partnership to conduct business as an investment manager or investment advisor to certain funds without the need for a lengthy approval process. It created a fast-track for approval of fund managers and advisors and also provides a lighter touch regulatory regime for such managers and advisors.
The regime so far has been highly successful, however, the limitation that the fund(s) being managed or intended to be managed had to be a BVI fund or a non–BVI fund investing at least a substantial part of its assets in a BVI fund proved somewhat restrictive for some clients.
In recognition of the restriction and the limitation placed on clients, on January 2, 2014 the Investment Business (Approved Managers)(Amendment) Regulations 2013 (the “New Regulations”) came into force and extended the operating scope of the Approved Manager regime to include managing non-BVI funds.
Prior to the New Regulations, to be eligible as an Approved Manager, the manager had to satisfy the following:
(a) be a BVI company or partnership
(b) manage or intend to manage a BVI private or professional fund
(c) manage or intend to manage a BVI closed-ended fund
(d) manage or intend to manage a Non-BVI equivalent fund that invests at least a substantial part of its assets in a BVI private, professional or closed-ended fund
(e) have assets under management of not more than US$400 million in respect of hedge funds and of not more than U$1 billion for closed-ended funds.
Extension of scope of the Approved Manager Regime
Subsequent to the New Regulations, an Approved Manager can now manage funds from any recognised jurisdiction that has equivalent characteristics to a BVI private or professional fund subject to the assets under management cap in (e) above.
The recognised jurisdictions for these purposes are Argentina, Australia, Bahamas, Bermuda, Belgium, Brazil, Canada, Cayman Islands, Chile, China, Curacao, Denmark, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, Panama, Portugal, Singapore, Spain, South Africa, Sweden, Switzerland, United Kingdom and the United States of America.
The New Regulations also allow an Approved Manager to provide services to a fund that is not from a recognised jurisdiction where it invests all or a substantial part of its assets in a qualifying fund based in the BVI or a recognised jurisdiction.
Advantage of Approved Manager Regime
The Approved Manager regime has the following advantages for fund managers:
1. Setup is quick: a fund manager can commence business 7 days after submitting an application
2. No lengthy approval process: an applicant for approved manager status can expect approval, typically within 30 days of submitting the application
3. Easy and straightforward process: the prospective fund manager must complete and submit a standard form application and submit the supporting documents; however the document burden is not onerous
4. The Approved Manager is a regulated entity, but is not subject to burdensome regulations and filings
5. It is a low cost fund manager and is ideal for startup managers as well as small to medium-sized managers
It is clear that the changes made by the New Regulations will make the BVI Approved Manager regime even more attractive to a significantly broader client base and help to further the growing use of BVI investment funds and investment managers globally.
For further information, please contact Christopher Simpson(csimpson@onealwebster.com) or Mr. Kerry Anderson(kanderson@onealwebster.com).
This Guide is general in scope and is not intended to be comprehensive. It is not a substitute for legal advice.