FSC Guidelines on Custodian and Fund Manager Exemptions for Private and Professional Funds


On March 15, 2012 the BVI Financial Services Commission (FSC) published its
“Guidelines for Applying for an exemption to appoint a Custodian or Fund Manager.”
These Guidelines relate to regulation 7 (2) of the Mutual Fund Regulations, 2010 that
permit the FSC to exempt a private or professional fund from the requirement to appoint
a fund manager or a custodian. By releasing these guidelines the FSC have now
established a rational and clear framework for industry participants to pursue
exemptions for fund managers and custodians and will be useful to fund promoters and
their advisors in structuring private and professional funds on start-up.

The Guidelines are accompanied by two new application forms that will apply, one
each, to exemption applications for fund managers and custodians. More importantly,
the guidelines finally set out guidance as to the sort of scenarios that the FSC would
consider qualify a fund for an exemption.

For an exemption from the requirement for a custodian, the following scenarios are
explicitly recognised by the FSC:

  • Funds that have prime brokers
  • Feeders funds in a master/feeder structure
  • Funds of funds
  • Funds in the process of winding down
  • Funds that invest in esoteric assets such as real estate, private equity, collectibles, etc

For an exemption from the requirement for a fund manager, the following scenarios are
explicitly recognised by the FSC:

  • Where the fund’s investment management function is being carried out by the directors
  • Funds in the process of winding up
  • Funds not currently carrying out fund business

The Guidelines should therefore allow for more certainty in the structuring and setting up BVI companies and is a welcome compliment to the modern and user friendly regime ushered in by the Securities and Investment Business Act, 2010.

For further information, please contact Christopher Simpson (csimpson@onealwebster.com) or 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.

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