BVI MUTUAL FUNDS ACT, 1996

No. of 1996
VIRGIN ISLANDS
MUTUAL FUNDS ACT, 1996


ARRANGEMENT OF SECTIONS
Section
Preliminary
1. Short title and commencement.
2. Interpretation.
PART I
Administration
3. Appointments.
4. Delegation of power.
5. Annual report.
6. Records of the Registrar.
7. Mutual Funds Advisory Committee.
PART II
Public Funds
8. Registration.
9. Application for registration.
10. Application for consent to be registered.
11. Power to grant registration or consent.
12. Registration procedure.
13. Accounting records and financial statements.
14. Duty to publish and file a prospectus.
15. Certificate of compliance.
16. Investors’ rights.
17. Limitation of action and amount recoverable.
PART III
Private Funds
18. Recognition.
19. Application for recognition.
20. Power to grant recognition.
21. Recognition procedure.
PART IV
Managers and Administrators
22. Licensing.
23. Application for a licence.
24. Power to grant licences.
25. Licensing procedure.
PART V
General
26. Notices to accompany applications.
27. Form and conditions of certificates and licences.
28. Annual fees.
29. Cancellation of certificates or licences.
30. Cancellation procedure.
31. Appeal of cancellations.
32. Appeal by existing entities.
33. Appeal procedure.
34. Grant or cancellation to be published.
35. Power to grant exemptions.
36. Access to information and records.
37. Immunity and actions by the Registrar.
38. Confidentiality.
39. Exemption from certain enactments.
40. Offences and penalties.
41. Power of the Minister to vary the Schedule.
42. Regulations.
43. Transitional.
SCHEDULE 1
SCHEDULE 2
No. of 1996 The Mutual Funds Act, 1996 Virgin Islands
I Assent
Governor
, 1996
VIRGIN ISLANDS
NO. OF 1996
An Act to provide for the regulation,
authorisation and Control of mutual funds
and their managers and administrators carrying on
business in or from within the Virgin Islands and for
related matters.
[Gazetted , 1996]
ENACTED by the Legislature of the Virgin
Islands as follows:
Preliminary
Short title 1. This Act may be cited as the Mutual and
Funds Act, 1996 and shall come into force
on
Commencement. such date as the Governor may appoint by
proclamation published in the Gazette.
Interpretation. 2. (1) In this Act, unless the context
otherwise requires,
“administratoorr”" means a person who,
(a) for valuable consideration
provides a mutual fund with
administrative services and
facilities alone or together with
accounting services; or
(b) is entitled to provide to
mutual
funds (by whatever name called) such
services and facilities as provided
in paragraph (a) under the laws of a
recognised Country or Jurisdiction;
“auditor” means a person who is entitled to
practice as public accountant
and to perform audits under the laws of the
Territory or of a recognised Country or
Jurisdiction;
“company” means a body corporate, wherever
incorporated or constituted;
“existing entity” means
(a) a public fund,
(b) a private fund, or
(c) a manager or administrator,
which was carrying its business in or from
within the Territory immediately before
the coming into force of this Act;
“financial yeeaarr”",, in relation to a mutual
fund, means the period not
exceeding fifty-three weeks at the end of which
the balance of the fund’s accounts is struck or,
if no such balance is struck or a period of more
than fifty-three weeks is employed for that
purpose, then calendar year;
“Governor”" means the Governor in Council;
“investor”" means a person who owns or holds
shares (as herein defined)
issued by a mutual fund;
“manager” means a person who,
(a) for valuable consideration,
provides a mutual fund with management
services alone or together with investment
advice or administrative services; or
(b) is entitled to provide to mutual
funds (by whatever
name called), such services or advice as
provided in paragraph (a) under the laws
of a recognised country or jurisdiction;
“Minister”" means the minister responsible for
the administration of this
Act;
3
“mutual fund” or “ffuunndd”" means a company
incorporated, a partnership formed
or a unit trust organised, under the laws of the
Territory or of any other country or
jurisdiction which
(a) collects and pools funds for the
purpose of
collective investment in accordance with
the principle of risk spreading, and
(b) issues shares (as herein defined)
that entitle the
holder to receive on demand or within a
specified period after demand 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,
the partnership or the unit trust, as the
case may be,
and includes an umbrella fund whose
shares are split into a number
of different class funds or sub-funds;
“officer” includes
(a) a director, alternate director, the
president, a
vice-president, the secretary, the
treasurer, and any other person designated
as an
officer of a company by by-law, by
resolution of the directors or by any
other instrument;
(b) a general partner of a partnership;
and
(c) a trustee of a unit trust;
“partnershiipp”" means a contractual relation
which subsists between persons
carrying on a business in common with a view of
profit and includes a partnership formed under
the laws of the Territory or of any other
country or jurisdiction notwithstanding any
statutory definition thereof to the contrary;
4
“person” includes an individual natural
person, a mutual fund, any company,
partnership, unit trust or trustee;
“private fundd”" means a mutual fund that
(a) the shares issued by it are not
offered to the
general public and are owned or held by
(i) not more than fifty investors
where the first time
investment of each of such investors
is not less than twenty-five
thousand dollars in the United
States currency or the equivalent in
any other currency; or
(ii) any number of investors where
the first time investment of
each of such investors is not less
than two hundred and fifty thousand
dollars in the United States
currency or the equivalent in any
other currency; or
(b) is designated as private fund by
regulations;
“promoter”" means a person acting alone or in
conjunction with others
directly or indirectly who takes the initiative
in forming or organising the business of a
mutual fund, but does not include an underwriter
who receives underwriting commission without
taking any part in the founding or organising of
the mutual fund business;
“prospectus” means any prospectus or amended
prospectus, notice, circular,
advertisement, information memorandum or other
invitation offering to the public for
subscription or purchase any shares issued by a
mutual fund;
5
“public fundd”" means a mutual fund which, by
means of publishing or
distributing a prospectus or by any other means,
offers any shares it issues for subscription or
purchase to any interested member of the general
public;
“recognised Country or Jurisdiction” means
any Country or Jurisdiction
recognised by the Minister under subsection (3);
“Registrarr”" means the Registrar of Mutual
Funds or Deputy Registrar of
Mutual Funds appointed under this Act or such
other person as may be performing the duties of
the Registrar under this Act;
“regulations or the regulations” means
regulations made under this Act;
“security”" means any document or instrument
constituting evidence of title
to or interest in the capital assets, property,
profits, earnings or royalties of any person, as
herein defined, and includes
(a) bonds, debentures, notes, mortgages
and other
evidence of indebtedness;
(b) any share, stock, document or
instrument
commonly known as a security; and
(c) any document or instrument
constituting evidence of an option,
subscription or other interest in a
security or constituting evidence of an
interest in an association of legatees or
heirs;
“share” means share in the share capital of a
mutual fund company and
includes an interest in a mutual fund
partnership and a unit in a mutual fund unit
trust;
“underwriterr”" means a person who,
(a) as principal, agrees to purchase
shares issued by
mutual funds with a view to offering them
6
to the public; or
(b) as agent for a mutual fund, offers
for sale or sells
to the public shares issued by the mutual
fund;
“unit trustt”" means a contractual arrangement
creating a trust under the
laws of the Territory or of any other country or
jurisdiction in which unit holders participating
in the arrangement are the beneficiaries of the
trust.
(2) In this Act,
(a) every company incorporated and
every partnership formed or
unit trust organised under the laws
of the Territory for the purpose of
carrying on business as a mutual
fund, a manager or administrator
shall, if carrying on business
anywhere outside the Territory, be
deemed to be carrying on business
from within the Territory; and
(b) the expression “carrying on
business from within the
Territory” includes carrying on
business outside the Territory from
a place of business or a registered
office within the Territory.
(3) The Minister may recognise any
Country or Jurisdiction for the purposes
of this Act and shall cause a notice of such
recognition to be published in the Gazette.
PART I
Administration
Appointments. 3. (1) There shall be appointed
(a) a Registrar of Mutual Funds
and
Deputy Registrar of Mutual Funds
both of whom shall be public
officers; and
7
(b) any other public officers as
may be
necessary to administer this Act.
(2) The Registrar has
(a) the duty to supervise mutual
funds
and managers and administrators in
accordance with this Act; and
(b) in and for the discharge of
that
duty, the powers conferred upon him
by this Act.
(3) The Registrar may, upon request by
any person to whom this Act applies and
the payment of the fee set out in Part I of Schedule 2
or such other amount as may be prescribed by
regulations, issue to such person a certificate of
compliance in such form as the Registrar thinks fit.
(4) The Registrar, the Deputy Registrar
or any employee of the office of the
Registrar shall not, knowingly, have any financial
interest in any person registered, recognised or
licensed under this Act.
Delegation of 4. (1) The Governor and the Minister may power.
in writing delegate any of their
respective powers conferred upon
them by this Act to the Registrar and thereupon this
Act shall be
read as if those powers were originally conferred upon
the Registrar.
(2) The Registrar may delegate any of
his powers or duties under this Act to the
Deputy Registrar and thereupon this Act shall be read
as if those powers or duties were originally conferred
or imposed upon the Deputy Registrar.
Annual report. 5. (1) The Registrar shall, on or before
the 30th day of April in each year,
prepare and deliver to the Minister a report
consisting of
(a) a summary of the nature and
number of
8
(i) filings made under this
Act;
(ii) registrations,
recognitions and licences
granted under this Act;
(iii) enforcement proceedings
or disciplinary
measures taken under this Act;
and
(b) a general commentary on the
law
relating to the mutual funds
industry and on the practice and
development of that law.
(2) On receiving the report delivered
to him pursuant to subsection (1), the
Minister shall lay the report before the Legislative
Council.
Records of the 6. (1) The Registrar shall keep separate
Registrar. registers for all
(a) registered public funds;
(b) recognised private funds; and
(c) licensed managers and
administrators.
(2) The registers required under
subsection (1) shall show
(a) the information required under
section 26 (a), (b) and (c)
with respect to each registered
public fund, recognised private fund
and licensed manager or
administrator;
(b) the date of registration,
recognition or licence, as the
case may be; and
(c) the status of such
registration, recognition or licence
if cancelled and the date thereof.
9
(3) Registers kept by the Registrar
shall be in such form as he may determine
and, subject to section 38, shall be open to public
inspection during ordinary office hours on payment of
an inspection fee of five dollars or such other amount
as may be prescribed by regulations.
Mutual Funds 7. (1) There shall be a Committee called Advisory
Committee. the Mutual Funds Advisory Committee which
shall consist of not more than
five persons appointed by the Minister from among
members
of the private sector who are known to him to have
adequate knowledge of and experience in the mutual
funds industry.
(2) The Minister shall appoint a senior
public officer who shall be the
Chairman of the Mutual Funds Advisory Committee and
the Registrar of Mutual Funds shall be an ex-officio
member thereof.
(3) The Mutual Funds Advisory Committee
shall
(a) advise the Minister on any
matter
referred to it by him relating to
the mutual funds industry;
(b) on its own motion report and
make
recommendations to the Minister on
any matter relating to mutual funds
as it sees fit; and
(c) have power to establish
(i) its own working rules and
procedures; and
(ii) as many sub-committees as
it thinks necessary.
PART II
Public Funds
Registration. 8. No public fund shall carry on any
business or arrange or administer its
affairs in or from within the Territory unless it is
registered under this Act.
10
Application for 9. (1) A public fund may apply to the registration.
Governor for registration to carry on business
in or from within the Territory.
(2) An application shall be
(a) made in the form and contain
the
information as set out in
Schedule 1 Schedule 1; and
(b) accompanied by
(i) a statement setting out
the nature and
scope of the business to be
carried on by the applicant in
or from within the Territory,
including the name of any
other country or jurisdiction
where the applicant is
carrying on or intends to
carry on business;
(ii) the application fee set
out in Part II of
Schedule 2 Schedule 2 or such other
amount as may be
prescribed by regulations;
(iii) the instrument by which
the applicant is
constituted or such other
proof as may be satisfactory
to the Governor that the
applicant is lawfully
constituted under the laws of
the Territory or of any other
country or jurisdiction;
(iv) the notices required
under section 26; and
(v) such other documents or
information as the
11
Governor may reasonably
require for the purpose of
determining the application.
Application for 10. (1) The promoters of a public fund that consent to
be is proposed to be formed, may apply to the
registered. Governor for his consent to register
such proposed public fund upon
being lawfully constituted under the laws of the
Territory or of any other country or jurisdiction and
upon complying with the requirements of this Act.
(2) An application for consent under
subsection (1) shall be
(a) in the form of a letter
setting out the particulars of the
proposed public fund; and
(b) accompanied by the
application fee set out in
Schedule 2 Part II of Schedule 2 or such other amount
as may be prescribed by regulations.
(3) The consent of the Governor shall
be
(a) in such form as the Governor
may direct; and
(b) valid for a period of three
months
from the date it is granted subject
to there being no change, that the
Governor
considers material, in any of the
particulars contained in the
application for consent.
(4) The promoters of a proposed public
fund may, upon the expiry of the three
months period referred to in subsection (3) (b), apply
for the renewal of the Governor’s consent subject to
(a) supplying such documents or
information as the Governor
may require; and
(b) the payment of the application
12
fee required under subsection
(2) (b).
Power to grant 11. (1) The Governor may, in his registration or
discretion, grant or refuse to grant
consent.
(a) registration under section 9;
or
(b) his consent under section 10.
(2) Notwithstanding subsection (1), the
Governor shall refuse to grant
registration or his consent, as the case may be, if he
determines that it is not in the public interest that
such registration or consent should be granted.
(3) Except as provided in section 32,
where the Governor, in the exercise of his
powers under subsection (1) (a), makes a decision
refusing to grant registration, he shall not be bound
to assign any reasons for his decision which shall not
be subject to appeal or review in any court.
Registration 12. (1) Where the Governor grants procedure.
registration pursuant to section 9 he shall
direct the Registrar accordingly and
the Registrar shall
(a) register the public fund in
the
register maintained by him for the
purpose under section 6; and
(b) issue a certificate to the
registered public fund as
directed by the Governor showing the
date of registration.
(2) Where the Governor grants his
consent under section 10, the promoters of
the proposed public fund shall, within the three
months period referred to in section 10 (3) (b) from
the date of granting such consent or the renewal
thereof, deliver to the Registrar
(a) the consent of the Governor;
(b) satisfactory proof that the
13
proposed public fund is
lawfully constituted in the
Territory or elsewhere;
(c) the application fee required
under
section 9 (2) (b) (ii); and
(d) the notices referred to in
section 9 (2) (b) (iv).
(3) If the Registrar is satisfied
that the proposed public fund has complied
with the requirements of subsection (2), he shall
register the public fund and issue to it a certificate
of registration in accordance with the procedure set
out in subsection (1).
(4) The Registrar shall refuse to
register the proposed public fund if he
determines that
(a) its registration has not
received the consent of the
Governor pursuant to section 10; or
(b) it has not complied with any
of the
requirements of subsection (2).
(5) Any person aggrieved by a decision
of the Registrar under subsection (4) may
appeal to the Governor whose decision shall be final.
Accounting records 13. (1) Every registered public fund and
financial shall
statements.
(a) maintain adequate accounting
records and prepare financial
statements in respect of each
financial year in accordance with
generally accepted
accounting principles applicable in
the Territory or in any other
recognised Country or Jurisdiction;
and
(b) keep such accounting records
and
14
financial statements available for
examination by the Registrar or any
person authorised under his hand at
(i) its place of business in
the Territory; or
(ii) such other place as its
officers may see
fit, provided that copies of
such records and statements or
such other documents or
information as the Registrar
may consider adequate are
kept at its place of business
in the Territory.
(2) The financial statements required
under subsection (1) shall be
(a) audited by an auditor
acceptable to the Registrar (in this
Act called “the approved auditor”)
in accordance with generally
accepted auditing standards
applicable in the Territory or in
any other recognised Country or
Jurisdiction;
(b) accompanied by the report of
the
approved auditor thereon; and
(c) provided to or made available
for examination by all
investors of the registered public
fund.
Duty to publish 14. (1) No registered public fund shall in and file a
or outside the Territory offer its shares to
prospectus. the public unless prior to such
offer it publishes in writing a
prospectus signed by or on behalf of its officers who
approved the contents of the prospectus or authorised
its publishing, and files a copy thereof with the
Registrar.
(2) Every prospectus shall
(a) provide, full, true and plain
15
disclosure of
(i) the market price or value
of any shares
being offered thereby;
(ii) particulars of the
business and finances of the
fund offering such shares; and
(iii) all facts that
significantly affect or would
reasonably be expected to have
a significant effect on the
disclosures required in subparagraphs
(i) and (ii);
(b) contain a summary statement of
investors’ rights as provided
in section 16; and
(c) be accompanied by or contain
reference to the availability
of the financial statements for the
last financial year of the fund and
the auditor’s report thereon if the
fund has completed a financial year
in operation.
(3) The Registrar shall not accept for
filing a copy of a prospectus unless it is
accompanied by a certificate from an attorney
certifying that it complies with the requirements of
subsection (2).
(4) If all or any part of the
prospectus is not in the English language, the
Registrar may require that an English translation of
the prospectus or that part of the prospectus,
verified in a manner satisfactory to him, be filed
along with the prospectus.
(5) Where in a prospectus any of the
disclosures required under subsection (2)
(a) ceases to be accurate, the registered public fund
shall publish an amendment thereto giving accurate
disclosures and provide a copy thereof to each of its
investors and to the Registrar.
16
Certificate of 15. Every registered public fund, compliance.
wherever it is constituted, which carries on
business outside the Territory under
the laws of another country or jurisdiction, shall
every year, within three months of the end of its
financial year, file with the Registrar a certificate
of compliance from the competent authority that is
responsible for the regulation and supervision of the
conduct of its business in that other country or
jurisdiction.
Investors’ rights. 16. (1) If a registered public fund
publishes a prospectus or any amendment thereto that
contains misrepresentation relating to any of the
disclosures required under section 14 (2) (a), a
person who purchased any shares pursuant to such
prospectus or amendment thereto is deemed to have
relied upon the misrepresentation and shall have the
rights provided in subsection (2).
(2) A person referred to in subsection
(1) may elect to exercise a right of
action
(a) for the rescission of the
purchase, or
(b) for damages,
jointly and severally against the fund and
every person who, while aware of the
misrepresentation, signed the prospectus or amendment
thereto and consented to its publishing and filing or
caused it to be signed or published and filed.
(3) For the purposes of this section,
“misrepresentation” means
(a) an untrue or misleading
statement of any of the disclosures
required under section 14 (2) (a);
or
(b) an omission to disclose any of
such disclosures.
(4) No person is liable under this
section if he proves that the purchaser
purchased the shares offered by the prospectus or
amendment thereto with knowledge of the
misrepresentation.
17
(5) The right of action for rescission
or for damages conferred by subsection (2)
is in addition to and without derogation from any
other right the plaintiff may have at law.
Limitation of 17. (1) Notwithstanding any provision of action
and law to the contrary, any action pursuant to amount
section 16 (2) may not be commenced after
recoverable.
(a) one hundred and eighty days
from
the day that the plaintiff first had
knowledge of the misrepresentation,
or
(b) one year from the date of the
purchase transaction that gave
rise to the cause of action,
whichever is earlier.
(2) In any action under section 16
(2), the amount recoverable shall not
exceed the price at which the shares were purchased or
subscribed, including any fees or other charges paid
by the plaintiff.
PART III
Private Funds
Recognition. 18. No private fund shall, in or from
within the Territory, carry on business or
manage or administer its affairs unless it is
recognised under this Act.
Application for 19. (1) A private fund that is constituted recognition.
under the laws of the Territory is entitled
to be recognised under this Act if,
upon the coming into force of this Act, it provides
proof satisfactory to the Minister that it is
(a) a private fund within the
meaning of this Act; and
(b) lawfully constituted under the
laws of the Territory.
(2) A private fund that is constituted
outside the Territory may apply for
18
recognition under this Act by sending to the Minister
a letter setting out the nature and scope of its
business which shall be accompanied by
(a) the application fee set out in
Schedule 2 Part II of Schedule 2 or such other amount
as may be prescribed by regulations;
(b) the notices required under
section 26; and
(c) proof satisfactory to the
Minister that the applicant
is
(i) a private fund within the
meaning of this Act; and
(ii) lawfully constituted
under the laws of
another country or
jurisdiction.
Power to grant 20. (1) The Minister may, in his recognition.
discretion, grant or refuse to grant
recognition under section 19 (2).
(2) Where the Minister refuses to grant
recognition under section 19 (2),
the provisions of section 11 (3) shall apply mutatis
mutandis.
(3) The Minister shall not refuse to
grant recognition under section 19 (1)
unless the applicant fails to comply with the
requirements of that section.
(4) Where the Minister refuses to grant
recognition under section 19 (1), he
shall give the applicant notice in writing of his
decision and the reasons therefor and the applicant
may appeal such decision pursuant to section 33.
Recognition 21. Where the Minister grants procedure.
recognition to a private fund, he shall
direct the Registrar accordingly and the
Registrar shall
(a) enter the particulars relating
19
to the private fund in the
register maintained by him for the
purpose under section 6; and
(b) issue a certificate of
recognition to the private fund as
directed by the Minister showing the
date of recognition.
PART IV
Managers and Administrators
Licensing. 22. (1) No person shall, in or from within
the Territory, carry on business as
manager or administrator of mutual funds unless that
person is licensed for the purpose under this Act.
(2) Subsection (1) does not apply to a
person who
(a) is not ordinarily resident or
domiciled in the Territory;
(b) is a qualified and authorised
manager or administrator of
mutual funds (by whatever name
called) under the laws of a
recognised Country or Jurisdiction;
and
(c) has received written
permission from the Minister to
carry on business as manager or
administrator of mutual funds in or
from within the Territory.
Application for 23. (1) A person who wishes to do so may a licence.
make an application to the Minister to carry
on business in or from within the
Territory as
(a) manager;
(b) administrator; or
(c) both manager and administrator
of mutual funds.
(2) An application shall be
(a) made in such manner as the
Minister may direct; and
20
(b) accompanied by
(i) the application fee set
out in Part II of Schedule 2
Schedule 2 or
such other amount as may
be prescribed by
regulations;
(ii) a statement of the
financial and human resources
and administrative facilities
available to the applicant for
the competent and efficient
conduct of its business; and
(iii) such other documents or
information as the
Minister may reasonably
require for the purpose of
considering the application.
Power to grant 24. (1) The Minister may, in his licences.
discretion, grant or refuse to grant a
licence to any applicant.
(2) The Minister shall not grant a
licence unless he is satisfied that the
applicant
(a) is a fit and proper person to
be engaged in the business of
managing or administering the
affairs of mutual funds; and
(b) has or has available to him
adequate knowledge, expertise,
resources and facilities necessary
for the proper management or
administration of mutual funds.
(3) Notwithstanding subsections (1) and
(2), the Minister shall refuse to
grant a licence if he determines that it is not in the
public interest that a licence should be granted.
(4) Where the Minister refuses to grant
21
a licence to an applicant, the
provisions of section 11 (3) shall apply mutatis
mutandis.
Licensing 25. Where the Minister grants a licence procedure.
to an applicant, he shall direct the
Registrar accordingly and the Registrar shall
(a) enter the particulars of the
applicant in the register maintained by
him for the purpose under section 6; and
(b) issue a licence to the applicant as
directed by
the Minister showing the date on which the
licence is granted.
PART V
General
Notices to 26. (1) In addition to any other accompany
requirement under this Act, every application
applications. for registration, recognition
or a licence made under this
Act shall be accompanied by a notice of
(a) the address of the applicant’s
place of business and its
address for service in the
Territory;
(b) the name and address of a
person
resident in the Territory who is
authorised to represent the
applicant and to accept service on
its behalf; and
(c) the address of any place or
places
of business that the applicant may
have outside the Territory.
(2) If any information contained in any
of the notices required to accompany
the application pursuant to subsection (1) is altered
at any time thereafter, the applicant, upon being a
registered public fund, a recognised private fund or a
licensed manager or administrator, as the case may be,
shall give in writing to the Registrar particulars of
22
the alteration within twenty-one days after the
alteration is made.
Form and 27. (1) A certificate or a licence may be
conditions of granted subject to terms, conditions, certificates
restrictions or limitations as the Governor and licences. or the
Minister, as the case may be, sees fit to specify
therein.
(2) A certificate or a licence shall
(a) be in such form as may be
directed by the Governor or
the Minister, as the case may be;
(b) be admitted in all courts as
prima
facie evidence of the facts stated
therein; and
(c) remain in force until it is
cancelled.
Annual fees. 28. (1) Where
(a) a public fund is granted
registration,
(b) a private fund is granted
recognition, or
(c) a person is granted a licence,
there shall be payable for the year in which
such registration, recognition or licence is
granted the fee set out in paragraph (A) of
Schedule 2 Part III of Schedule 2, or such other amounts
as may prescribed by regulations.
(2) On or before the 31st day of March
every year following the year in which
registration, recognition or licence is granted there
shall be payable the annual fee set out in paragraph
(B) of Part III of
Schedule 2 Schedule 2 or such other amounts as may
prescribed by regulations.
(3) An unpaid annual fee may be sued
for by the Government by action as a civil
debt and the Government may require, and the court may
23
order, the payment of a penalty in an amount equal to
the amount of the fee for late payment of the fee.
Cancellation of 29. The Governor, in the case of a certificates or
registered public fund, and the Minister, in
licences. the case of a recognised
private fund or a licensed
manager or administrator, may, subject to sections 30
and 31, cancel a certificate or a licence, as the case
may be,
(a) at the request of the holder
thereof; or
(b) where the holder thereof
(i) has ceased to carry on
business in or from
within the Territory;
(ii) has contravened any
provision of this
Act, the regulations or any
term, condition, restriction
or limitation attached to the
holder’s certificate or
licence, as the case may be;
(iii) has been convicted of an
offence under this
Act or of a criminal offence
in any country or
jurisdiction;
(iv) has knowingly and
wilfully supplied false,
misleading or inaccurate
information or failed to
disclose information required
for the purposes of any
provision of this Act or the
regulations;
(v) is carrying on business
in a manner
detrimental to the interests
of mutual funds investors or
to the public interest; or
24
(vi) is declared bankrupt or
is being wound-up
or otherwise dissolved.
Cancellation 30. (1) Before cancelling a certificate or
procedure. a licence under paragraph (b) of
section 29, the Governor or
the Minister, as the case may be, shall
(a) give the holder thereof notice
in writing of the grounds on
which he intends to do so;
(b) afford the holder an
opportunity to make written
representations to him within a
period of thirty days after receipt
of the notice; and
(c) take any such representations
into consideration.
(2) Where in the exercise of his powers
under section 29 (b)
(a) the Governor decides to cancel
a certificate, or
(b) the Minister decides to cancel
a certificate or a licence, as
the case may be,
he shall give notice in writing to the holder
thereof of such cancellation and the
reasons therefor.
Appeal of 31. The holder of a certificate or a
cancellations. licence aggrieved by the decision cancelling
such certificate or licence may appeal such decision
in accordance with section 33.
Appeal by 32. Notwithstanding any provision in existing
entities. this Act, where
(a) the Governor, in the exercise
of his powers under section 11
(1) (a), refuses to grant
25
registration, or
(b) the Minister, in the exercise
of his powers
(i) under section 20 (1)
refuses to grant
recognition, or
(ii) under section 24 (1)
refuses to grant a
licence,
to an existing entity, he shall give such
existing entity a notice in writing of his
decision and the reasons therefor and the existing
entity may appeal such decision in accordance with
section 33.
Appeal procedure. 33. (1) An appeal under sections 20 (4), 31
or 32 shall be by
(a) way of summons to a Judge in
Chambers; and
(b) serving the Governor or the
Minister, as the case may be,
with a notice of appeal within
twenty-one days or such longer
period as the judge may allow, after
receipt of the notice required under
sections 20 (4), 30 (2) or 32, as
the case may be.
(2) The bringing of an appeal under
section 31 suspends the decision appealed
against pending the determination or abandonment of
the appeal.
Grant or 34. The Registrar shall publish in the cancellation
to Gazette, in such form as he thinks fit, be published. notice
of every grant or cancellation of a
certificate or a licence under this Act.
Power to grant 35. (1) Upon the recommendation of the exemptions.
Registrar, the Governor may, if he is
satisfied that to do so would not be prejudicial to
the public interest, direct that all or any of the
provisions of this Act or the regulations shall
(a) not apply, or
26
(b) apply subject to such
modifications as he may specify in
the direction,
to any person or any class of persons.
(2) A direction under this section may
be
(a) subject to any conditions as
the
Governor may see fit to specify
therein; and
(b) revoked at any time at the
discretion of the Governor.
(3) Notwithstanding any provision or
rule of law, a direction under this
section is not a statutory instrument having
legislative effect.
Access to 36. For the purpose of discharging his information
duties under this Act and the regulations and
and records. subject to section 38, the
Registrar or any person acting
under his authority, may, at all reasonable times, in
writing, direct any person to whom this Act applies to
(a) furnish information, or
(b) provide access to any records,
books, or other documents,
relating to the business of that person
being carried on under this Act which, in the
opinion of the Registrar, are necessary to enable him
to ascertain compliance with the provisions of this
Act or the regulations.
Immunity and 37. (1) No liability shall be incurred by actions
by the and no suit, action or proceeding
shall be Registrar. brought against the
Crown, any agent thereof, the
Registrar or any person acting under his authority for
any act done or omitted to be done in good faith
(a) in the performance or intended
performance of any function or
duty, or
27
(b) in the exercise or intended
exercise of any power,
under this Act or the regulations.
(2) The Registrar may bring actions and
institute proceedings in his name of
office for the enforcement of any provision of this
Act or the regulations, or for the recovery of fees or
other sums of money payable under this Act or the
regulations.
Confidentiality. 38. Notwithstanding section 6,
(a) any information, material or
document furnished to or filed
with the Registrar by any recognised
private fund is
privileged and shall not be
disclosed to any person except
(1) the Governor, the
Minister, the Attorney General
or a public officer authorised
by the Governor or the
Minister; or
(ii) on the order of a court
of competent
jurisdiction for the purpose
of criminal proceedings;
(b) the Governor may direct that
any
specified information, material or
document furnished to or filed with
the Registrar by any registered
public fund shall be held in
confidence and shall not be
disclosed to any person so long as
the Governor is of the opinion that
to do so is in the public interest.
Exemption from 39. (1) Notwithstanding any statutory certain
provision or rule of law to the contrary
enactments.
(a) a public fund that is
28
registered or a private fund that is
recognised under this Act, and
(b) an investor in any such
registered public fund or recognised
private fund who is not ordinarily
resident or domiciled in the
Territory,
Cap. 206 are in all respects exempt from any and all Cap. 212
of the provisions of the Income Tax Act, the Cap. 67
Stamps Act, and the Registration and Records Act.
(2) Notwithstanding the provisions of Cap. 285
Part IX (section 235A) of the
Companies Act, a company that is
incorporated outside the Territory which establishes a
place of business within the Territory to carry on
business in accordance with the provisions of this Act
as
(a) a registered public fund,
(b) a recognised private fund, or
(c) a licensed manager or
administrator,
is exempt from the provisions of that Part IX
(section 235A) of the Companies Act.
Offences and 40. (1) A person who,
penalties
(a) wilfully makes a
misrepresentation in any document
required to be filed, furnished or
delivered under this Act or the
regulations,
(b) wilfully makes any statement
or gives any information required
for the purposes of
this Act or the regulations that he
knows to be false or misleading,
(c) knowingly fails to disclose
any
fact or information required to be
disclosed for the purposes of this
Act or the regulations, or
29
(d) being in charge of or having
possession of or control over
any information, records, books or
other documents referred to in
section 36, refuses or wilfully
neglects to comply with any lawful
direction given under that section,
commits an offence under this Act and is
liable on summary conviction to a fine of not
less than five thousand dollars and not more than
fifty thousand dollars or to imprisonment for a period
not exceeding two years or both such fine and
imprisonment.
(2) Any person who, without reasonable
cause, contravenes a provision of this Act
or the regulations for which no penalty is provided
commits an offence against this Act and is liable on
summary conviction,
(a) in the case of a body
corporate or unincorporated, a fine
of not more than fifty thousand
dollars; and
(b) in the case of an individual,
to a fine of not more than
five thousand dollars or to
imprisonment for a period not
exceeding one month or to both such
fine and imprisonment.
(3) A prosecution for an offence under
this Act may be commenced within five
years from the date of the commission of the offence
but not thereafter.
Power to the 41. The Minister may by Notice Minister to
published in the Gazette,
vary the
Schedule. (a) vary the form of
Schedule 1 provided such variation
does not, in any material respect,
change the substance of the
Schedule; or
(b) subject to the affirmative
resolution procedure of the
30
Legislative Council modify, delete,
repeal or replace any Schedule to
this Act in whole or in part.
Regulations. 42. The Governor may make regulations
(a) prescribing fees payable under
this Act;
(b) prescribing forms for use
under this Act;
(c) prescribing criteria with
respect to exemptions
authorised by this Act;
(d) prohibiting the use of any
names
or any words or expressions in a
name with respect to mutual funds;
(e) designating mutual funds or a
class or classes thereof as
private mutual funds;
(f) authorising the Registrar to
require that any document,
statement, report, certificate,
release, agreement, or other
information be filed with, furnished
or delivered to him;
(g) defining, for the purposes of
this Act, terms or expressions
used in this Act that are not
defined in this Act;
(h) prescribing any matter
required to be or which may be
prescribed under this Act;
(i) authorising the Registrar to
issue
directives and policy guidelines for
the purposes of this Act or
regulations; and
(j) generally for the better
31
administration of this Act and
for carrying the intent and purpose
of its provisions into effect.
Transitional. 43. Any person who, at the date of the
coming into force of this Act, is carrying
on any business or engaged in any activity relating in
any respect, directly or indirectly to mutual funds in
or from within the Territory, shall within three
months or such longer period as may be granted by the
Governor from such date of coming into force comply
with the provisions of this Act.
32
SCHEDULE 1
(Section 9 (2) (a))
APPLICATION FOR REGISTRATION OF A PUBLIC FUND
1. Applicant: state name and address of the fund
2. Constitution: (a) state the legal form of the fund
(i) company
(ii) partnership
(iii) unit trust
(b) state the name of the country or
Jurisdiction where the fund is constituted
(c) state the title of the law under which
the fund is constituted
3. Officers: (a) state name, address, place of birth and
citizenship of each officer of
the fund:
(i) directors;
(ii) general partners; or
(iii) trustees
(b) state educational and professional
qualifications of each officer
(c) give details of business, occupation or
employment of each officer
4. References: give two personal references, a bank
reference and a police clearance certificate for
each officer
5. Functionaries: state names, addresses and business
activities of each of the fund’s
(a) managers;
(b) administrators;
(c) investment advisers; and
33
(d) custodians.
6. Prior Registration:
state if the fund is now or has been registered,
licensed, recognised or authorised under any law or regulations
relating to mutual funds, collective investment schemes/funds or
securities in any country or jurisdiction.
7. Refusal or Disciplinary Measure:
Has the fund, any of its officers, managers,
administrators, investment advisers or custodians been the subject
of
(a) refusal of an application for registration,
licence, recognition or authorisation, or
(b) suspension, cancellation or revocation of
registration, licence, recognition or authorisation
by any authority in any country or jurisdiction?
give details and reasons
8. Civil Proceedings:
Has a judgment been rendered or any suit, action or
proceedings pending against any officer of the fund or of
any of its functionaries listed in question 5 above, in civil
proceedings in any court or tribunal in any country or
jurisdiction which has been or is based in whole or in part on
fraud, theft, deceit, misrepresentation or similar conduct?
give details
9. Offences:
Has any officer of the fund or of any of its
functionaries listed in question 5 above been or is being charged,
indicted or convicted in any country or jurisdiction for any
offence in any criminal or civil proceedings relating to fraud or
theft arising out of dealing in mutual funds, collective
investment schemes/funds or securities?
10. Bankruptcy:
Has an officer of the fund or of any of its
functionaries listed in question 5 above been
(a) declared bankrupt or been party to bankruptcy or
insolvency proceedings,
34
(b) subject to proceedings relating to winding-up,
dissolution or creditors’ arrangement, or
(c) subject to proceedings relating to receivership or
Creditors’ compromise,
in any country or jurisdiction?
AFFIDAVIT
I, …………………………, in my capacity as
(Director, general partner or trustee) acting for and on behalf
of the applicant public mutual fund,
Do depose and say that I have read and understood the
35
questions in this application form and hereby certify under Oath
that the foregoing answers and statements are true, correct and
complete to the best of my knowledge, information and belief.
Sworn before me ………………… Name and
Commissioner of Oaths Signature
of Deponent
at the city of ………………….
this……. day ………….. 19….
SCHEDULE 2
FEES
36
PART I (Section 3 (3) (b))
Fee for issuing a Certificate of Compliance
The fee for issuing a Certificate of
Compliance pursuant to section 3 (3) (b) is $25.00
PART II
Application Fees (Sections -
9 (2) (b) (ii)
10 (2) (b)
19 (2) (a)
23 (2) (b) (i))
The fee for
(a) an application for registration
under section 9 (2) (b) (ii) is $500.00
(b) an application for consent to be
registered under section 10 (2)
(b) is $100.00
(c) an application for recognition
under section 19 (2) (a) is $350.00
(d) an application for a licence under
section 23 (2) (b) (i) is $250.00
PART III
Annual Fees (Section 28 (1) and (2))
(A) Fee payable for the year in which registration, recognition or
licence is granted pursuant to section 28 (1):
(1) where registration, recognition or licence is granted
on or before the 30th day of June in any year, the fee
payable for that year is
(a) $500.00 by a registered public fund;
(b) $350.00 by a recognised private fund;
(c) $500.00 by a person licensed as manager or
37
administrator; and
(d) $1000.00 by a person licensed as both manager
and administrator.
(2) Where registration, recognition or licence is granted
on or after the 1st day of July in any year, the fee payable
for that year is
(a) $250.00 by a registered public fund;
(b) $175.00 by a recognised private fund;
(c) $250.00 by a person licensed as manager or
administrator; and
(d) $500.00 by a person licensed as both manager
and administrator.
(B) The annual fee payable pursuant to section 28 (2) is
(a) $500.00 by a registered public fund;
(b) $350.00 by a recognised private fund;
(c) $500.00 by a person licensed as manager or
administrator; and
(d) $1000.00 by a person licensed as both manager and
administrator.
Passed by the Legislative Council this 6th day
of June, 1996.
Reeial George
Deputy Speaker
Hugh A. Hodge
Clerk of the Legislative Council
38
39
OBJECTS AND REASONS
This Bill is designed to establish credibility to the British Virgin
Islands based mutual funds and reassure investors of the legitimacy and
security of their investments. To this end, it provides funds promoters and
operators with a suitable location to manage their existing funds (wherever
they may be constituted) or to establish new funds under available convenient
legal structures as international business companies, limited partnerships or
unit trusts.
The Bill is divided into five Parts, with Part I dealing with matters
relating to administration generally. This embraces such matters as the
appointment of the Registrar and Deputy Registrar of mutual funds, the
delegating powers of the Governor in Council and the Minister, the requirement
for the submission of annual reports by the Registrar of mutual funds, the
keeping of records and the creation of a Mutual Funds Advisory Committee to
advise the Minister on issues relating to mutual funds.
Parts II, III and IV represent the main thrust of the Bill. The Bill
addresses matters relating to public funds (Part II) which offer their shares
or units to the general public and private funds (Part III) which offer their
shares or units to a restricted number of wealthy and sophisticated investors.
Both types of fund, wherever they may be incorporated, formed or constituted,
are allowed under the Bill to operate in or out of the Territory. In the case
of private funds, however, these are only required to be recognised by the
Minister upon proof that they are lawfully constituted under the laws of any
country or jurisdiction and that they are not offering their shares or units
to the general public. Private funds which are constituted under the laws of
the Territory could not be denied recognition unless they fail to prove that
they are private funds within the meaning of the Bill and are lawfully
constituted.
In order to operate in or from within the Territory public funds are
required to be registered. The Bill outlines the mode of application for
registration and the information to be supplied by the applicant with a view
to striking a balance between the principle of freedom of international
enterprise and the need for a measure of regulatory accountability to assure
investors of the safety of their investments.
Part IV of the Bill essentially provides the regulatory requirements of
mutual funds managers and administrators. A person wishing to carry on
business in or from within the Territory as manager or administrator of mutual
funds is required to apply for a licence to the Minister. A statement of the
financial and human resources available to the applicant is to accompany the
application to satisfy the Minister that the applicant is a fit and proper
person to be granted a licence. Provisions are also made to allow managers
and administrators who are qualified and authorised to act as such pursuant to
the laws of a recognised Country or Jurisdiction to operate in or from within
the Territory without the need to be licensed.
The fifth Part of the Bill addresses general provisions concerning
40
notices, forms and conditions of certificates and licences, annual fees,
cancellation procedures, appeals, exemptions, offences and penalties, powers
of amendment, regulations and transitional provisions.
Ralph T. O=Neal
Minister of Finance
VIRGIN ISLANDS
LEGAL REPORT
The purpose of this Bill is to establish credibility to the British
Virgin Islands based mutual funds and reassure investors of the legitimacy and
security of their existing funds (wherever they may be constituted) or to
establish new funds under available convenient legal structures as
international business companies, limited partnerships or unit trusts.
The Bill is divided into five Parts, with Part I dealing with matters
relating to administration generally. This embraces such matters as the
appointment of the Registrar and Deputy Registrar of mutual funds, the
delegating powers of the Governor in Council and the Minister, the requirement
for the submission of annual reports by the Registrar of mutual funds, the
keeping of records and the creation of a Mutual Funds Advisory Committee to
advise the Minister on issues relating to mutual funds.
Parts II, III and IV represent the main thrust of the Bill. The Bill
addresses matters relating to public funds (Part II) which offer their shares
or units to the general public and private funds (Part III) which offer their
shares or units to a restricted number of wealthy and sophisticated investors.
Both types of fund, wherever they may be incorporated, formed or constituted,
are allowed under the Bill to operate in or out of the Territory. In the case
of private funds, however, these are only required to be recognised by the
Minister upon proof that they are lawfully constituted under the laws of any
country or jurisdiction and that they are not offering their shares or units
to the general public. Private funds which are constituted under the laws of
the Territory could not be denied recognition unless they fail to prove that
they are private funds within the meaning of the Bill and are lawfully
constituted.
In order to operate in or from within the Territory public funds are
required to be registered. The Bill outlines the mode of application for
registration and the information to be supplied by the applicant with a view
to striking a balance between the principle of freedom of international
enterprise and the need for a measure of regulatory accountability to assure
investors of the safety of their investments.
Part IV of the Bill essentially provides the regulatory requirements of
mutual funds managers and administrators. A person wishing to carry on
business in or from within the Territory as manager or administrator of mutual
funds is required to apply for a licence to the Minister. A statement of the
financial and human resources available to the applicant is to accompany the
application to satisfy the Minister that the applicant is a fit and proper
person to be granted a licence. Provisions are also made to allow managers
and administrators who are qualified and authorised to act as such pursuant to
the laws of a recognised Country or Jurisdiction to operate in or from within
the Territory without the need to be licensed.
The fifth Part of the Bill addresses general provisions concerning
notices, forms and conditions of certificates and licences, annual fees,
cancellation procedures, appeals, exemptions, offences and penalties, powers
of amendment, regulations and transitional provisions.
The Bill was introduced in the Legislative Council on 23rd day of May,
1996 and passed through its remaining stages on the 6th day of June, 1996.
In my opinion, His Excellency the Governor may properly assent to this
Bill in the name and on behalf of Her Majesty.
Attorney General
Attorney General’s Chambers
Central Administration Complex
Road Town, Tortola

 

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