6 May 2010 – Until now the only investments regulated by the BVI Financial Services Commission (“Commission”) were mutual funds. The Securities and Investment Business Act (“SIBA”) creates a new regulatory framework to regulate all securities and investment business ventures administered in of from within the Territory and will come into effect on 17 May 2010. SIBA will bring the BVI legal framework into compliance with internationally accepted standards for investment business.
Any BVI person or entity that is engaged in investment business will be subject to the requirements of SIBA and should obtain professional advice to determine whether or not they require licensing under SIBA. Conducting investment business without the requisite license is an offence. Offences carry penalties of up to USD75,000.
Investment business includes:
- dealing in investments
- making arrangements for other persons to enter into or participate in investments
- managing invests for others
- providing investment advice to others
- providing custodian or administration services to others
- operating an investment exchange.
SIBA sets out the requirements for licensing, including financial resources and capital resources. Licensees are subject to the requirements to obtain prior approval for appointment of directors and senior officers and there are restrictions on transferability or issue of their own securities. In addition, licensees are subject requirement to maintain books/records, segregate client assets, the provisions of the Regulatory Code and proposed Investment Business Regulations.
Public issues of securities will be subject to a Public Issuers Code and requirements to issue and register prospectuses.
The existing Mutual Funds Act and Mutual Funds Regulations will be repealed and all private, professional and public funds, fund managers and fund administrators will be regulated under SIBA. Transitional provisions in SIBA provide that every existing private, professional and public fund, fund administrator and fund manager licensed under the Mutual Funds Act will be deemed to be licensed under SIBA.
SIBA will require all licensees to appoint an authorized representative in the Territory to be the main intermediary between the licensee and the Commission. In addition the authorized representative will be required to keep such books and records as may be required for licensees by the Regulatory Code or Mutual Funds Regulations. Failure to appoint an authorized representative is an offence subject to penalties.
SIBA introduces a market abuse regime that creates offences for insider dealing, making misleading statements and market manipulation. Provision has been made for Market Abuse Regulations to be issued at some future date.