If you want to de-register a BVI fund by cancelling its certificate of recognition, the chances are things haven’t gone as planned.
Perhaps the launch was not a success and the fund never traded, perhaps the launch went well but performance was poor and you are winding up. Or maybe things are more positive, you have just realised that you could operate as a closed-end fund and it makes financial sense to de-register or you think you would be better off domiciled in another jurisdiction. Whatever the reason, don’t be down. In the words of Henry Ford, “Failure is only the opportunity to more intelligently begin again”. The good news is, de-registering is pretty easy so we can save you a headache!
Unless the fund is being wound up, or there are no remaining investors, it is likely that you will need to amend the redemption provisions contained in the constitutional documents and the offering document to remove the investors’ rights to require redemption and to take out any references to the fund being recognised. The documentation for this will be drafted by your lawyer and you will need to get any necessary investor consent. That’s the tricky bit done.
The next step is to apply to the Financial Services Commission (the FSC). The application takes the form of a letter from the board, accompanied by resolutions of the board. Your lawyer will draft the documents.
The application will need to contain:
- confirmation that the fund is in good standing (you will need to ensure that all fees are paid up to date, all functionaries requiring approval or notification by the FSC have been duly approved or notified and that there is no regulatory enforcement action pending against the fund);
- the original certificate of recognition or an affidavit confirming that it has been lost;
- a copy of the resolution of the board of directors indicating the date on which the fund has or will cease to carry on regulated business and that it will not begin to conduct regulated business without first obtaining the appropriate licence;
- an explanation of the reason for cancelling the licence; and
- confirmation that the fund’s business is not being terminated in a manner prejudicial to its investors and creditors (it is usually appropriate to include management accounts for the period since the last audited financial statements).
Where the fund is being continued into another jurisdiction or has never conducted regulated business, some specific additional statements are also required to be contained in the application.
Once the directors have signed the documents, your lawyer will submit the application to the FSC. On approving the application, the FSC will provide a letter confirming the cancellation of the certificate of recognition. It’s as easy as that.
The author of this post is no longer with Harneys. For more information on this topic, please reach out to the author listed above.