I recently had the great pleasure of being interviewed by James Williams, Managing Editor of HedgeWeek, for the 2017 BVI Special Report. We discussed at length the positive regulatory developments in the pipeline for the BVI, some of which I thought I’d share:
A New Partnership Act
I’m most excited about the introduction of the new Partnership Act (Phil and I were actually on the drafting committee for this private sector led initiative). In relation to companies, the BVI has always had the most innovative and sophisticated legislation out there, and the updated BVI Partnership Act is a welcome addition to that as it will usher in world-class legislation, bringing in, for example, the ability to create limited partnerships with separate legal personality, and creating a fantastic opportunity for the BVI on the PE and VC side.
The closed-ended SPC
Next is the the imminent extension of the use of Segregated Portfolio Companies (SPCs) for unregulated, closed-ended structures. It’s a very natural move (I’ve never heard a convincing argument for SPCs to be limited to regulated structures) and something that we’ve been lobbying the Government to do for some time, so we’re obviously extremely happy with this result.
Approved Fund SPCs
In relation to regulated SPCs, I am very happy to announce that it is now possible to create approved fund SPCs. Previously, it was only possible to establish SPCs in the BVI as private, professional or public funds. However, we’ve been seeing a huge demand (principally in the family office arena) for approved fund SPCs, and it is very pleasing to see that the regulator in the BVI, the Financial Services Commission (FSC) has been receptive to our proposals.
It is worth highlighting that we are undoubtedly seeing an increase in inquiries regarding not only the establishment of SPCs, but also the conversion of existing funds into SPCs. Given the current market conditions, managers who are looking to run a different strategy are considering whether this could be carried out within the same fund structure. There is no doubting that the statutory segregation of an SPC allows managers to avoid the risk of cross-contamination, thereby creating an alternative (and cost-effective) solution.
AIFMD Opt-in Regime
Last, but by no means least, is the creation of an AIFMD opt-in regime called the Securities and Investment Business (AIFMD) Regulations, in contemplation of a formal assessment of the BVI by ESMA later this year. The expectation behind this AIFMD equivalent regime is that it will allow managers of BVI funds to take advantage of third-country passporting rights, which will continue to give them access to investors within the EU Member States.
Clearly, none of these developments would have happened without the full backing of the BVI Government and, in particular, our friends at the BVI FSC, who are committed to ensuring that the BVI stays firmly ahead of the regulatory curve.
It’s going to be a great year and you’ll be hearing more on each of these developments as they come into force in the very near future. As always, do get in touch with me or the team if you have any questions or comments.
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