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  • UNTANGLING THE GORDIAN KNOT

    Read the latest article by Calum McKenzie as published in Hedgeweek.

    Regulatory and investor pressure have drastically altered the hedge fund industry in recent years. With managers increasingly looking for fund administrators to provide more middle-office and value-added services, whilst at the same time squeezing them on fees, the situation has become a Gordian Knot. Administrators must find ways to remain relevant, attract new clients, and continue to build revenues at a time when everyone is adjusting to FATCA, AIFMD, and shortly Common Reporting Standards.

    Folio is one of the BVI's most recognised independent fund administrators and whilst the group is glad that the BVI is evolving its fund product range, it is cognisant of the fact that regulatory and cost pressures are holding people back from launching funds.

    "I don't think it's any different in any other offshore jurisdiction," says Calum McKenzie (pictured), Director, Folio Corporate Services Limited. "Our large clients are still happy with the situation here in the BVI, but what is more challenging is getting new managers to launch fund products.

    "The Approved Manager has been the biggest success story of the last few years. Statistics would show that it has proven popular in terms of the number of registrations. The question mark that goes against that is how many of those were full licensed investment managers that decided to switch to take advantage of the more regulatory appropriate structure for their offering."

    Introducing the BVI Approved Manager regime, and more recently the BVI Incubator and Approved Fund products, is evidence that the BVI, at a jurisdictional level, is attempting to "think outside the box" and untangle the Gordian Knot.

    "Previously, we had limited alternative products to offer clients: they either had a BVI private or professional fund or a closed-ended vehicle. The incubator and approved fund provide a more regulatory appropriate product for start-up managers.

    "Also, with the ability to offer the Approved Manager, we are now starting to reclaim that space," says McKenzie.

    "Despite having almost 2,000 funds registered in BVI I believe the BVI still needs to address the perception issue that we are essentially an M&A domicile. We need to shout loudly that BVI is an excellent funds domicile and explain more clearly to people why BVI should be foremost in their minds. For example, people can realise significant cost savings, relative to competitor jurisdictions, by establishing their structure in the BVI. We need more investors to understand the virtues of the BVI, which in turn might help to attract more managers," notes McKenzie.

    In other words, when managers speak to prospective investors, the question put to them shouldn't be, `Why are you choosing the BVI?' but rather `Why aren't you choosing the BVI?'

    McKenzie is a Team Leader for Team BVI, part of the marketing machine at BVI Finance. Team BVI is conducting a lot of planning into how the jurisdiction can further enhance its funds industry. He confirms that the BVI is hoping to introduce a new Limited Partnership Act at the end of Q1 or early Q2.

    "The Partnership Act in the BVI is in need of an overhaul. A lot of US managers structure their offshore funds as LPs, and we aim to have state-of-the-art partnership legislation that will allow us to appeal even more to US managers," concludes McKenzie.

    If this happens, it will further loosen the Gordian Knot and help the BVI's fund administration community expand its client base.

    The article can be found on www.hedgeweek.com: (February 2016 - www.hedgeweek.com)

  • COMMERCIAL SERVICES - BRITISH VIRGIN ISLANDS

    Lawyer Monthly recently conducted an interview with Calum McKenzie, Director at Folio Corporate Services Limited. Calum McKenzie has worked in the offshore financial services industry for over 16 years.

    When we last spoke in April 2015, you told me what makes the British Virgin Islands attractive to foreign businesses. Has this changed at all in that time? In what way?

    The BVI remains a great place to do business. There have been changes in a legislative and product sense but changes we can only view as positive. The BVI Business Companies (Amendment) Act 2015 (when proclaimed) will introduce a number of fine tuning modifications which should be warmly welcomed by the industry in general. We have seen the formal introduction of the new investment funds products – the Approved Fund and the Incubator Fund (see below) and the Approved Manager continues to be a very popular product, even more so now that people are becoming aware that they can be used for managed accounts and non BVI funds.

    How has 2015 panned out for the M&A markets in the BVI? Were many of these deals cross-border?

    The general consensus in the industry is that BVI is having another very good year for M&A activity. I am personally aware of a number of significant very large cross-border deals done in 2015 involving BVI companies. This is not surprising given BVI’s reputation for corporate business transactions and our position as industry leader. However we must ensure that as a jurisdiction we continue to enhance our reputation and respond to the demands of the industry, hence why we continue to update and amend legislation and develop new products as described above.

    The BVI have recently introduced the “incubator fund” and the “approved fund” designed to enhance its investment offering. Can you tell me about these two new products?

    The “approved fund” and the “incubator fund” are two appropriately regulated fund products which are primarily aimed at those managing funds for friends and family/non-institutional offerings and start-up emerging managers.

    The incubator fund is aimed at managers who do not necessarily have the benefit of seed investor capital but who wish to set up quickly and establish a track record with minimal set-up costs and without having to comply with onerous regulatory obligations. The product is therefore very attractive to start-up managers who are seeking the best environment to grow their assets under management in the most cost-efficient manner.

    The approved fund is aimed at managers who wish to establish a fund for a longer term, but on the basis of a more private investor offering, which may appeal to family offices or an investor base of close connections.

    What are the attractions of them and what impact will it have on the attractiveness of the islands to investors?

    The approved fund and the incubator fund essentially allow emerging or start-up managers a swift and uncomplicated entry into the market at a price point they can afford and sustain.

    The regulatory obligations of both funds are appropriate for the product with approved and incubator funds having the option to only appoint the service providers that the manager strictly believes the fund requires (although it should be noted that an approved fund will be mandated to appoint an Administrator). They offer almost immediate time to market (able to commence trading within two business days of lodging the application for approval with the Commission) and they offer significantly lower costs to launch and ongoing running costs than those associated with a traditional fund structure. That said we do still reasonable levels of demand for our existing fund products such as the private’ and ‘professional’ funds.

    What have you been working on since we last spoke?

    Working hard with the BVI Finance Centre and the BVI Investment Funds Association to continue to promote the BVI as a first class venue of choice for investment business by highlighting our great existing products and services as well as introducing our new products to new clients and new markets. Last month I spoke on a panel at the Markets Group Private Wealth Latin America and Caribbean Forum in Miami to promote the BVI in general as well as to draw more attention to the introduction of the approved fund and the incubator fund. Our goal is to make BVI the first choice as an international business partner.

    What does 2016 hold for commercial services in the BVI?

    We believe that we will continue to see positive levels of demand for products across the spectrum of the BVI financial services offering not least in investment business products. Specifically we believe there will be continued development in creating substance and seeking value added services such as director services. Whilst we undeniably foresee a lot of work in the near future as a result on ongoing global regulatory demands such as AIFMD, FATCA & CRS, we must continue to be responsive to industry demands and view the implementation of these industry changes as necessary and indeed positive developments for the jurisdiction. Our view is that by adopting and implementing global financial standards it demonstrates the BVI’s continuing maturity as a jurisdiction and our position as an important financial centre.

    Should you require any further information or assistance in relation to these products, please feel free to contact one of our Directors at your convenience;

    William Harris – william@fiduciarygrouplimited.com

    Calum McKenzie – calum@fiduciarygrouplimited.com

    Daniel Cann – daniel@folioadmin.com

     

    Article download (December 2015 - BVI article.pdf)

  • BVI INTRODUCES ‘INCUBATOR’ & ‘APPROVED’ FUNDS PRODUCTS

    The “incubator fund” and the “approved fund” are two new lightly regulated fund products which are primarily aimed at start-up emerging managers and those managing funds for friends and family/non-institutional offerings.

    The Securities and Investment Business (Incubator and Approved Funds) Regulations 2015 (the Regulations) were gazetted on 18 May 2015 and are expected to be brought into force shortly.

    The incubator fund is aimed at managers who do not necessarily have the benefit of seed investor capital but who wish to set up quickly and establish a track record with minimal set-up costs and without having to comply with onerous regulatory obligations. The product is therefore expected to be very attractive to start-up managers who are seeking the best environment to grow their assets under management in the most cost-efficient manner.

    The approved fund is aimed at managers who wish to establish a fund for a longer term, but on the basis of a more private investor offering, which may appeal to family offices or an investor base of close connections.

    Both of these new fund products are able to commence trading within two business days of lodging the application for approval with the Commission meaning almost immediate time to market.

    It is anticipated that the establishment costs for the new products will be lower than those associated with setting up a private or professional fund. On an ongoing basis significant savings will also be realized as the funds will have the option to only appoint the service providers that the manager strictly believes the fund requires. Although it should be noted that an approved fund will be mandated to appoint an Administrator.

    The introduction of these two new funds products is a welcome development for the BVI’s funds industry and demonstrates the ongoing commitment to the growth of international financial services offered in the BVI.

    Should you require any further information or assistance in relation to these products, please feel free to contact one of our Directors at your convenience;

    William Harris – william@fiduciarygrouplimited.com

    Calum McKenzie – calum@fiduciarygrouplimited.com

    Daniel Cann – daniel@folioadmin.com

  • THE DIRECTORS REGISTRATION AND LICENSING LAW 2014 - CAYMAN

    The Cayman Islands Government (CIG) has introduced The Directors Registration and Licensing Law 2014 (“the Law”) and corresponding Regulations under which individuals and corporate companies acting as directors on mutual funds regulated under the Mutual Funds Law of the Cayman Islands ("regulated funds") need to be either registered or licensed. The Law was passed on Thursday, April 10, 2014 and took effect on June 4, 2014 subject to limited exceptions.

    This Law marks the first time that all directors of regulated funds have been regulated directly in the Cayman Islands and it grants the Cayman Islands Monetary Authority (CIMA) the power to approve or deny a registration or a licence.

    What does it mean for Directors

    All directors of regulated funds and directors of SIBL Excluded Person investment managers (together "covered entities") will be required by law to be registered or licensed with CIMA, even if not resident in Cayman.

    Directors subject to licensing must comply within six months of the Law taking effect and directors subject to registration must comply within three months.

    Compliance with the Law is required by September 3, 2014 for individual directors and December 3, 2014 for corporate.

    Application for registration to CIMA must be made in the form prescribed by the Regulations with the CI$700 fee, which is also due by every January 15 thereafter. There are penalty fees applied for late receipt of annual fees.

    We have attached a list of FAQs as posted by CIMA which should assist with any questions that you may have. However should you require any further information or assistance with the registration process, please feel free to contact one of our Directors at your convenience;

    William Harris – william@fiduciarygrouplimited.com

    Calum McKenzie – calum@fiduciarygrouplimited.com

    Daniel Cann – daniel@folioadmin.com

  • DOING BUSINESS & INVESTING IN THE BRITISH VIRGIN ISLANDS

    The BVI is the leading jurisdiction for the incorporation of companies. The number of active companies is approximately 460,000 based on the 2014 Q4 statistics released by the BVI Financial Services Commission. The main single reason for this is the product… the BVI company is quick and simple to obtain/register, easy to use and understand – thanks to pragmatic, clear and simple legislation, recognized worldwide and historically a proven product. Overall, the jurisdiction is ranked 44th in the world, ahead of 39 other financial centres.

    Read More (article .pdf)

    The article can be found in the Finance Monthly e-mag (April Issue):
    http://content.yudu.com/A2swdt/FM0414/resources/1.htm

  • BVI STANDS OUT IN GLOBAL FINANCIAL CENTRES INDEX

    An examination of whether legislation should be enacted to codify the duties of directors.

    Terms of Reference

    The Law Reform Commission has sought to initiate independent research into whether legislation should be enacted to codify the duties of company directors. Generally, the duties of directors can be categorised as fiduciary duties and duties of care and skill and these duties are mainly found in the common law.

    We will examine, among other things, the fiduciary duties of directors under the general law, the persons to whom those duties are owed, the liability of directors for breaches of those duties and the circumstances in which a company can ratify a breach of those duties.

    The original Publication can be found on the Cayman Islands Law Reform Commision website at:

    http://www.lawreformcommission.gov.ky/portal/page?_pageid=4221,7269304&_dad=portal&_schema=PORTAL

    Read More

  • CAYMAN CONSIDER STATUTORY CODIFICATION OF DIRECTOR’S DUTIES

    An examination of whether legislation should be enacted to codify the duties of directors.

    Terms of Reference

    The Law Reform Commission has sought to initiate independent research into whether legislation should be enacted to codify the duties of company directors. Generally, the duties of directors can be categorised as fiduciary duties and duties of care and skill and these duties are mainly found in the common law.

    We will examine, among other things, the fiduciary duties of directors under the general law, the persons to whom those duties are owed, the liability of directors for breaches of those duties and the circumstances in which a company can ratify a breach of those duties.

    The original Publication can be found on the Cayman Islands Law Reform Commision website at:

    http://www.lawreformcommission.gov.ky/portal/page?_pageid=4221,7269304&_dad=portal&_schema=PORTAL

    Read More

  • INVESTMENT BUSINESS (Approved Managers) AMENDMENT

    Last year we told you that the BVI had introduced a new ‘regulation light’ regime for the recognition and approval of Investment Managers and Advisers. The essence of the new regime was to strike the right balance of flexibility, cost and effective regulation (previous article).

    In practical terms, the outcome was an attractive alternative for Investment Managers and Advisers conducting business in the BVI, specifically acting to any number of private and professional funds recognized under the Securities and Investment Business Act, 2010 as well as any number of closed ended funds domiciled in the BVI which have the key characteristics of a private or professional fund subject to a cap of US$400 million for open-ended funds and US$1 billion for closed-ended funds.

    The Investment Business (Approved Managers) (Amendment) Regulations, 2013 (“the Amendments”) have been introduced to extend the types of funds which an Approved Manager can manage, enabling it to now also manage any fund that has the equivalent characteristics to a private or professional fund domiciled in a recognised jurisdiction being a jurisdiction listed in the Securities and Investment Business (Recognised Jurisdictions) Notice, 2010. The recognised jurisdictions for these purposes are Argentina, Australia, Bahamas, Bermuda, Belgium, Brazil, Canada, Cayman Islands, Chile, China, Curacao, Denmark, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, Panama, Portugal, Singapore, Spain, South Africa, Sweden, Switzerland, United Kingdom and the United States of America.

    The New Regulations also provide that an Approved Manager may provide services to a fund that is not from a recognised jurisdiction when it invests all or a substantial part of its assets in a fund based in the BVI or a recognised jurisdiction.

    The Amendments will make the Approved Manager even more attractive to a wider range of Investment Managers and Advisors and further enhance the BVI’s current competitive advantage in this field.

    Should you require any further information or assistance in this regard, please feel free to contact one of our Directors at your convenience;

    William Harris – william@fiduciarygrouplimited.com

    Calum McKenzie – calum@fiduciarygrouplimited.com

  • INSURANCE: THE SOLUTIONS SECTOR

    My last article for Offshore Investment Magazine, "Diversity in the battle against adversity: cross-selling techniques using insurance", highlighted the need for the various sectors of the offshore financial services industry to work more closely together, emphasising the importance of cross-selling products in an increasingly challenging environment.

    Read More

  • PRIVATE PANAMANIAN FUNDS – AN OVERVIEW

    Panama, one of the world's fastest growing economies (recording its second consecutive year of double-digit growth in 2012), is undoubtedly the banking and financial services hub of Latin America. The resulting new wealth and growing middle class has created an ever increasing demand for new investment products and vehicles.

    Not unexpectedly, professionals are asking about the viability of Panamanian Private Funds (PPFs). As is the case in the banking sector, many Latin American professionals and investors generally feel more comfortable utilising Panamanian entities rather than traditional offshore entities. This can be for a variety of reasons, ranging from legislative and language familiarity to specific regulatory issues in their home country.

    From a practicality and viability standpoint, the processes are not too dissimilar to the set-up of a Fund in, for example, the BVI. Firstly, the requisite due diligence on the client must be collected, then, together, with a specialist law firm, the various necessary documents must be drafted, including the Memorandum and Articles of Association (M&A), Offering Memorandum (PPM) and the Subscription Document, as part of a formal application to the Superintendent (of the Securities Market of Panama) for permission to incorporate and proceed with the establishment of the Fund.

    Depending on whether the Fund will have any offerings within Panama or whether it is managed in Panama, this process can take between 30 to 60 days. The more involvement the Fund has in Panama (such as local Investors, a local Manager, a local Administrator or a local Custodian), the more heavily scrutinised the Fund will be.

    The Fund can only be offered in a private capacity (up to 50 persons) and cannot be a public offering. Furthermore, the persons who are offered the Fund and eventually invest into the Fund can only be sophisticated investors (USD100,000 minimum investment with a net worth of USD1 million or more). However, there are no restriction on the type of investment the Fund can make.

    The Fund is required to appoint three Directors (who do not need to be based in Panama), the same number as required to form a basic Panamanian company. A suitably qualified Administrator and Auditor must also be appointed, as well as a Custodian to hold the assets.

    From a practical standpoint, PPF set-ups are not particularly onerous. A couple of points to note are that the M&A and PPM need to be filed in Spanish. Also, operationally, bank and broker/custodial accounts need to be established for the Fund with institutions who are comfortable with Panamanian entities and with Funds.

    From a cost perspective, the set-up and ongoing operational fees are not too dissimilar to other jurisdictions. There will be legal fees, time and incorporation costs to consider in the set-up. Thereafter, ongoing costs relate to administration, audit, corporate, bank, broker/custodial fees and regulatory fees.

    As far as taxes are concerned, all Panama companies (including PPFs) are exempt from tax on income received from overseas and are widely used for doing business and holding assets outside Panama. The other key benefit is the fact that the registration and supervision fees are extremely low (USD250 registration and 0.001% of average net assets for a year with a minimum of USD500 and a maximum of USD5,000). These factors alone make Panama an attractive new option as a Fund jurisdiction.

    With its already excellent reputation as a banking and international financial services centre and the combination of a strong economy, growing infrastructure and its geographical location, Panama should firmly position itself as a viable and attractive Fund jurisdiction in the future.

    Please contact daniel@folioadmin.com for more information.

  • BVI APPROVED INVESTMENT MANAGERS "Regulation Light"

    On December 10, 2012, the BVI introduced a new ‘regulation light’ regime for the recognition and approval of Investment Managers and Advisors. The essence of the new regime is to adopt a risk-based approach to certain elements of investment management business conducted in the BVI and to strike the right balance of flexibility and effective regulation, taking into account the relative risk, nature and complexity of the business carried on.

    In practical terms, the outcome is an attractive alternative for investment managers and advisors conducting business in the BVI who are currently otherwise required to hold a full licence under Part I of the Securities & Investment Business Act (“SIBA”).

    The new Approved Manager regime provides for eligible investment managers and advisors to submit a short application to the Commission, which permits the commencement of business 7 days later without the need for formal licence approval (noting that the Commission may raise an objection during the 7 day period). Under the alternative SIBA Part I licensing regime, the Financial Services Commission can typically take a minimum of four weeks to process an application for a licence.

    As per the Investment Business (Approved Managers) Regulations, an Approved Manager may act as the investment manager or investment advisor to any number of private or professional funds recognised under SIBA (including funds domiciled outside of the BVI), as well as any number of closed ended funds domiciled in the BVI which have the key characteristics of a private or professional fund.

    An Approved Manager can also act for non-BVI feeder funds into BVI master funds. The key restriction is that aggregate assets under management of all of the open ended funds cannot exceed USD400 million and that the capital commitments of all of the closed ended funds cannot exceed USD1 billion.  The higher threshold for closed ended funds is reflective of the risk based approach taken by the Commission in the development of the regime; closed ended funds are widely considered to expose interested parties to a lower level of regulatory risk.

    While an Approved Manager will not be restricted to any material extent on the way it carries on business, it is important to note that the regime is a "licensing regime" rather than an entirely exempted activity. The Commission will continue have regulatory powers at its disposal to take enforcement action against an Approved Manager should it determine it to be necessary to do so.

    The approved manager regime can be likened to the exempt manager regime in the Cayman Islands  (or to describe it more accurately, registration as an excluded person to fall outside of the licensing requirement of the Cayman Islands Securities and Investment Business Law ("SIBL")). Significantly however the regulatory fees payable by a BVI Approved Manager are considerably lower than for a Cayman exempt entity (both for the initial application and on an annual basis thereafter). A BVI Approved Manager attracts only an initial application fee of USD1,000 and an annual approval fee thereafter of  USD1,500.

    Furthermore, a Cayman exempt entity cannot act as manager or advisor to private funds and closed-ended funds in the same way a BVI Approved Manager can. Broadly speaking, a Cayman Islands exempt manager can only act for funds which fall within the definitions of "sophisticated investor" or "high net worth person" under SIBL. This makes the new BVI regime ideal for managers of funds with less than fifty investors, especially start ups and family funds, for example.

    Aside from this, an Approved Manager will only be subject to a minimal number of ongoing obligations. These include the following:

    -  an Approved Manager must have at least two directors at all times, one of whom shall be an individual;

    -  an Approved Manager is required to have an authorised representative regulated in the BVI;

    -  an Approved Manager is required to notify the Commission of any change to any of the information provided by the Approved Manager pursuant to its application for approval within 14 days:

    - an Approved Manager shall notify the Commission of any matter in relation to it or its conduct, which has or is likely to have a material impact or significant regulatory impact with respect to the Approved Manager or its business;

    - an Approved Manager is required to prepare and submit financial statements to the Commission. However, there is no audit requirement; and

    -  an Approved Manager will be required to submit an Annual Return to the Commission by 31 January of each year containing summary details of the business it is carrying on.

    FGL firmly believes that this legislation achieves an appropriate balance between the need for effective regulation and commercial viability. With approximately 2,400 investment funds currently registered in the BVI, the Approved Manager regime is certain to prove to be an attractive option for fund managers seeking to commence business in both a time and cost effective manner.

    Should you require any further information or assistance in this regard, please feel free to contact one of our Directors at your convenience;

    William Harris – william@fiduciarygrouplimited.com

    Calum McKenzie – calum@fiduciarygrouplimited.com

  • LATIN AMERICA: THE NEW FRONTIER

    Simon Owen, principal of Folio Insurance Management and Hyperion Risk Solutions, explains the growing reinsurance and captive opportunities in Latin America and the related challenges.

    Emerging Markets

    Contrary to what certain factions of the industry might lead you to believe, the insurance world is not as complicated and as enigmatic as it may seem. As is the case in most business sectors, the application of common-sense, intuition and experience generally provide the basis of opportunity. The associated complexities follow thereafter.

    Basic economic principles and trends surrounding the commercial insurance industry are inextricably linked to the reinsurance and captive industries and often indicate where future opportunities will arise.

    Read More

  • PRINCIPLES OF GOOD CORPORATE GOVERNANCE

    The circumstances, commentary and findings in Weavering put corporate governance front and centre in the financial services arena. Despite this there appears to be a continued reticence on the part of principals or sponsors when it comes to appointing professional independent directors rather than ‘amateurs’ with a direct or personal connection to a company.

    Read More

  • THE CHANGING FACE OF THE BVI

    The BVI has long been recognised as the ‘go-to’ domicile for the incorporation of offshore companies. There is no question that this can be attributed in large part to the basic tenet of the jurisdiction being tax neutral, highly cost efficient and offering a good degree of privacy within which to conduct business affairs. However many other far less successful jurisdictions offer such benefits so what has led to the unquestionable success of the BVI?

    BVI business core principles

    The BVI has a highly regarded legal system based on English common law and is home to the Commercial Court of the Eastern Caribbean Supreme Court which provides unparalleled legal access to practitioners. The legal framework is modern yet proven and trusted with prudent modern regulations. There is a stable political climate, as the recent change in the Governing party demonstrates. There is a dedicated network of high quality sophisticated corporate and financial service providers based in the BVI. It is home to the full array of global offshore law firms and also all of the ‘Big 4’ accounting & audit firms, along with a very good range of niche and boutique service providers. It is OECD ‘white listed’ and is a member of IOSCO (International Organisation of Securities Commissions). It has also recently undergone another review by the IMF and has in large part been given a glowing report. General living standards in the BVI are very high compared to most other Caribbean islands and indeed compared to many other supposedly more sophisticated jurisdictions and as a result of this the BVI has a very high GDP per capita. All of these factors have contributed to the success of the BVI and its core product of the BVI business company.

    However, with all of that said, the BVI as a jurisdiction has not been resting on its laurels and its principal product of the BVI business company. The jurisdiction has for some time been seeking to add value to its core company product and indeed has created a number of successful complimentary products and structures resulting in more sophisticated options for clients.

    Products and uses

    In the main, since the creation of the original BVI business company in 1984, BVI companies have been used by individuals for traditional purposes such as trading, holding, contracting or uses such as succession and wealth planning. For corporate users BVI business companies are the vehicle of choice for those wishing to establish subsidiaries to fulfill a wide range of corporate and group functions at low cost and great efficiency. Such uses would include special purpose vehicles for one-off transactions, joint ventures, or other more general operations such as treasury functions or to provide access to foreign capital markets. However the maturation of the BVI as a jurisdiction means that the BVI is ideally placed to handle much more sophisticated types of business.

    Investment business

    The BVI is the number two domicile in the world by number of registered mutual funds. The current number is fast approaching 3,000.

    In order to bolster this segment of the industry the Securities & Investment Business Act (“SIBA”) was passed into law in 2010 and created a legislative & regulatory framework governing the entire investment business industry (as opposed to simply mutual funds as per the 1996 Mutual Funds Act). SIBA in itself has done little to change the landscape of mutual funds business in the BVI (aside from codifying certain requirements which were previously imposed by the Financial Services Commission). However SIBA has created a regime for the licencing and operation of investment advisors, broker dealers, market makers, custodians and broker dealers, where such activities were previously unregulated. SIBA also introduced a market abuse regime which provides protection for investors by criminalising insider trading, circulating misleading information and market manipulation.

    As a BVI Fund is a regulated entity the establishment and use of such a licensed entity is, as one would assume, a more complicated, costly and time consuming process than establishing a simple BVI business company. However on a relative basis BVI mutual funds are a highly attractive product. The set-up procedure is efficient, quick and relatively low cost. They do not provide investment restrictions (aside from Public Funds) and returns are not subject to tax at corporate level. They can provide access to international markets and allow international investor’s access to locally managed assets and globally held investments.

    The key in this regard is to ensure that you choose the correct BVI service provider for your needs as not all BVI based service providers offer such value added services.

    Insurance business

    In addition to the value added products available in the investment business sector, the BVI continues to be a popular domicile for insurance products most notably captive & re-insurance vehicles. However with the onset of more demanding and discerning clients, the BVI now has service providers who are able to facilitate clients demanding products such as high net worth life insurance and specialty products such as professional indemnity insurance and directors & officers insurance.

    These can be facilitated and provided through BVI based specialty brokers with access to premier international insurers and the Lloyd's market.  Using a licensed broker based in the BVI that specializes in financial services ensures that you have someone who understands both the needs of the specific client, albeit a fund, private trust company or service provider, and the regulatory and legal obligations of BVI licensees.

    Having such providers available is another important development to the local industry, which in many other jurisdictions remains underserved by overseas brokers that do not fully understand the nuances and complexities of offshore financial services jurisdictions.

    Directorships and Governance

    One area of business that is anticipated to grow significantly in the BVI is the provision of BVI based independent directors who can implement and administer an appropriate good corporate governance structure.

    Such a path of progression is inevitable on the back of the recent financial scandals and the ongoing economic crisis, both of which have led to a world of increasing compliance and a need for transparency.

    The professional and experienced service providers in the BVI are well placed to capitalize on this segment of the industry as an increasing and exciting opportunity.

    The future

    In conclusion it can be said that the BVI is placing itself well in the competitive world of finance. It has demonstrated over an extended period of time its ability to meet the changing demands of its customers and yet simultaneously enhance its products and reputation. The BVI is an ideal place to do business and will continue to be the leading choice for the discerning needs of the global financial community.

    Calum Mckenzie has worked in the offshore financial services industry for approximately 14 years. He has extensive experience and knowledge of fiduciary services, including providing director and trustee services to entities varying greatly in terms of structural complexity, asset value and activity, more lately with a focus on providing services to mutual funds. Mr. McKenzie is currently a non-executive Director of a BVI Class I General Trust Company, a director of a BVI Company Management company and is presently approved as a director in a number of offshore jurisdictions, including the BVI, Cayman Islands, Nevis and Anguilla. He is a sitting member of the BVI Financial Services Commission (“FSC”) Fiduciary and Registry Liaison Committee providing operational advice and guidance to the BVI FSC and a sitting Council member of the BVI Association of Registered Agents. Calum is a member of the Institute of Directors, London and by birth is a British citizen who has been resident in the British Virgin Islands since 1998. Calum can be contacted at +1 284 494 7065 or by email at calum@folioadmin.com.

  • DIVERSITY IN THE BATTLE AGAINST ADVERSITY

    Diversity in the battle against adversity: cross-selling techniques using insurance.

    The Offshore Challenge

    The past 12 months will always be remembered in the financial world for all of the wrong reasons.

    With a US government downgrade in August, UK banks being downgraded in October and continuing uncertainties relating to the potential debt default by Eurozone members, navigating the markets in 2012 could only ever be described as "challenging" at best.

    Read More

Phone: +1 284 494 7065   Email: calum@fiduciarygrouplimited.com

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