AUDITED ACCOUNTS – 30 JUNE 2015
FUND ANNUAL RETURN – 30 JUNE 2015
US FATCA – 30 JUNE 2015
RECORD KEEPING – IMMEDIATE
TIGHTENING ATTITUDE OF THE COMMISSION TO LATE FILINGS
Over the last six months we have seen that the British Virgin Islands ("BVI") Financial Services Commission (the "Commission") has become increasingly strict with payment and filing deadline contraventions and we are expecting to see administrative penalties levied in particular in respect of late filings of accounts, failure to obtain the prior consent of the Commission (where required) and changes to functionaries.
As such, we recommend all regulated entities to review their procedures for identifying changes that require notifications to or approvals of the Commission and to undertake a review of their current status with the Commission, with a view to bringing all requisite filings up to date before 30 June 2015.
AUDITED FINANCIAL STATEMENTS FOR FUNDS AND LICENSEES
Pursuant to the Securities and Investment Business Act, 2010 ("SIBA") and the Mutual Funds Regulations, 2010, all BVI private, professional and public funds ("Funds") and all BVI investment business licence holders ("Licensees") are required to appoint, and at all times have, an auditor for the purposes of auditing their financial statements.
All Funds and Licensees are required to submit a final copy of their audited financial statements to the Commission within six months of the end of each financial year. Funds and Licensees with a financial year ending on 31 December are therefore required to submit their audited financial statements for the 2014 financial year to the Commission on or before 30 June 2015.
Funds and Licensees could be faced with administrative penalties and/or enforcement action if they fail to meet the deadline.
Funds and Licensees must prepare financial statements for each financial year in accordance with one of the prescribed accounting standards1 or internationally recognised and generally accepted accounting standards equivalent to such prescribed accounting standards.
Exemptions and Extensions
Funds and Licensees which have not appointed an auditor will need to make a written application to the Commission for an exemption from the requirement to appoint an auditor and submission of audited financial statements. Alternatively, Funds and Licensees which are not in a position to file the audited financial statements by the annual filing deadline may apply to the Commission for an extension. The Commission may, in normal circumstances, grant a maximum extension of up to nine months following the end of the relevant financial year. Please speak with your usual Maples and Calder contact or one of the individuals listed at the top of this update for further details on the exemption or extension process.
Procedure for Submission
Funds and Licensees should submit audited financial statements to the Commission through their appointed authorised representative, Maples Authorised Representative Services (BVI) Limited.
Other types of funds that are not registered or recognised under SIBA, for example closed-ended funds domiciled in the BVI, are not required to prepare or submit audited financial statements to the Commission.
ANNUAL RETURNS FOR FUNDS
All Funds are subject to an annual reporting regime under which a mutual fund annual return ("MFAR") must be submitted to the Commission.
Information to be disclosed in the MFAR
Each Fund must report on the following:
- Basic prudential and governance information, which includes information on its registered agent and functionaries.
- Summary financial information for the relevant reporting period, which includes; opening NAV, total subscriptions, total redemptions, net income/net loss, dividends/distributions, ending NAV and year-end gross assets.
Asset allocation details are also required, but there is no need to set out specific details of individual investments. Details of investors do not have to be disclosed in the MFAR.
When do MFARs need to be filed?
The reporting period for the MFAR is every calendar year, ending on 31 December. Funds are required to submit the MFAR within six months of the end of each reporting period, i.e. on or before 30 June.
Purpose of MFARs
The Commission intends to use the information filed in the MFAR to measure and develop the BVI funds industry whilst at the same time meeting international reporting standards. We understand that the Commission will not make the MFAR publicly available, but may share information gathered from the MFAR on an aggregate basis.
Filing Procedure for the MFAR
The MFAR must be submitted to the Commission electronically.
If you have not previously filed your MFAR electronically then you will need to register as a new user on the Commission's website and obtain log in details by email.
A copy of the Commission's full guidance notes is also available.
If you require assistance with the MFAR please speak with your usual Maples and Calder contact or one of the individuals listed at the top of this update. You may also contact the Commission directly at firstname.lastname@example.org .
FATCA DEADLINE – 30 JUNE 2015
BVI entities who have determined that they are Reporting BVI Financial Institutions ("Reporting FIs") for the purposes of the Foreign Account Tax Compliance Act of the United States ("FATCA") and recently registered with the US Internal Revenue Service ("IRS") for a Global Intermediary Identification Number ("GIIN") should now be taking steps to identify any accounts they hold for which information will need to be reported to the BVI International Tax Authority ("ITA") for onward transmission to the IRS.
Once it has been established that an account held by a Reporting FI is a US Reportable Account, the following information will need to be provided to the ITA in respect of that US Reportable Account for 2014:
- the name, address, US Tax Identification Number ("TIN") of the entity or individual accountholder and, where the accountholder is a Passive NFFE that has controlling persons who are Specified US Persons, the name, address and TIN of such persons;
- the account number;
- the name and identifying number of the Reporting FI; and
- the account balance or value as of 31 December 2014.
This information is to be transmitted to the ITA before 30 June 2015 via the online portal known as the BVI Financial Account Reporting System ("BVIFARS"), which is now operational. All Reporting FIs which have a return to submit must apply for enrolment on BVIFARS by 1 June 2015.
Similar reporting requirements are contained in the intergovernmental agreement entered into with the United Kingdom, however the deadline for filing information for 2014 in relation to UK reportable accounts has been extended until 31 May 2016 and the exact format of this reporting has yet to be finalised.
If you have any questions regarding making the reports or whether the Fund or Licensee is a Reporting FI for these purposes, please contact your usual Maples and Calder contact or one of the individuals listed at the end of this update. If you require assistance with filing the returns, MaplesFS can assist with this process.
ENHANCED RECORD KEEPING REQUIREMENTS
Since 2005, BVI business companies have been required under the BVI Business Companies Act, 2004 to keep records that are sufficient to show and explain the company's transactions and that enable the financial position of the company to be determined with reasonable accuracy at any time. These statutory record keeping requirements on companies remain in force and have now been applied to BVI limited partnerships by way of an amendment to the Partnership Act, which came into force in November 2012. BVI companies and partnerships remain entitled to adopt accounting standards appropriate to them in the jurisdictions in which they operate, provided the minimum transparency standard discussed above is met.
The records and underlying documentation that BVI companies and limited partnerships are required to keep must now be kept for a period of at least five years, following the enactment of the Mutual Legal Assistance (Tax Matters) Act, 2012 which also came into force in November 2012. The five year period starts on the date of completion of the transaction to which the records and underlying documentation relate, or the termination of the business relationship to which they relate.
The records and documentation of a company or a limited partnership are not required to be kept in the BVI. However, the company or limited partnership must notify its registered agent of the physical location of its records and underlying documentation, and notify the registered agent within 14 days of any change to that location. As such, all Funds that are formed as companies or limited partnerships are required to notify their registered agent in the BVI of the location of the financial records and documents of the Fund.
If you have not already done so, please notify us of the location of the financial records and documents as soon as possible either through your usual Maples and Calder contact or one of the individuals listed at the top of this update.
(a) The International Financial Reporting Standards, promulgated by the International Accounting Standard Board;
(b) UK GAAP;
(c) US GAAP;
(d) Canadian GAAP; or
(e) Such other recognised international accounting standards as may be approved by the Commission on a case by case basis.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.