By Sherri Ortiz, executive director,
The British Virgin Islands International Finance Centre
IN an increasingly globalised world, where the success of a country’s financial sector depends on its ability to find the right mix of a supportive business environment and high standards of transparency and regulation, the British Virgin Islands (BVI) stands out above its competitors, offering international businesses and high net worth individuals many advantages.
The BVI has been a venue for financial services for decades. However the sector really took off after the 1984 passage of the International Business Company (IBC) Act and the British Virgin Islands can now boast an offering including funds and investment services, trusts and estate planning, incorporations, captive insurance and mega-yacht registry.
The BVI is the second largest jurisdiction in the funds space with approximately 2,900 open ended funds recognised or registered with the BVI’s Financial Services Commission (FSC). In fact, we have seen an increase in the number of new funds registering in the BVI this year as the market has begun to regain confidence with investors looking to redeploy some of their investment capital.
The BVI has many strong arguments to attract clients from all over the world. Alongside the strengthening and deepening of relationships with existing clients, our aim at the BVI IFC is to reach out to all markets that can benefit from access to BVI services to ensure they are aware of new developments in our financial services sector.
The BVI has a nimble approach to providing fund services confirmed by amendments made under the Securities and Investment Business Act, 2010 (SIBA). Whilst most regulation of the BVI funds industry remained unchanged under SIBA, it codifies some of the practices already undertaken by funds domiciled in the BVI. Amongst new regulation changes was an extension to the window in which a professional fund can trade without being licensed by the FSC, from 14 days to 21. This speeds up time-to-market for fund managers with professional funds. This change also demonstrates the BVI’s commitment to having a dynamic fund industry, able to move quickly on new products and set an appropriate level of regulation.
Despite the recent challenges posed by the global economic downturn, the BVI can point to an economy that remains in good health. In fact an International Monetary Fund report published last year indicated that the financial crisis had not affected the health of BVI financial institutions and businesses continue to find that the territory strikes the right balance between meeting the needs of the international community, while maintaining regulatory and corporate governance standards that match international best practice.
The territory possesses a pool of knowledgeable and qualified legal and corporate professionals, who support the multitude of business structures and investments conducted from within the jurisdiction. The absence of currency exchange controls, the use of the US Dollar as the official currency and the presence of an internationally renowned commercial court also add to the flexibility and ease of use of BVI funds.
In the past year we have seen an upturn in investor capital raising and new fund formation in the BVI and we expect this activity to continue to grow in the long term as market confidence returns. Currently new capital raisings by fund managers favour established fund managers but in the longer term we anticipate a further increase in new fund activity by start-up fund managers with the BVI as an established fund centre, well placed to service both established and start-up managers.