BRITISH VIRGIN ISLANDS Law and Practice Contributed by: Michael Gagie, Andrew Wood, Ruairi Bourke and Joanna Russell, Maples Group
Any change to any of the foregoing personnel must be notified to the FSC within certain prescribed time - frames specified under SIBA. Anti-Money Laundering The business of being a private investment fund con - stitutes “relevant business” for the purposes of the BVI Anti-Money Laundering (AML) Regulations (As Revised), and as a result, private investment funds are subject to the BVI AML regime. In addition to the regime’s know-your-client (KYC) investor onboarding requirements, a private investment fund must also appoint a suitably qualified money laundering report - ing officer. The officer, who may be internal or appointed external - ly, will act as the liaison with the BVI Financial Investi - gation Agency in relation to AML compliance matters, and will have responsibility for ensuring compliance by the fund’s staff with AML law and regulation, and any internal reporting protocols and compliance pro - cedures the fund may have adopted. A BVI investment fund that does not constitute a pri - vate investment fund under SIBA and is not other - wise regulated in the BVI will not technically be sub - ject to the jurisdiction’s AML regime. However, it is both recommended and accepted market practice for unregulated funds of this nature to conduct investor onboarding KYC and due diligence as if subject to the regime. US Foreign Account Tax Compliance Act (FATCA) and the OECD’s Common Reporting Standard (CRS) BVI funds, whether recognised as private investment funds or not, will also constitute “(foreign) financial institutions” under FATCA and CRS (as each is extend - ed to the BVI). Accordingly, such investment funds are subject to the regimes’ registrations, account due dili - gence and account reporting requirements.
due diligence will typically be limited to an entity’s constitution, books and records, and its compliance with applicable local law and regulation. 4.2 Vendor Due Diligence It is not uncommon for a buyer to rely on vendor due diligence provided the transaction does not have any specific BVI regulatory or complex financial aspects. In such cases, the buyer may prefer their own due diligence report to address these issues. The structure for the acquisition of shares in a BVI company will predominantly be driven by the structure of the shareholding. Where shares are closely held, the execution of a private treaty sale and purchase agreement or the use of applicable drag-along provi - sions would be typical. If shares are more widely held, it would be common to see the use of the BVI statu - tory merger provisions. BVI statutory mergers have been a popular mechanism in the jurisdiction for many years, being used in both private and public transac - tions. Court-sanctioned schemes of arrangement are possible in the BVI but are not generally used. The terms of an acquisition will be driven by commercial 5. Structure of Transactions 5.1 Structure of the Acquisition The single-investor, single-investment, club deal and co-investment fund structures that have become increasingly common in the BVI will quite often invest into underlying portfolio investments directly and will themselves be party to transaction documentation. BVI closed-end investment funds structured more as fully functioning blind pool funds – which remain rarer – will, however, more typically establish separate acquisition structures for their downstream transac - tions rather than investing directly. Such special purpose vehicles will usually be corporate entities and may be formed in a wide range of jurisdictions, including the BVI, with the choice often being driven by broader tax considerations. rather than BVI-specific factors. 5.2 Structure of the Buyer
4. Due Diligence 4.1 General Information
It is uncommon for substantive activity to be under - taken by BVI entities within the territory itself, so BVI
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