British Virgin Islands Introduces Two New Fund Products

The British Virgin Island has created two new fund products, the ‘incubator fund’ and the ‘approved fund’.  Both of these are aimed at start-up funds of small to mid-sized non-institutional investment managers in an effort to overcome some of the more vigorous regulatory obligations which can be off putting to fund managers who are just starting out.

The Incubator Fund
The fund is permitted to operate for two years although there is the possibility of an extra year.  At least two months prior to its expiration an Incubator Fund must either convert into a more permanent fund or cease its operations.  This validity period allows the investments to be tested and grow strong without having to having to worry about difficult and time-consuming regulatory obligations.   It does not require officials such as administrators or managers, it also does not require an auditor provides it remains within the fund thresholds which are;
– A maximum of twenty investors
– A minimum initial investment of US$20,000 by each investor
– A cap of US$20 million on the value of investments of the fund

The Approved Fund
There is no need to appoint an auditor, manager or custodian, although it does require an administrator.  There is no validity period on this fund.  The following thresholds are required and if exceeded the fund will need to convert into a more suitable fund;
– A maximum of twenty investors
– There is no minimum initial investment for investors
– A cap of US$100 million on the value of investments of the fund

Both of the above funds are able to commence trading within two business days of lodging the application for approval with the commission.  Once licensed the on-going regulatory obligations are fairly minimal with periodic reporting and the FSC needing to be informed of any key changes.

For more information please contact us