The principal legislation pertaining to funds in the British Virgin Islands (BVI) is the Securities and Investment Business Act (SIBA).

Key Features

The incubator fund is designed for managers who are looking to start an investment strategy on a trial basis with sophisticated investors.  If the strategy succeeds within the prescribed timescale, the Regulations provide a seamless route for the fund to be recognised or approved as a private professional or approved fund, depending on the manager’s future plans for growth of the fund.  If the strategy does not succeed, the regime allows for an incubator fund to close down or convert to an ordinary company.  The key differentiating criteria for incubator funds over other fund types include:

  1. Only suitable for “sophisticated private investors”. Such investors are defined in the Regulations as “a person who has been invited to invest in an incubator fund and the amount of his or her initial investment is not less than US$20,000.”
  2. The total number of investors is limited to 20.
  3. Net assets of the fund must not exceed US$20,000,000 or its equivalent in any other currency.
  4. No manager, administrator or custodian is required to be appointed.
  5. No audit required.
  6. Can only be approved for a two year period. It is possible to seek an extension from the Commission for an additional 12 month period.  Prior to the end of this period it will be necessary to make an application to the Commission for the fund to be recognised as either a private fund or a professional fund or to be approved as an approved fund.

Legal Requirements

Requirements

Description

General

  • Corporate  vehicle permitted

International Business Company (IBC), Partnership or Unit Trust

  • Local physical office required

No

Share capital or equivalent

  • Minimum subscription

USD 20,000

  • Limit to investors

Maximum of 20

Directors

  • Minimum number

2

  • Corporate directorship allowed

Yes

  • Local director required

No

Service Providers Required

  • Custodian

No

  • Fund manager/Investment manager

No

  • Fund administrator

No

  • Auditors

No

  • Legal Advisers

Yes

Tax Treatment

Mutual Funds are tax exempt

Duration to Set Up

About 3 months

Distinctive Benefits of Licence

  • Tax exemption of Mutual Funds;
  • A recognized and respected legal system supported by English common law, modern local legislation and a well-developed court system, including a dedicated commercial division;
  • No regulatory restrictions on investment policies or strategies or on performance and other fee arrangements;
  • No requirement to appoint local directors or local functionaries;
  • Various types of fund structures including, single class funds, multi-class funds and master-feeder funds are facilitated;
  • Statutory segregated portfolio ring-fencing; and
  • Amendment of constitutional documents may be made by shareholders or directors where so authorized.

The Valsen Advantage

  • End to end comprehensive service
  • Speedy and efficient service
  • Expert advice on structuring options
  • Dedicated ongoing compliance support
  • Extensive network pool of service providers